rice land designation policy in vietnam and the implications of policy reform for food security and economic welfare abstract with the aim of promoting national food security the vietnamese government enforces the designation of around 35 per cent of agricultural land strictly for paddy rice cultivation we investigate the economic effects of adjusting this policy using an economy wide model of vietnam with detailed modelling of region specific land use agricultural activity poverty and food security measures our results show that the removal of the rice land designation policy increases real private consumption by an average of 0 35 per cent per annum over 2011 2030 while also reducing poverty improving food security and contributing to more nutritionally balanced diets among vietnamese households

testing price equations how inflation and unemployment are related in both the short run and long run is perhaps the key question in macroeconomics this paper tests various price equations using quarterly u s data from 1952 to the present issues treated are the following 1 estimating price and wage equations in which wages affect prices and vice versa versus estimating reducedform price equations with no wage explanatory variables 2 estimating price equations in log level terms first difference i e inflation terms and second difference i e change in inflation terms 3 the treatment of expectations 4 the choice and functional form of the demand variable 5 the choice of the cost shock variable the results suggest that the best specification is a price equation in level terms imbedded in a price wage model where the wage equation is also in level terms the best cost shock variable is the import price deflator and the best demand variable is the unemployment rate there is some evidence of a nonlinear effect of the unemployment rate on the price level at low values of the unemployment rate many of the results in this paper are contrary to common views in the literature but the empirical

monetary policy shifts and the stability of monetary policy models since the publication 1976 of the classic lucas critique researchers in empirical macroeconomics have endeavored to specify models that capture the underlying dynamic decision making behavior of consumers and firms who require forecasts of future events recently a number of researchers have developed simple models that have become the workhorses for monetary policy analysis the models vary considerably with regard to optimizing foundations and explicit treatment of expectations however relatively little effort has been devoted to testing the empirical importance of the lucas critique for these simple models can one find specifications that are policy invariant this paper develops and implements a set of tests for several monetary policy models used extensively in the literature in particular we attempt to test the robustness of optimizing versus nonoptimizing models to changes in the monetary policy regime we present evidence that shows that some forward looking models from the recent literat

assessing nominal income rules for monetary policy with model and data uncertainty nominal income rules for monetary policy have long been debated but two issues are of particular recent interest first there are questions about the performance of such rules over a range of plausible empirical models especially models with and without explicit rational inflation expectations second there are questions about the performance of these rules in real time using the type of data that is actually available contemporaneously to policy makers rather than final revised data this paper determines optimal monetary policy rules in the presence of such model uncertainty and real time data uncertainty and finds only a limited role for nominal output growth

empirical evidence on inflation expectations in the new keynesian phillips curve abstract we review the main identification strategies and empirical evidence on the role of expectations in the new keynesian phillips curve paying particular attention to the issue of weak identi

expectations as a source of macroeconomic persistence evidence from survey expectations in a dynamic macro model abstract embedding survey expectations in a standard dsge model helps to identify key slope parameters in standard relationships dramatically reduces the need for lagged dependent variables often motivated by price indexation and habit formation and obviates the need for autocorrelated structural shocks in the key equations formal statistical tests demonstrate that much of the persistence in aggregate data is better accounted for by slow moving expectations rather than by habits indexation and autocorrelated structural shocks

is workfare cost effective against poverty in a poor labor surplus economy workfare schemes impose work requirements on beneficiaries this has seemed an attractive idea for self targeting transfers to poor people this incentive argument does not imply however that workfare is more cost effective against poverty than even poorly targeted options given hidden costs of participation in particular even poor workfare participants in a labor surplus economy can be expected to have some forgone income when they take up such a scheme a survey based method is used to assess the cost effectiveness of india s employment guarantee scheme in bihar participants are found to have forgone earnings although these fall well short of market wages on average factoring in these hidden costs the paper finds that for the same budget workfare has less impact on poverty than either a basic income scheme providing the same transfer to all or uniform transfers based on the government s below poverty line ration cards for workfare to dominate other options it would have to work better in practice reforms would need to reduce the substantial unmet demand for work close the gap between stipulated wages and wages received and ensure that workfare is productive that the assets created are of value to poor people cost effectiveness would need to be reassessed at the implied higher levels of funding

inference in nonlinear econometric models with structural change this paper extends the classical test for structural change in linear regression models see chow 1960 to a wide variety of nonlinear models estimated by a variety of different procedures wald lagrange multiplier like and likelihood ratio like test statistics are introduced the results allow for heterogeneity and temporal dependence of the observations in the process of developing the above tests the paper also provides a compact presentation of general unifying results for estimation and testing in nonlinear parametric econometric models

