analyzing nutritional impacts of policies an empirical study for malawi summary widespread malnutrition in developing countries calls for appropriate strategies presupposing good knowledge about nutritional impacts of policies little previous work has been carried out in this direction especially with respect to micronutrients we use representative household data from malawi and develop a demand systems approach to estimate income and price elasticities of food demand and nutrient consumption these estimates are applied for policy simulations given multiple nutritional deficiencies income related policies are better suited than price policies to improve nutrition while consumer price subsidies for maize improve calorie and mineral consumption they can worsen vitamin consumption in urban areas

the dynamics of individuals fat consumption consumers are increasingly aware of the link between their lifestyle choices and the risk of noncommunicable diseases a dynamic approach incorporating this linkage in food demand is developed where consumers maximize utility over time by choosing fat intake to control their cumulative fat level the resulting dynamic indirect utility function and household data on meat fish and dairy consumption are used to estimate a censored demand system results show that consumers consciously adjust but not instantaneously their cumulative fat level highly educated households have a faster rate of adjustment of cumulative fat when cumulative fat level increases consumers shift to dairy or white meat from red meat products

velocity and the variability of money growth some international evidence abstract using data from four countries the paper tests friedman s hypothesis that the volatility of money growth causes velocity to change despite a wide variety of patterns in the movements of velocity in these countries support is evident for the hypothesis

is the price level tied to the m2 monetary aggregate in the long run a long run link between money and prices is evident for the united states since the korean war if the m2 measure of money is used and the velocity of m2 v2 is modeled as a mean reverting series this link between m2 and prices is the basis for a dynamic model of inflation that compares favorably in forecasting exercises with phillips curve and more typical monetarist approaches the behavior of v2 is examined from 1870 to the present providing a basis for reconsidering previous findings that v2 follows a random walk copyright 1991 by american economic association

rationing by waiting and the value of time results from a natural experiment the authors analyze data from a natural experiment with rationing by waiting in the situation motorists were confronted with a choice between waiting in line for low priced gasoline or purchasing at a higher price without waiting they view this as a revealed preference experiment and use their choices to estimate the value of time spent waiting as a function of individual characteristics in most cases the estimates of the value of time are quite similar to individuals after tax wages 13 references 7 tables

agricultural performance and development strategy retrospect and prospect abstract the slow pace and inequitable pattern of past agricultural growth have been major factors in the continuing problems of poverty hunger and unemployment especially in the poorer regions of the third world past experience shows that agriculture has an important potential in economic development given appropriate structures and policies these historical lessons are of strategic significance for poor countries as they confront severe problems of adjustment this paper examines the main payoffs and obstacles to the pursuit of an agriculture led industrialization strategy together with proposals for appropriate policies that can support such a strategy

flexible demand systems with serially correlated errors fat and oil consumption in the united states a flexible demand system proposed by lewbel is used to estimate u s fat and oil demand from 1950 to 1986 results suggest that the lewbel model outperforms the translog and aids and that correction for serial correlation is important findings also suggest that price and income effects together with increasing public health concerns primarily determine u s fat and oil demand

conditional exchange rate volatility and the volume of foreign trade evidence from seven industrialized countries there has long been a concern over the volatility of exchange rates and their impact on the volume of foreign trade however very little attention has been paid to the choice of an appropriate volatility variable as well as the proper specification of the trade equation the sample standard deviation of the exchange rate has been used as a proxy for exchangerate uncertainty in empirical studies that examine the effects of exchange rate uncertainty on the volume of foreign trade see for example akhtar and hilton 1 and gotur 27 these studies have provided conflicting evidence on this issue it has been argued that use of the sample standard deviation is inappropriate because the empirical distribution of exchange rates is not normal 22 10 in this regard subsequent empirical research 12 36 40 41 11 has employed a moving standard deviation of the rate of change of the exchange rate as a proxy for exchange rate uncertainty chowdhury 11 obtained a clear pattern of results that support the hypothesis that the higher volatility of exchange rates led to a reduction in international trade transactions after the breakdown of the bretton woods system in march 1973 other studies have reported ambiguous results 2 the moving standard deviation used in these studies has been criticized in the literature for a ignoring relevant information on the random process generating exchange rates 18 b underestimating the effect of volatility on decisions 52 c distorting the measurement of the volatility variable by smoothing the series 9 and d injecting an element of arbitrariness into the calculation through decisions about the order m of the moving average 43 3

estimating dynamic demand for cigarettes using panel data the effects of bootlegging taxation and advertising reconsidered abstracct a dynamic demand for cigarette consumption is estimated using pooled data of 46 states over the period 1963 to 1980 a price elasticity of 0 2 and an insignificant income elasticity is found using pooled estimation techniques the bootlegging effect is modeled explicitly using neighboring price the effect is found to be significant two major policy issues are analyzed in light of these new estimates 1 cigarette taxation is found to be an effective tool for generating revenues even though there may be spillover effects to neighboring states where bootlegging is significant 2 the effects of the fairness doctrine act and the advertising ban on cigarette consumption are re examined we find mild support for the effectiveness of subsidized anti smoking messages in reducing cigarette consumption and no support for the thesis that the ban on advertising helps to increase per capita consumption