price level convergence and regional phillips curves in the us and emu abstract we use panel estimates of regional phillips curves of the hybrid new keynesian type to study price level convergence within the us and emu regional inflation rates tend to eliminate ppp deviations in both monetary unions with average half lives around 3 years the start of emu did not greatly affect ppp reversion in the euro area where changes in nominal exchange rates accounted for the bulk of the adjustment process before 1999 this role was largely taken over by regional inflation differences since notwithstanding clear evidence of forward lookingness in the us inflation persistence is substantial in both monetary unions

dynamic inconsistencies counterfactual implications of a class of rational expectations models a number of recent papers have developed dynamic macroeconomic models that incorporate rational expectations and optimizing foundations while the theoretical motivation behind these models is sound the dynamic implications of many of the specifications that assume rational expectations and optimizing behavior can be seriously at odds with the data for both inflation and real side variables exhibit gradual and hump shaped responses to real and monetary shocks for models that are intended for monetary policy analysis these dynamic shortcomings should be considered quite serious when monetary policy has only short run effects on real variables the inability to approximately capture the short run responses of inflation or real variables to policy shocks makes a model unsuitable for policy analysis this paper identifies a simple feature common to many dynamic specifications for prices and real variables that causes the problem the paper also discusses several potential solutions to the problem including alterations to the expectations assumption to the order of differencing implicit in the model and to the underlying behavioral assumptions this abstract was borrowed from another version of this item

do central banks react to house prices we estimate the federal reserve s the bank of england s and the bank of japan s responses to house prices we show that generalized method of moments estimates of a taylor rule augmented with house prices are biased and dispersed we then use full information methods and estimate the policy rule together with a var for the nonpolicy variables these estimates are also biased we propose an alternative approach and estimate a dynamic stochastic general equilibrium model embedded with a monetary rule with a direct response to house prices we find that house prices played a separate role in the reaction functions of these central banks

the new keynesian phillips curve and lagged inflation a case of spurious correlation the new keynesian phillips curve nkpc specifies a relationship between inflation and a forcing variable and the current period s expectation of future inflation most empirical estimates of the nkpc typically based on generalized method of moments gmm estimation have found a significant role for lagged inflation producing a hybrid nkpc using u s quarterly data this article examines whether the role of lagged inflation in the nkpc might be due to the spurious outcome of specification biases like previous investigators we employ gmm estimation and like those investigators we find a significant effect for lagged inflation we also use time varying coefficient tvc estimation a procedure that produces consistency under a variety of sources of misspecification using two separate measures of expected inflation we find strong support for the view that under tvc estimation the coefficient on expected inflation is near unity and that the role of lagged inflation in the nkpc is spurious

evaluating microfoundations for aggregate price rigidities evidence from matched firm level data on product prices and unit labor cost a number of competing business cycle models have recently emerged all of which can explain why nominal shocks have real effects 1 although sharing a large number of common features a key difference between these models lies in the assumptions of how firms set prices and process information yet there exists very little direct micro evidence on the credibility of these assumptions this paper uses detailed data on product prices and unit labor cost merged at the firm level to evaluate competing sets of assumptions regarding firms price setting behavior thereby we provide firsthand evidence on the empirical relevance of the microfoundations of different dynamic stochastic general equilibrium dsge models

the phillips curve under state dependent pricing abstract we derive a phillips curve equation from the dynamic stochastic general equilibrium dsge model with state dependent pricing developed by dotsey et al 1999 state dependent pricing and the general equilibrium dynamics of money and output quarterly journal of economics 114 655 690 this state dependent phillips curve encompasses the new keynesian phillips curve nkpc based on calvo type price setting as a special case we analyze the effect of the state dependent terms that is the variations in the distributions of price vintages on inflation persistence and we examine whether the hybrid nkpc that is the nkpc extended by a lagged inflation term can adequately describe inflation dynamics generated in a calibrated state dependent pricing economy

productivity health and inequality in the intrahousehold distribution of food in low income countries a model is formulated incorporating linkages among nutrition labor market productivity health heterogeneity and the intrahousehold distribution of food and work activities in a subsistence economy empirical results based on a sample of households from bangladesh indicate that despite considerable intrahousehold disparities in calorie consumption households are averse to inequality furthermore consistent with the model the results also indicate that both the higher level and greater variance in the calories consumed by men relative to women reflect in part the greater participation by men in activities in which productivity is sensitive to health status copyright 1990 by american economic association

intra household inequality fairness and productivity evidence from a real effort experiment abstract this paper investigates experimentally how changes in wage rates and entitlements affect individual productivity in lab in the field experiments run with married couples from rural regions in uganda we design a game in which the production task itself is straightforward but where the rules governing payment vary across subjects and between rounds in some cases all the value of output goes to the husband in other cases all goes to the wife in other cases the value of output is shared equally and finally in some cases each spouse receives income according to only their own output to consider the effects of wage inequality we vary the price paid for each completed item so that the ratio of male to female wages varies from 0 5 to 2 all this is done transparently so that both partners know the rules of the game the results generally indicate that a rise in relative wages lowers relative effort a result that is contrary to the most straightforward interpretation of standard models of the household but compatible with some models of fairness men do not generally respond strongly to treatment in contrast women s labor supply is strongly backward bending when all income goes to the husband but effort rises with wages when each spouse gets to keep their own earnings the results therefore suggest that the effects of reforming or removing one inequality may depend critically on the existence of other inequalities

the new keynesian phillips curve from sticky inflation to sticky prices the new keynesian phillips curve nkpc model of inflation dynamics based on forward looking expectations is of great theoretical significance in monetary policy analysis empirical studies however often find that backward looking inflation inertia dominates the dynamics of the short run aggregate supply curve this inconsistency is examined by investigating multiple structural changes in the nkpc for the u s between 1960 and 2005 employing both inflation expectations survey data and a rational expectations approximation we find that forward looking behavior plays a smaller role during the high and volatile inflation regime to 1981 than in the subsequent period of moderate inflation providing empirical support for sticky price models over the last two decades a break in the intercept of the nkpc is also identified around 2001 and this may be associated with u s monetary policy in that period

estimating new keynesian phillips curves a full information maximum likelihood approach abstract the new keynesian phillips curve has recently become an important ingredient in monetary policy models however using limited information methods the empirical support for the new keynesian phillips curve appear to be mixed this paper argues by means of monte carlo simulations with a simple new keynesian sticky price model that single equations methods e g gmm are likely to produce imprecise and biased estimates then it is argued that estimating the model with full information maximum likelihood fiml is a useful way of obtaining better estimates finally a version of the model used in the monte carlo simulations is estimated on u s data with fiml and although the pure forward looking new keynesian phillips curve is rejected a version with both forward and backward looking components provides a reasonable approximation of u s inflation dynamics

endogenous technological change and the new keynesian model this paper develops and estimates a new keynesian nk model with endogenous technology it shows that introducing endogenous technology can solve three important puzzles faced by conventional nk m

habit formation in consumption and its implications for monetary policy models this paper explores a monetary policy model with habit formation for consumers in which consumers utility depends in part on current consumption relative to past consumption the empirical tests developed in the paper show that one can reject the hypothesis of no habit formation with tremendous condence largely because the habit formation model captures the gradual hump shaped response of real spending to various shocks the paper then embeds the habit consumption specication in a monetary policy model and nds that the responses of both spending and inflation to monetary policy actions are signicantly improved by this modication jel d12 e52 e43

news shocks and the slope of the term structure of interest rates abstract we adopt a statistical approach to identify the shocks that explain most of the fluctuations of the slope of the term structure of interest rates we find that one shock can explain the majority of unpredictable movements in the slope impulse response functions lead us to interpret this shock as news about future total factor productivity tfp by showing that slope shocks are essentially tfp news shocks we provide a new explanation for the relationship between the slope and macroeconomic fundamentals our results also provide a new empirical benchmark for structural models at the intersection of macroeconomics and finance jel e23 e43 e52 g12 g14

inflation output variance trade offs and optimal monetary policy the author estimates the inflation output gap variance trade off faced by monetary policymakers in the united states for policymakers who care about deviations of inflation around target and output around potential the estimated trade off represents the optimal policy frontier given the structure of the economy policymakers can do no better than to attain weighted variances of inflation and output that lie on the frontier the author finds that the variance trade off becomes quite severe when the standard deviation of inflation or output drops much below 2 percent this suggests that approximately balanced responses to policy goals are consistent with reasonable preferences over inflation and output variability copyright 1997 by ohio state university press