estimating fishing and hunting leisure spending shares in the united states abstract we apply a bivariate censored demand system to estimate hunting and fishing trip related spending shares in the united states using data from off site surveys the approach considers fishing and hunting destination decisions and includes respondents who were inactive i e did not hunt or fished in a particular season the statistical significance of correlation coefficient parameter supports the use of a joint e g bivariate rather than separate e g univariate decision modeling process for fishing or hunting share equations most individual characteristics are statistically significant as explanatory variables respondents holding recreation licenses tended to spend significantly more on recreation than those without licenses all own price and cross price elasticities are statistically significant and suggest that hunting and fishing are complements the results also suggest that the popularity of hunting may decline as the population ages

demand for food fats and oils the role of demographic variables and government donations a systems model of u s food fats and oils demand is estimated using quarterly time series data for the period 1962 87 demographic scaling is used to incorporate demographic variables and per capita government butter donations in addition to price income and demographic demand elasticities dietary fat intake elasticities are calculated for each of the demographic characteristics included in the study all of the five own price elasticities are statistically significant as are fifteen of the twenty cross price elasticities fourteen of the fifteen demographic elasticities are statistically significant

policies to move from stabilization to growth although some discussions of stabilization see growth as more or less an assured product of appropriate stabilization this paper argues that there is no guarantee that stabilization will lead to growth it may result in stagnation the paper discusses the essentials of stabilization including inflation targets fiscal policy monetary policy exchange rates and incomes policy and suggests that two areas of structural reform deregulation including trade reform and reform of the financial sector can play a central role in the long run success of a stabilization effort the paper concludes that countries that have experienced protracted high inflation financial instability and payments crises probably will have a difficult and protracted transition to growth and that external resources will be necessary as a continuing feature of the transition sustained external support in the form of long term loans heavily conditioned on the tangibility and credibility of domestic progress in adjustment will help provide a bridge by which flight capital may return and foreign direct investment may be encouraged to take advantage of fresh opportunities

information health risk beliefs and the demand for fats and oils mean and variance measures of health information about cholesterol and saturated fat are included in a demand system for fats and oils a bayesian model of health risk belief and consumer awareness surveys are the basis for computing these measures the empirical demand model shows that health information has resulted in significant increases in consumption for corn cottonseed and soybean oils and decreased consumption for butter and lard the predicted demand effects based on the bayesian information model are more reasonable than predictions from using either a time trend or a simple cumulative cholesterol information index copyright 1995 by mit press

a microeconometric model analysis of us consumer demand for alcoholic beverages this paper discusses the specification and estimation of a two stage budgeting consumer demand for alcoholic beverages using 1987 88 usda individual and household food consumption survey data the upper level first stage budgeting decision is modelled via a gamma tobit model the lower level second stage budgeting allocates alcohol expenditure via a synthetic demand system for beer spirits and wine the synthetic system is constructed via a normalized linear combination of the level rotterdam cbs and an aids equivalent model data on individual three day alcohol consumption from the individual food intake survey are used for analysis while price and household characteristics information are obtained from the house hold food intake survey the results show that some individual and household characteristic variables as well as economic variables have significant impacts on consumer demand for alcoholic beverages

demand systems estimation with microdata a censored regression approach demand systems estimation increasingly makes use of household level microdata mainly to measure the effects of demographic variables data based on these household expenditure surveys present a major estimation problem for any given household many of the goods have zero consumption implying a censored dependent variable techniques which do not take this censored dependent variable into account will yield biased results we utilize a censored regression approach that is computationally simple consistent and asymptotically efficient the results are then presented and compared with those obtained using an uncensored technique

implications of consumer heterogeneity in time series estimates of us money demand the money demand function has traditionally been estimated with income and interest rates typically employing quite lengthy time series controversy however surrounds the importance of heterogeneous agents in monetary economics and throughout macroeconomics more generally in particular if proportions of agents with different traits and hence different money demands are changing over time ignoring those changes may bias estimated income and interest elasticities this concern as well as that of appropriate functional form is explored here controlling for consumer heterogeneity has surprising effects on the estimated elasticities of traditional variables