international evidence on the efficacy of new keynesian models of inflation persistence in this paper we take an agnostic view of the phillips curve debate and carry out an empirical investigation of the relative and absolute efficacy of calvo sticky price sp sticky information si and sticky price with indexation models spi with emphasis on their ability to mimic inflationary dynamics in particular we look at evidence for a group of 13 oecd countries and we consider three alternative measures of inflationary pressure including the output gap labor share and unemployment we find that the calvo sp and the si models essentially perform no better than a strawman constant inflation model when used to explain inflation persistence indeed virtually all inflationary dynamics end up being captured by the residuals of the estimated versions of these models we find that spi model is preferable because it captures the type of strong inflationary persistence that has in the past characterized the economies of the countries in our sample however two caveats to this conclusion are that improvement in performance is driven mostly by the time series part of the model i e lagged inflation and that the spi model overemphasizes inflationary persistence thus there appears to be room for improvement via either modified versions of the above models or via development of new models that better track inflation persistence

the transmission mechanism in good and bad times does the transmission of economic policies and structural shocks vary with the state of the economy we answer this question using a strategy based on quantile regressions which account for endogenous regressors and state dependent parameters an application to u s real activity and interest rate reveals pervasive asymmetries in the propagation mechanism across good and bad times during periods when real activity is above its conditional average the estimates of the degree of forward lookingness and interest rate semi elasticity are significantly larger in absolute value than the estimates associated with below average periods results are robust to alternative strategies to model state dependent parameters

behavioral heterogeneity in u s inflation dynamics in this article we develop and estimate a behavioral model of inflation dynamics with heterogeneous firms in our stylized framework there are two groups of price setters fundamentalists and rando

is inflation sticky abstract new keynesian sticky price models predict that monetary policy can affect real variables however they also predict that inflation can be reduced without depressing output or employment in fact bringing down inflation is costly presenting a challenge to the new keynesian model two departures from the new keynesian model predict costly disinflation one assumes sticky inflation rather than sticky prices while the other assumes less than perfectly rational expectations taking into account information from surveys of inflation expectations i find the evidence suggests that inflation is not sticky and that inflation expectations are less than perfectly rational

the un importance of forward looking behavior in price specifications the seminal work of edmund s phelps 1978 john b taylor 1980 and guillermo a calvo 1983 developed forward looking models of price determination that imparted inertia to the price level these models incorporate expectations of future prices and excess demand by imposing constraints typically lag lead symmetry constraints that force future variables to enter the specification in this paper the author tests the empirical significance of future prices in specifications like those of taylor he finds that expectations of future prices are empirically unimportant in explaining price and inflation behavior however the dynamics of a model that includes a purely backward looking inflation specification differ substantially and not altogether pleasingly from those with a forward looking specification copyright 1997 by ohio state university press

fairness concepts and the intrahousehold allocation of resources abstract how do parents allocate scarce resources among their children while much research has focused on investment strategies parents preferences for equity may also play a role in the household allocation of resources while the studies that incorporate equity define it in limited terms in this paper several fairness concepts are applied to the problem of intrahousehold distribution comparing food allocations and health outcomes across fairness concepts indicates that each concept results in a different allocation of food and a different health outcome the implications of this result for empirical studies of intrahousehold distribution and policy interventions are discussed

how important is precommitment for monetary policy we quantify the welfare differential between precommitment and discretionary monetary policy in three estimated models of the u s economy by calculating the permanent deviation of inflation from target that in welfare terms is equivalent to moving from discretion to precommitment using a range of reasonable central bank preference parameters this inflation equivalent ranges from 0 05 to 3 6 percentage points with a mid point of either 0 15 or 1 1 5 percentage points depending on the model in addition to the degree of forward looking behavior we show that the existence of transmission lags and or information lags is crucial for determining the welfare gain from precommitment

game theoretic analysis of a bankruptcy problem from the talmud abstract for three different bankruptcy problems the 2000 year old babylonian talmud prescribes solutions that equal precisely the nucleoli of the corresponding coalitional games a rationale for these solutions that is independent of game theory is given in terms of the talmudic principle of equal division of the contested amount this rationale leads to a unique solution for all bankruptcy problems which always coincides with the nucleolus two other rationales for the same rule are suggested in terms of other talmudic principles needless to say the rule in question is not proportional division

forecasting development outcomes under alternative surplus labour assumptions abstracteconomic forecasts are useful to policymakers both as aids to planning and as baselines against which counterfactual scenarios can be compared however policy makers should be aware that assumptions relating to model structure can influence forecast results we explore the sensitivity of forecasts to one aspect of model structure important in modelling developing economies surplus agricultural labour we outline a framework for modelling surplus agricultural labour that relies on average product remuneration we embed this within a model of a developing economy the philippines characterized by surplus agricultural labour we compare the results of two forecasts that differ in their treatment of the agricultural labour market in the first the surplus labour theory is activated establishing average product remuneration in agriculture in the second the surplus labour theory is not activated creating a failure to recognize average product remuneration in agriculture by comparing the two si

testing for the lucas critique a quantitative investigation this thesis contains four essays which studies the macroeconomic effects of fiscal and monetary policy quantitatively the first essay investigates whether swedish postwar business cycles have been generated by domestic or foreign shocks and finds that they are about equally important in the second essay the effects of government budget deficits on interest rates in sweden are studied in a small open economy framework the empirical results which have high power due to very large swings in deficits and interest rates provide support that larger deficits produce higher interest rates and thus give support against the ricardian view the third essay seeks to identify optimal social insurance and redistribution levels in sweden and the u s with respect to temporary and permanent idiosyncratic productivity risks the results indicate that sweden should reduce the social security level while the u s should approximately maintain the current level in the last essay the small sample properties of a well known statistical test for the lucas critique the super exogeneity test is studied in a general equilibrium environment the results indicate that the super exogeneity test do not have sufficient power in small samples

how serious is the neglect of intrahousehold inequality in this report the authors develop a framework for assessing the consequences of ignoring intrahousehold inequality in the measurement and analysis of poverty and inequality they apply this framework to data for the philippines and conclude that 1 the result of neglecting intrahousehold inequality will probably be considerable understatement of the levels of poverty and inequality with the philippine data measured levels of inequality and poverty were off 30 percent as a result of ignoring intrahousehold variation and 2 patterns of inequality revealed by household level data are somewhat different from patterns revealed by individual level data but the differences seem not to be dramatic to confirm these results the exercise should be repeated with data from other countries

borders and nominal exchange rates in risk sharing models of risk sharing predict that relative consumption growth rates are positively related to changes in real exchange rates we investigate this hypothesis using a new multicountry and multiregional data set within countries we find evidence for risk sharing episodes of high relative regional consumption growth are associated with regional real exchange rate depreciation across countries however the association is reversed relative consumption and real exchange rates are negatively correlated we define this reversal as a border effect we find the border effect and show that it accounts for over half of the deviations from full risk sharing since cross border real exchange rates involve different currencies it is natural to ask how much of the border effect is accounted for by movements in exchange rates our measures indicate that a large part of the border effect comes from nominal exchange rate fluctuations we develop a simple open economy model that is consistent with the importance of nominal exchange rate variability in accounting for deviations from cross country risk sharing

estimating central bank preferences under commitment and discretion this paper explains u s macroeconomic outcomes with an empirical new keynesian model in which monetary policy minimizes the central bank s loss function the presence of expectations in the model forms a well known distinction between two modes of optimization termed commitment and discretion the model is estimated separately under each policy using maximum likelihood over the volcker greenspan bernanke period comparisons of fit reveal that the data favor the specification with discretionary policy estimates of the loss function weights point to an excessive concern for interest rate smoothing in the commitment model but a more balanced concern relative to inflation and output stability in the discretionary model

targeting inflation with a role for money this paper demonstrates how a target for money growth can be beneficial for an inflation targeting central bank acting under discretion because the growth rate of money is closely related to the change in the interest rate and the growth of real output delegating a money growth target to the central bank makes discretionary policy more inertial leading to better social outcomes this delegation scheme is also compared with other schemes suggested in the literature the results indicate that stabilizing money growth around a target can be a sensible strategy for monetary policy although other delegation schemes are often more efficient

new keynesian economics and the phillips curve models with sticky prices are an important part of new keynesian economics the author shows that several of the new keynesian models imply a formulation that is similar to the expectations augmented phillips curve of milton friedman and edmund phelps he then presents new estimates of the new keynesian phillips curve the author uses two proxies for price expectations survey based measures and an econometric based measure originally developed by bennett mccallum 1976 overall the results are consistent with the model but the survey based results are more precise suggesting that the surveys may be better measures of actual expectations copyright 1995 by ohio state university press

customer markets and the welfare effects of monetary policy a customer market model in which firms and customers form long term relations is developed and integrated into the canonical new keynesian framework this leads to two important differences compared to the standard model first the purely forward looking phillips curve is replaced by a hybrid variant where current inflation also depends on past inflation second the welfare cost of inflation is much lower which leads to an optimal monetary policy where relatively more weight is put on output gap stabilization than previously found in the literature