household welfare and co2 emission impacts of energy and carbon taxes in mexico abstract we analyse the effects of environmental taxes on welfare and carbon emissions at the household level for the case of mexico the integrated welfare environmental analysis which is based on a censored energy consumer demand system extends previous work in two ways first the estimation of a full matrix of substitution elasticities allows us to test the necessity of incorporating second order effects into the welfare analysis second the substitution elasticities derived from the demand system are used to estimate the shortrun co2 emission reduction potential we find that first order approximations of welfare effects provide reasonable estimates particularly for carbon taxes analog to evidence in other low and middle income countries the taxation of all energy items is found to be regressive with the exception of motor fuels the analysis of the emission implications of different tax scenarios indicates that short run emission reductions at the household level can be substantial though the effects depend on how revenue is recycled this effectiveness combined with moderate and manageable adverse distributional impacts renders the carbon tax a preferred mitigation instrument considering the large effect of food price increases on poverty and the limited additional emission saving potential the inclusion of ch4 and n2o in a carbon tax regime is not advisable

understanding the impact of high food prices in latin america since the late 1980s almost all latin american countries have adopted a series of far reaching economic reforms especially trade financial and capital account liberalization increased economic openness has gone hand in hand with large financial inflows particularly in the first half of the 1990s and has brought new sources of economic growth as a result economies grew inflation declined and there was a big surge in foreign cap ital inflows although overall growth slowed after 1995 the region has expe rienced strong growth in the past five years the best sustained performance since the 1970s with the exception of a handful of countries this economic growth has been accompanied by relatively modest inflation despite these positive results virtually all latin american countries share similar problems uneven economic growth unacceptably high poverty and malnutrition rates and lagging agricultural growth more than 60 percent of the region s poor live in rural areas where slow economic growth unequal distribution of assets inadequate public investment and public services and vulnerability to natural and economic shocks are major policy issues the 2007 08 food price crisis exacerbated these problems prior to the cri sis the region was considered relatively stable and capable of absorbing exter nal shocks thanks to its higher foreign exchange liquidity decreased public sector and external borrowing needs exchange rate flexibility lower exposure to currency interest rate and rollover risks in public sector debt portfolios and improved access to local currency loans nevertheless the food price cri sis severely affected most of the latin american countries in terms of inflation especially food inflation

distributional effects of maize price increases in malawi abstractin the wake of highly volatile world prices of staple commodities we examine the impacts of increases in maize prices on various categories of households in malawi using household level data changes in household income are calculated taking into account the net maize production status of the household and food price elasticities estimated from a censored demand system while maize price increases have unequivocal deleterious effects on the incomes of urban households rural households experience differential impacts net producing households in rural areas benefit from price increases with households above the poverty line obtaining proportionally higher incomes

on bias correction in the multivariate sample selection model heien and wessells two step estimator for the multivariate sample selection model has been used extensively during the past 15 years a modified version of it with slightly different selectivity regressors has also appeared in the empirical literature both estimators are unfounded and generally do not correct for the sample selectivity bias as intended but have continued to gain popularity in empirical applications the properties of the modified heien wessells procedure are investigated in both the bivariate and multivariate contexts and the conditions under which this estimator fails to correct for sample selectivity are examined the theoretical properties are demonstrated with a simulated random sample

food demand in mexico an application of the amemiya tobin approach to the estimation of a censored food system the modeling of micro level food demand patterns requires not only allowing for household heterogeneity but also addressing the problem of censoring in this article we present a variation of the amemiya tobin framework for estimating a censored demand system that allows for household heterogeneity the unique aspect of our approach is the use of a procedure that ensures the adding up of both latent and observed expenditure shares and also imposes expenditure share nonnegativity this system is applied to an analysis of food demand based on a random sample of urban mexican households

disaggregated household meat demand with censored data previous research on meat demand has generally used highly aggregated data across time products and consumers however meat products across species are likely stronger substitutes than some products from the same species further demand for specific meat products would be expected to respond differently to market information about food safety or other events this study uses monthly consumer panel data collected between 1992 and 2000 to estimate a disaggregated meat product demand system the use of the expectations maximization algorithm is introduced to estimate a demand system that adjusts for the econometric problem of censored data resulting from purchased shares of some products by individuals often being equal to zero results indicate that certain individual meat products have noticeably different own price elasticities than existing aggregate meat product estimates of their respective species some individual meat products have stronger substitutes across species than within species e g be

urban household demand for fresh fruits and vegetables in thailand 300 200 2550 abstract food systems are undergoing profound changes in developing countries particularly on fresh produce with specific quality and safety attributes an understanding of the demandpatterns and their underlying determinants are important in designing food policies and generating information for local supply actors the disaggregate demand parameters for fresh fruits vegetables that have different product and process attributes were estimated by using the two stage budgeting framework the methodology accounted for censored data the analysis is based on crosssectional data of 300 households in bangkok and 200 households in urban areas of chiang mai in 2007 the trend in domestic demand for fresh fruits vegetables is towards an emphasis on safety quality and convenience economic development along with higher household incomes and educational levels of consumers contribute to this tendency households are becoming more price responsive to fresh produce from modern supply chain sectors the entire food sector should adapt to changes in consumers preferences traditional retailers should create customer trust by adopting safety and quality standards and upgrading the quality attributes of fresh produce modern retailers should sustain own reputation and improve product lines by adopting premium standards policies and programs that foster income growth along with better education will spur demand for better quality products and lead to diversification in diets the government should encourage the development and adoption of credible standards and product and process certification schemes an information campaign to educate consumers on food safety and quality would expand the market for fresh produce and benefit farmers keywords fruit vegetable demand elasticity food safety almost ideal demand system