intrinsic persistence of wage inflation in new keynesian models of the business cycles we derive and estimate a new keynesian wage phillips curve that accounts for intrinsic inertia in line with microevidence on wage setting we consider a wage setting model featuring an upward sloping hazard function based on the notion that the probability of resetting a wage depends on the time elapsed since the last reset our wage phillips curve embeds also backward terms we test the hazard function slope using generalized method of moment estimation then placing our equation in a small scale new keynesian model we investigate its dynamic properties using bayesian estimation model comparison shows that our model outperforms commonly used alternative methods to introduce persistence

estimating a new keynesian phillips curve with a corrected measure of real marginal cost evidence in japan we estimate a new keynesian phillips curve nkpc in japan focusing on the measurement of real marginal cost rmc especially we correct labor share by taking account of two kinds of labor market frictions i labor adjustment costs and ii real wage rigidity our results show that the consideration of these labor market frictions greatly improves the fit of japan s nkpc furthermore if we additionally incorporate materials prices in the calculation of rmc then the fit of the nkpc is further improved our most important finding is that the conventional backward looking component is no more needed to explain japan s inflation dynamics if we use a corrected measure of rmc

nutrition health birth order and seasonality intrahousehold allocation among children in rural india abstract nutrients available to children are determined largely by intrahousehold allocations there are a number of reasons why birth order may affect these allocations a model is developed to estimate critical parameters of parental preferences regarding the allocation of nutrients among their children latent variable estimates for rural south india indicate that parental preferences have productivity equity tradeoffs and parents favor older children the productivity equity tradeoff however is much less for the lean season therefore when food is scarcest parents follow more closely a pure investment strategy exposing their more vulnerable children to greater malnutrition tisk

monetary policy trade offs and the correlation between nominal interest rates and real output the authors present a structural model of the u s economy that combines their price contracting specification with a term structure relationship an aggregate demand curve and a monetary policy reaction function the model matches important features of postwar data well and provides a structural explanation of the correlation between real output and the short term nominal rate of interest the authors perform a battery of monetary policy experiments that show that as viewed through the lens of this model monetary policy has struck a good balance recently among competing monetary policy objectives copyright 1995 by american economic association

crime versus justice is there a trade off abstract when society is divided into two groups with different actual or perceived crime rates maintaining a low crime rate minimizing the total number of innocent individuals convicted of a crime and keeping the probability of wrongly convicting an innocent individual equal across groups are incompatible social goals this paper fully develops these trade offs an empirical application of the model finds that these trade offs may be substantial specifically we estimate that innocent black americans would be roughly eight times more likely to be wrongly convicted of murder than innocent white americans if society placed no value on equality when it comes to convictions however we estimate that eliminating inequality entirely could cost up to 1 900 lives annually because of a rise in the murder rate estimates reveal similar findings for gender inequality in highlighting this serious dilemma this paper suggests a need for awareness of costs of crime reduction policies

gender property rights and natural resources abstract attention to gender differences in property rights can improve the outcomes of natural resource management policies and projects in terms of efficiency environmental sustainability equity and empowerment of resource users although it is impossible to generalize across cultures and resources it is important to identify the nature of rights to land trees and water held by women and men and how they are acquired and transmitted from one user to another the paper particularly examines how the shift from customary tenure systems to private property in land trees and water has affected women the effect of gender differences in property on collective action and the implications for project design

the role of sticky prices in an open economy dsge model a bayesian investigation in this paper we use a dynamic stochastic general equilibrium dsge model for an open economy to examine the role of sticky prices in explaining the joint behaviour of inflation and a fairly large set of macroeconomic variables we find that price stickiness is an important feature for firms active in the domestic export and import sectors even though the model embodies variable capital utilisation a working capital channel and a time varying inflation target we also document that price stickiness in all sectors is important even if the markup shocks are allowed to be autocorrelated although the implied average contract duration falls substantially under this assumption jel e40 e50 c11

the robustness and efficiency of monetary policy rules as guidelines for interest rate setting by the european central bank abstract this paper examines the implications of recent research on monetary policy rules for practical monetary policy making with special emphasis on strategies for setting interest rates by the european central bank ecb the paper draws on recent research and new simulations of a large open economy model to assess the efficiency of a simple benchmark rule in comparison with other proposed rules further it stresses new results on the robustness of monetary policy rules in which each rule that is optimal or good according to one model or researcher is tested for robustness by other researchers using different models because of the large increase in the number of economists focussing on econometric evaluation of monetary policy rules for the interest rate instrument and because of the parallel increase in the variety of models being developed for this purpose much more evidence is becoming available on the robustness of simple monetary policy rules for the interest rate than ever before