wine consumption by us men wine consumption is modelled by focusing on three decisions the first is whether to consume any alcoholic beverages setting aside the teetotalers the second decision is whether to consume wine and the third choice is how much to consume we model these decisions using a double hurdle approach our econometric results indicate that the probability a man drinks wine increases if he is under age 65 has a high income and is a high school graduate heavy wine consumers are over age 65 are well educated physically active and have high incomes

sample selectivity models for away from home expenditures on wine and beer the impact of household characteristics on away from home wine and beer weekly expenditures in the usa is examined results imply that higher income households without children and headed by an older white and higher educated individual spend more on wine away from home than do others on the other hand smaller midwestern and western households without children and headed by a younger and white individual spend more on beer away from home than do others

the effects on output of money growth and interest rate volatility in the united states in october 1979 the federal reserve began a policy of disinflation and also stopped stabilizing interest rates subsequently interest rates became much more volatile using a methodology advanced by barro this paper estimates what this change in policy did to output in the united states the paper finds that the stagnation of the u s economy since 1979 stemmed almost as much from increased interest rate volatility as from reduced money growth the paper also assesses the extent to which increased volatility of money growth has contributed to stagnation it finds no evidence of any appreciable contribution the paper concludes that stabilizing interest rates is probably sensible monetary policy

household demand for fats and oils two step estimation of a censored demand system a censored system of household fat and oil demand equations is estimated with a two step procedure using cross sectional data from the 1987 1988 us nationwide food consumption survey own price and total expenditure elasticities are close to unity and there is no evidence of gross substitutability compensated elasticities suggest net substitution among the products considered

demand system estimation in the absence of price data an application of stone lewbel price indices this article evaluates the feasibility of estimating a system of demand equations in the absence of price information using the approach developed by lewbel 1989 stone lewbel sl price indices for commodity groups are constructed using information on the budget shares and the consumer price indices cpis of the goods comprising the commodity groups which allows for household level prices to be recovered this study evaluates how susceptible are elasticities and marginal effects estimates from traditional parametric demand systems to the cpi used in the construction of the sl prices to do this three alternative regional cpis are considered for the construction of the sl prices monthly quarterly and a constant unity price index elasticities and marginal effect estimates are computed for eight food commodity groups using the exact affine stone index easi model as the parametric demand system and data from the united states consumer expenditure survey the estimates proved to be robust to the a

the implications of increasing economic openness for real wages in developing countries 1973 1990 abstract our study shows that increasing economic openness is neither necessarily good nor necessarily bad for real wage growth in developing countries economic growth investment share growth and productivity growth not export share growth are the determinants of real wage growth we also find that the story of wage determination changed in the 1980s compared to the 1970s this change may be due to the implications of heightened competitive pressures in the world market or it may be the result of the debt crisis the main policy implication of our findings is that governments who want to promote growth and the living standards of their workers have to focus explicitly and primarily on increasing investment and productivity growth

money interest rates and risk abstract this paper analyzes the role of the risk in the form of the volatility of open market interest rates as a factor in the demand for money we demonstrate using an inventory theoretic model of money demand that increases in interest rate volatility will increase the demand for money we then present empirical evidence that the demand for money has been influenced by alterations in the volatility of open market rates using standard specifications of the demand for money

native american obesity an economic model of the thrifty gene theory native american obesity is hypothesized to result from three potential causes 1 a genetic predisposition or the thrifty gene 2 a rational addiction to nutrients and 3 dietary adjustment costs these hypotheses are tested using a two stage household production approach and scanner data from a panel of native and non native supermarkets nutrient intake for both groups is strongly influenced by adjustment costs native americans tend to place higher implicit valuations on protein relative to fats and carbohydrates compared to non natives consequently reductions in real carbohydrate prices over time may be a cause of high incidence of native american obesity

analyzing the stability of demand for money equations via bounded influence estimation techniques a robust estimation technique bounded influence instrumental variables is applied to an error correction model formulation of a u s money demand equation the weights generated by bounded influence instrumental variables are used to diagnose structural instability in the specification of the equations and their error processes these techniques are shown to be valuable additions to the empirical researchers toolkit and have been implemented in commonly used econometric software copyright 1990 by ohio state university press

the relationship between budget deficits and money demand evidence from a small economy a considerable number of empirical studies exploring the links between budget deficits and the demand for money have led to mixed results by using annual data of the greek economy and previous empirical studies this paper empirically evaluates the sensitivity and validity of the keynesian proposition and the ricardian equivalence hypothesis the paper employs cointegration ecm methodology and several diagnostic and specification tests the empirical findings show a significant and positive relationship between budget deficits and the demand for money supporting the keynesian model

causality in demand a co integrated demand system for trout in germany this article focuses on causality in demand a methodology where causality is imposed and tested within an empirical co integrated demand model not prespecified is suggested the methodology allows different causality of different products within the same demand system the methodology is applied to fish demand on the german market for farmed trout and substitutes it is found that supply sources i e aquaculture and fishery are not the only determinant of causality storing tightness of management and aggregation level of integrated markets might also be important the methodological implication is that more explicit focus on causality in demand analyses provides improved information the results suggest that frozen trout forms part of a large european whitefish market where prices of fresh trout are formed on a relatively separate market redfish is a substitute on both markets the policy implication is that increased production of trout causes a downward pressure on fresh trout prices but froz

recent instability of the demand for money an international perspective aggregate money demand functions once an apparent bulwark for macroeconomic research have had to be re examined in the light of the events and discoveries of the 1970s following goldfeld s extensive analysis it now is widely recognized that the demand for mi balances in the united states cannot be explained satisfactorily by standard functions apparently because of shifts occurring in the early 1970s similar reservations see below have been expressed with respect to m3 balances in the united kingdom where the demand relationships appear to have been upset by the introduction of regulatory reforms in 1971 in both cases part of the problem can be traced to specific events but the possibility remains that a more general instability may be present the rapid inflation experienced by all major industrial countries after 1973 the concurrent collapse of the bretton woods system of fixed exchange rates and the attempts by most major central banks to control growth in domestic money stocks may all have altered the responses of the demand for money to the standard functional arguments this paper presents a range of stability tests for a set of demand functions estimated for two monetary aggregates in each of six countries in order to determine whether money demand functions more generally have been stable over the recent period and to attempt to identify the nature and causes of any observed instabilities the major conclusions are that none of the other functions examined displays instabilities as severe as those of the mi function for the united states and that the latter may be unstable in a more persistent and fundamental way than has heretofore been recognized the equations estimated for this study are based on a variant of goldfeld s log linear real balances function the deflated value of money balances is related to real income interest rates and inflation with lagged adjustments introduced via a simple koyck transformation this function obviously is in a simplified form especially with respect to the lag struc

the value of time and the transactions demand for money this paper reexamines the hypothesis of dean s dutton and william p gramm and edi karni that the wage rate influences the demand for money as a proxy for the value of transactions time it develops value of time transactions models which yield demand for money equations that have a real wage rate argument and compares it to a non value of time alternative that does not the author finds that the value of time models perform well and that the value of time effect is empirically significant copyright 1990 by ohio state university press

velocity and the variability of money growth evidence from granger causality tests comment in a recent issue of this journal hall and noble 1987 employ the grangercausality method to test milton friedman s 1970 hypothesis that money growth volatility is a causal factor in changes in velocity the background of hall and noble s investigation is based on 1 the controversial marked decline in m 1 velocity in 1982 and 2 the apparent weakening of the money nominal gnp linkage implicit in the velocity decline this latter aspect of the drop in velocity would appear to undermine a basic plank of monetarism and has been described by robert gordon 1983 as the demise of monetarism friedman 1984 has countered this argument by relating the velocity decline in part to the unprecedented volatility of money growth following the federal reserve s 1979 shift to nonborrowed reserves targeting implicit in friedman s reasoning is that general uncertainty regarding money growth enters as an important argument in the public s money demand function thus friedman explains the 1982 velocity decline does not undermine monetarism rather it reflects one aspect of general portfolio readjustment under conditions of extreme perceived monetary uncertainty and the elnancial instability that characterized the period using quarterly data from 1963 i through 1984 ii hall and noble granger test the friedman hypothesis by estimating the following regression

the state and industrial strategy abstract the debate about the role of the state in promoting industrial growth in developing economies is reviewed we begin with the ideas of the early development economists of the 1950s and 1960s then take up two waves of neoclassical criticism respectively emphasizing the primacy of the market and the lack of autonomy and competence of the developmentalist state and sketch the elements of a countercritique the fact that all successfully developing economies apply industrial strategies incorporating institutional change is emphasized and boundary conditions and lessons from experience which delimit sensible strategic choices are pointed out