the effects of domestic rice market interventions outside business as usual conditions for imported rice prices the philippine government intervenes in the domestic rice market through the imposition of import tariffs and the provision of producer and consumer subsidies while policymakers are aware that these programmes come with allocative efficiency costs they justify the programmes on the grounds that they insulate the domestic economy from unexpected price spikes in the international rice market an interesting matter for policy evaluation is to quantify the insulation benefit that the programmes provide in circumstances of sudden severe import price spikes to examine this question we undertake a dynamic computable general equilibrium cge simulation in which the philippines is subject to an external rice price shock we find that the insulation benefit of the support programmes under a 2008 like event is worth approximately 0 10 of real consumption however the cost of insuring against these price spikes is significant we estimate the annual cost of the rice market interventions at approximately 0 40

estimating the linear quadratic inventory model maximum likelihood versus generalized method of moments abstract we compare generalized method of moments gmm and maximum likelihood ml estimators of the parameters of a linear quadratic inventory model using nondurable manufacturing data and monte carlo simulations data based gmm estimates for five normalizations vary widely generally rejecting the model the ml estimate generally supports the model monte carlo experiments reveal that the gmm estimates are often biased apparently due to poor instruments statistically insignificant economically implausible and dynamically unstable the ml estimates are generally unbiased even in misspecified models statistically significant economically plausible and dynamically stable asymptotic standard errors for ml are 3 to 15 times smaller than for gmm

european inflation dynamics abstract we provide evidence on the fit of the new phillips curve npc for the euro area over the period 1970 1998 and use it as a tool to compare the characteristics of european inflation dynamics with those observed in the u s we also analyze the factors underlying inflation inertia by examining the cyclical behavior of marginal costs as well as that of its two main components namely labor productivity and real wages some of the findings can be summarized as follows a the npc fits euro area data very well possibly better than u s data b the degree of price stickiness implied by the estimates is substantial but in line with survey evidence and u s estimates c inflation dynamics in the euro area appear to have a stronger forward looking component i e less inertia than in the u s d labor market frictions as manifested in the behavior of the wage markup appear to have played a key role in shaping the behavior of marginal costs and consequently inflation in europe

identification issues in limited information bayesian analysis of structural macroeconomic models the likelihood of the parameters in structural macroeconomic models typically has non identification regions over which it is constant when sufficiently diffuse priors are used the posterior piles up in such non identification regions use of informative priors can lead to the opposite so both can generate spurious inference we propose priors posteriors on the structural parameters that are implied by priors posteriors on the parameters of an embedding reduced form model an example of such a prior is the jeffreys prior we use it to conduct bayesian limited information inference on the new keynesian phillips curve with a var reduced form for us data

information variables for monetary policy in an estimated structural model of the euro area a small scale new keynesian model for the euro area is estimated with maximum likelihood under the assumptions of imperfect information and discretionary monetary policy the estimated parametrization of this widely used dynamic stochastic model unveils the monetary authorities objectives and the information content of two indicator variables monetary aggregates and real unit labour costs the results highlight a significant policy concern about interest rate smoothing and inflation almost no concern for output gap stabilization emerges regarding indicator variables unit labour costs provide information on potential output that is helpful for stabilization policy no useful information role emerges for monetary aggregates

a sectoral analysis of price setting behavior in us manufacturing industries abstract in this paper we estimate new keynesian phillips curves nkpc for u s manufacturing industries defined at the sic two digit level over the period 1959 to 1996 this enables us to measure the extent of nominal inertia across industrial sectors a key innovation in this research is the use of intermediate goods costs rather than labor costs as a measure of marginal costs intermediate goods costs are a more significant element of costs for the firms populating our sample and are not subject to the criticism that wage rates are nonallocative we find that there is statistically significant variability in estimates of price stickiness ranging from eight months to two years we also find that estimates of backward looking price setting behavior vary with some industries characterized by 81 of pricing decisions made in a purely forward looking manner while in others only 52 of pricing decisions are made that way market concentration as captured by the herfindahl hirschman index appears to be

is there a fiscal free lunch in a liquidity trap this paper uses a dsge model to examine the eects of an expansion in government spending in a liquidity trap the spending multiplier can be much larger than in the normal situation if the liquidity trap is very persistent and scal stimulus can be rapidly implemented moreover the budgetary costs may be minimal as the large response of output boosts tax revenues allowing for something close to a scal free lunch however we caution that the multiplier may be much smaller under plausible implementation lags for many types of public spending and or if the liquidity trap lasts less than two years in addition because the marginal impact of scal expansion decreases in the scale of the outlay it is crucial to distinguish between average and marginal multipliers