changing household characteristics and the away from home food market a censored equation system approach abstract the american consumer is obtaining more and more of his or her food at a restaurant and that worries some people concerned with the nation s dietary health to date much of this concern seems to be directed at the fast food segment of the restaurant industry this paper asks whether targeting one segment of the industry such as fast food restaurants is justified or whether a more balanced view of eating away from home is required to answer this question we look to the future and ask whether americans can be expected to purchase increasingly more fast food or more and more of the foods typically associated with full service dining one view is that sales at full service restaurants will now grow relatively faster than sales of fast food the argument supporting this position rests on rising incomes the aging of the population smaller household sizes and other changes taking place in the population using a new full information maximum likelihood procedure for estimating a system of censored expenditure equations we find evidence to support this argument

the rocky road to reform trade industrial financial and agricultural strategies abstract this paper reviews recent issues of economic reform in developing countries based on studies undertaken for the world institute for development economics research wider emphasis is placed on a novel 3 gap adjustment model for savings investment trade and fiscal limitations at the macro level and a distinction between allocative and productive efficiency microeconomically issues of stabilization and adjustment and trade industrial policy financial reform privatization market deregulation and the agrarian question are discussed

commercial policy growth and the distribution of income in a dynamic trade model abstract this paper analyzes the effects of commercial policy in a dynamic three factor three sector model that allows for endogenous capital accumulation nontraded goods and both consumption and capital good imports simple well defined conditions are derived under which different trade strategies raise or lower the real wage and are effective in promoting capital accumulation

a re examination of the demand for money in small developing economies this paper re examines the money demand function in three small open economies of asia korea pakistan and singapore in addition to using the relatively new procedure of error correction modelling the roles of variables such as a the expected change in the exchange rate b foregin interest rates and c foreign exchange risks on money demand are examined in testing the importance of these variables in the money demand function special attention is paid to testing the assumptions of the classical linear regression model the sample period for each country spans from 1973 1 through 1990 1 the empirical results suggest that the error correction specification performs very well in addition to the traditional variables the results suggest that at least some measure of foreign monetary developments appear to have some significant effect on money demand behaviour in these small developing economies

the demand for currency in the united states the idea of totally deregulating the financial system and implementing monetary policy through currency control has received renewed attention an important aspect concernin g the desirability of using currency as the instrument of policy is t he behavior of the demand for currency this paper investigates the d emand for currency over the period 1921 80 and finds that currency be haves in a systematic and explainable manner over this period copyright 1988 by ohio state university press

the value of time and recent u s money demand instability much controversy has surrounded the u s money demand relationship or more precisely its stability this is rather disappointing in light of the central importance of money demand estimates for the formulation and implementation of effective monetary policy and for almost all theories of aggregate economic activity to date the vast majority of alternative money demand specifications have generally failed to produce a stable money demand function throughout the 1970s and 1980s

additive general error models for production cost and derived demand or share systems many empirical studies of production specify a deterministic model of the firm derive the implied behavioral equations input demand or share system and then embed this system in a stochastic framework by tacking on linear error terms in contrast this paper proposes general error models gems in which the error specification is an integral part of the optimization model these models are the statistical embodiment of stigler s view that apparent observed inefficiencies reflect the investigator s ignorance of the true optimization problem additive gems are proposed and interpreted specification tests indicate that a translog additive gem is superior to the standard translog specification

a new market for an old food the u s demand for olive oil while u s consumption of olive oil has tripled over the past two decades nearly all olive oil continues to be imported estimation of a demand system using monthly import data reveals that the income elasticity for virgin oils sourced from eu is above one but demand for nonvirgin oils is income inelastic the demand for olive oil as a single product is price inelastic differentiated by product characteristic and origin olive oils are highly substitutable with each other but not with other vegetable oils news about the health and culinary benefits of olive oil and the spread of mediterranean diet contribute significantly to the rising demand

a double hurdle model of cigarette consumption this paper shows the importance of the double hurdle approach for modelling individuals cigarette consumption using data from the uk general household survey and argues that participation and consumption should be treated as separate individual choices the likelihood function for the full double hurdle is derived and it is shown how restrictions on the stochastic specification of the model and auxillary information which identifies ex smokers allow it to be decomposed the empirical results highlight the value of the sample separation information and the need to model starting and quitting as separate decisions