monetary policy under financial uncertainty abstract monetary policy may play a substantial role in mitigating the effects of financial crises in this paper i suppose that the economy occasionally but infrequently experiences crises where financial variables affect the broader economy i analyze optimal monetary policy under such financial uncertainty where policymakers recognize the possibility of crises optimal monetary policy is affected during the crisis and in normal times as policymakers guard against the possibility of crises in the estimated model this effect is quite small optimal policy does change substantially during a crisis but uncertainty about crises has relatively little effect

market opportunities genetic endowments and intrafamily resource distribution child survival in rural india the authors examine how intrafamily resource allocations respond to changes in economic conditions and to genetic differences in children by estimating the determinants of variations in the sex specific survival differentials of rural indian children based on standard census and household survey data they explore in particular the hypothesis that such differences are related to the relative returns to survival with households selectively allocating resources to children in response to variation in sex differences in their expected earnings opportunities as adults data are from the 1961 census and a 1971 household survey excerpt

gender differences in land inheritance schooling and lifetime income evidence from the rural philippines this article examines the difference in lifetime incomes arising from parental preferences in the allocation of land inheritance and investments in schooling between sons and daughters in the rural philippines sons are preferred with respect to land inheritance receiving 0 15 additional hectares of land while daughters are treated more favourably in schooling investments receiving 1 5 more years of schooling however differences in both current and life cycle incomes between sons and daughters are insignificant this suggests that filipino parents allocate intergenerational transfers to equalise incomes among their children without sacrificing efficiency

women s income and boy girl anthropometric status in the cote d ivoire abstract this paper examines the effects of the intrahousehold distribution of income on children s anthropometric status in the c te d ivoire we find that increases in the proportion of cash income accruing to women increases boys height for age relative to girls and that this effect is statistically significant we suggest that this result may reflect efficiency and equity concerns which in this case reinforce each other

robustness of the estimates of the hybrid new keynesian phillips curve abstract gali and gertler 1999 inflation dynamics a structural econometric approach journal of monetary eonomics 44 2 195 222 developed a hybrid variant of the new keynesian phillips curve that relates inflation to real marginal cost expected future inflation and lagged inflation gmm estimates of the model suggest that forward looking behavior is dominant the coefficient on expected future inflation substantially exceeds the coefficient on lagged inflation while the latter differs significantly from zero it is quantitatively modest several authors have suggested that our results are the product of specification bias or suspect estimation methods here we show that these claims are incorrect and that our results are robust to a variety of estimation procedures including gmm estimation of the closed form and nonlinear instrumental variables also as we discuss many others have obtained very similar results to ours using a systems approach including fiml techniques hence the conclusions of gg and others regarding the importance of forward looking behavior remain robust

identifying the influences of nominal and real rigidities in aggregate price setting behavior we formulate a generalized price setting framework that incorporates staggered contracts of multiple durations and that enables us to directly identify the influences of nominal vs real rigidities we estimate this framework using macroeconomic data for germany 1975 1998 and for the u s 1983 2003 in each case we find that the data are well characterized by nominal contracts with an average duration of about two to three quarters we also find that new contracts exhibit very low sensitivity to marginal cost corresponding to a relatively high degree of real rigidity finally our results indicate that backward looking price setting behavior such as indexation to lagged inflation is not needed in explaining the aggregate data at least in an environment with a stable monetary policy regime and a transparent and credible inflation objective

do parents favor boys in an optimizing model of parental allocation systematic differences in human capital investments betwen the sexes may originate in at least 3 ways 1 parents may respond to expected gender wage differentials 2 parents may respond to systematic differences by gender in the price of human capital investments 3 parental preferences may favor girls or boys in the sense that they value identical outcomes at the same cost more highly for one sex than for the other this paper analyzes the role of parental preferences in general and unequal concern in particular in the allocation of human capital investments among children the authors generalize their earlier model of the human capital investments among children to incorporate the possibility that the returns to such investments may include not only the childs own ecpected earnings but also the expected earnings of his or her spouse thus the model assumes that parents may value returns that accrue trough the marriage market as well as through education the relevant returns to education may include marrying a spouse with higher expected earnings the empirical analysis indicates that gender wage differentials like endowment differentials are mildly reinforced by the parental allocation of human capital investments marriage market outcomes are significant determinants of the allocation of human capital investments among children there is no evidence that parental preferences favor boys this study shows that parental preferences either exhibit equal concern or slightly favor gils