velocity and the variability of money growth evidence from granger causality tests note economists and policy makers were caught off guard by the behavior of the income velocity of money in 1982 the velocity of m1 which had grown at a 3 3 percent average annual rate from 1970 1981 fezl by 4 4 percent in 1982 in the fourth quarter of 1982 the decline was 12 6 percent at an annual rate the 1982 decline in velocity significantly reduced nominal gnp growth and may have helped cause the fall in real gnp the 1982 episode has generated quite a bit of controversy the decline in velocity is important not only for its possible relation to real gnp but also because it has led some economists to seriously question monetarism monetarists believe that there is a predictable link between money growth and nominal gnp growth when velocity declined in 1982 that link appeared to have weakened seemingly undermining the monetarist beliefs in fact robert gordon 1983 has called the 1982 episode the velocity recession and the demise of monetarism milton friedman 1984 has stated that the decline in velocity does not undermine monetarism at all he believes that velocity fell because of the extreme volatility of money growth following the announced change in federal reserve operating procedures in october 1979 figure 1 shows the income velocity of m1 v and the standard deviation of current and seven lags of m1 growth s a large increase in the volatility of money growth in 1980 precedes the decline in velocity in 1982 based on this friedman states that the 1982 episode strengthens not weakens the case for the monetarist proposition of a constant growth rule of the money supply this paper uses the granger causality method to test friedman s hypothesis that the volatility of money growth causes velocity to change we conclude that friedman is correct i e the volatility of money measured by the standard deviation of money growth causes velocity in the granger sense in the next section we review some of the recent explanations offered by economists for the 1982 decline in velocity the concluding section presents our results of the granger tests of friedman s hypothesis

a sample selection approach to censored demand systems the multivariate sample selection model is extended to a nonlinear equation system with partial selection and applied to household meat consumption in china elasticity estimates differ from those obtained from conventional maximum likelihood and tobit estimates chinese meat products are gross complements while net substitution also exists in some cases the use of micro survey data has been popular in estimating consumer demand equations important features of microdata include censored dependent variables estimation procedures for censored consumer demand systems include the primal kuhn tucker approach of wales and woodland 1983 dual virtualprice approach of lee and pitt 1986 and the tobit system amemiya 1974 estimated by generalized maximum entropy golan perloff and shen 2001 and maximum simulated likelihood dong gould and kaiser 2004 yen lin and smallwood 2003 procedures less efficient alternatives include the quasi maximum likelihood estimator yen lin and smallwood 2003 the generalized method of moments estimator meyerhoefer ranney and sahn 2005 and a number of two step estimators heien and wessells 1990 perali and chavas 2000 shonkwiler and yen 1999 yen 2005 recently proposed a maximum likelihood ml procedure for the multivariate sample selection model mssm an extension of the bivariate sample selection model heckman 1979 which had motivated the procedures of heien and wessells 1990 and shonkwiler and yen 1999 the mssm was developed in the context of linear equations and in addition is not strictly applicable for a partially selective equation system viz

investment choice and asset allocation of italian households the discrete continuous approach financial and monetary policies are considered to be effective depending on the reaction of financial markets which are increasingly populated by households in this article from intertemporal settings i derive a financial almost ideal fai demand system and i estimate it by highlighting the determinants of both limited participation to financial markets and asset substitutability complementarity in the allocating stage finally the wealth elasticities provide some further insights on the low diffusion of the newer and more complex financial instruments across italian households

a comparative study of national price levels agricultural prices and exchange rates abstract this paper attempts a comparison of national price levels agricultural prices and exchange rates across countries and over the years 1975 and 1980 using recently produced results from the united nations statistical office and the food and agriculture organization this paper suggests that in most developing countries official exchange rates are more overvalued relative to gdp based purchasing power parities ppps but less overvalued relative to agricultural output based ppps gdp based ppps in most developed countries are however closer to official exchange rates hence conventional opinion as to the existence of significantly lower agricultural output prices in most developing countries is not supported by this study at the same time protection afforded farmers in terms of higher agricultural output prices is indicated in many developed countries it is also observed that in asia agricultural output prices relative to nonagricultural prices have declined over the period 1975 1980 whereas the opposite trend seems to be the case in africa no distinct trend differences over the period are evident for the european experience however agricultural output prices in asia in 1980 were still higher than in africa a few policy implications of these observations are discussed briefly at the conclusion of the paper

semiparametric estimation of consumer demand systems with micro data maximum likelihood and two step estimators of censored demand systems yield biased and inconsistent parameter estimates when the assumed joint distribution of disturbances is incorrect this paper proposes a semiparametric estimator that retains the computational advantage of the two step approach but is immune to distributional misspecification the key difference between the proposed estimator and the two step estimator is that the parameters of the binary censoring equations are estimated using a distribution free single index model we implement the proposed estimator using household level data obtained from the hainan province in china specification test lends support to our approach

impacts of world prices transmission to domestic rice markets in rural iran abstract this paper attempts to assess the degree to which iranian rural households have responded to the change in price of imported rice due to exchange rate unification and to examine the extent to which the policy has affected the economic welfare of various household income groups particularly the poor utilizing samples of 2472 households selected from national expenditure survey data of 2002 and 2003 armington and pass through elasticities were calculated as two measures of substitutability and are discussed separately for each household group in these areas the findings of this study indicate that domestic rice prices are associated differently with imported rice prices among the households however a price increase in imported rice that is mainly consumed by the poor worsens their position much more severely than for the rich people who mainly prefer domestic rice the findings contribute to the understanding of how price changes resulting from trade liberalization may affect various groups of households and the ways they respond to such changes in prices

the demand for money in the united states evidence from cointegration tests this paper uses recent cointegration test procedures to investigate the underlying economic relationship between real money balances real income and interest rates for the united states unlike recent studies of money demand the authors analysis uses quarterly data spanning the period 1915 88 thus providing a sample encompassing a wide variety of economic experiences the evidence presented indicates that the broader m2 measure of money is the preferable measure with which to consider the long run effects of monetary policy copyright 1991 by ohio state university press

a censored system of cigarette and alcohol consumption many previous studies of us cigarette and alcohol consumption have focused on single equations however the addictive nature of consumption suggests that it is more appropriate to model these products as a system we propose a two step estimation procedure and apply the procedure to a system of equations for cigarette beer and wine consumption results differ from those derived from an existing two step procedure findings suggest that consumption of cigarettes beer and wine is responsive to income changes but the elasticities are rather small personal physiques education age race ethnicity health gender employment status and regions also play significant roles in consumption

interest rate variability and economic performance further evidence evans 1984 argues that a policy induced rise in unanticipated interest rate volatility in 1980 82 substantially and significantly reduced output in the u s economy he concludes that stabilizing interest rates is probably sensible monetary policy p 204 a second hypothesis that increased volatility of money growth has contributed to stagnation is rejected by evans this comment raises some questions about the strength of evans s conclusions and about the implicit channels of influence for his results evans s conclusion that only past unanticipated volatility affects output is theoretically and empirically weak anticipated changes in volatility are shown to have similar effects on output second evans implies that in barro s 1981 output model the channel of the interest rate volatility effect on the economy is through an unanticipated decline in aggregate demand the price level effect of such an unanticipated reduction in aggregate demand is tested in barro s price equation in examining these issues an alternative measure of money

u s cigarette consumption the case of low income women we use double hurdle or cragg models to test whether decisions about smoking participation and consumption levels are separate endogenous choices we also estimate several dominance models which assume that standard corner solutions are not applicable a complete dominance model with independence between the participation and consumption decisions is the preferred specification for our data the most important variables influencing participation are region number of children education and ethnicity region age race ethnicity and health status most affected consumption levels

identification and estimation of money demand in most natural sciences physics chemistry biology theories are validated by controlled experiment however in other natural sciences astronomy meteorology and in most social sciences including economics the data are characteristically generated not by experiment but by measurement of uncontrolled systems in economics theories take the form of restrictions on the models assumed to generate the data and statistical methods replace experimental controls in testing these restrictions and here is the difficulty in economics particularly macroeconomics the theory used to derive tests ordinarily does not generate a complete specification of which variables are to be held constant when statistical tests are performed on the relation between the dependent variable and the independent variables of primary interest accordingly in such cases there will be a set of often very different candidate regression based tests each of which has equal status with the others since each is based on a different projection of the same underlying multivariate model except in the unlikely event that the explanatory variables are mutually orthogonal the conditional regression coefficients which generally form the basis for the test statistic will depend on the conditioning set we conclude from this that if a theory which does not generate a complete specification of the regression test is nonetheless to have testable implications these implications must be robust over the permissible alternative specifications if the restrictions indicated by the theory are satisfied in some projections but not in others that have an equal claim to represent implications of the theory one cannot conclude that the theory has been confirmed the fact that the observable implications of valid theories must obtain over a broad but usually incompletely specified set of regressions rather than for a single regression introduces a large and unavoidable element of imprecision into hypothesis testing in macroeconomics generally it appears to be appropriate to weaken the statistical criterion for rejecting theories consider for example the theory of money demand which will engage our attention in this paper the tobin baumol square root formula implies that the elasticity of money demand with respect to the interest rate is exactly one half but which interest rate should wealth be held constant inflation in view of such uncertainties it would be inappropriate to insist in a literal minded fashion on rejecting the tobin baumol model if in some regression the measured interest elasticity differed from one half by more than two standard deviations and only then obviously a more flexible approach is called for the practice has been to conclude that the statistical evidence is consistent with the tobin baumol model as long as the interest rate coefficient is negative if it is negative and significant or negative and insignificantly different from minus one half that would provide somewhat stronger confirmation but a positive coefficient particularly a significantly positive coefficient would be viewed as raising questions about the validity of the theory in macroeconomics generally as in the money demand application the typical response to specification uncertainty has been to regard a theory as supported if the signs of the estimated coefficients agree with those expected from theory and as disconfirmed otherwise there is no theoretical justification for this procedure but it seems to be a reasonable course to follow the point that economic theory ordinarily generates incompletely specified statistical university of california santa barbara we have received helpful comments from andrew abel robert clower michael darby robert engle stephen goldfeld david laidler edward leamer robert lucas frederic mishkin and edward prescott thomas hall provided able research assistance