pollution without subsidy what is the environmental performance index overlooking abstract agriculture is heavily subsidized in most organization for economic cooperation and development oecd countries and environmental externalities can occur due to pollution caused by protectionist policies this study examines the structure of agricultural protection in oecd countries from a chronological and comparative perspective in addition the policy environment interaction is scrutinized to better explain the environmental implications of agricultural policies in the era of globalization this paper critically evaluates the environmental performance index and recommends that this index includes polluting inputs in future calculations

bipolarity multipolarity and free trade recent literature typically attributes the relative scarcity of open international markets to the prisoner s dilemma structure of state preferences with respect to trade i argue that the prisoner s dilemma representation does not reflect the most critical aspect of free trade agreements in an anarchic international system security externalities explicit consideration of these effects suggests that a bipolar international political system has an advantage relative to its multipolar counterpart with respect to the opening of markets among states less credible exit threats and stronger incentives to engage in altruism within its alliances explain the advantage of a two power system the real income gains that motivate free trade are also the source of the security externalities that impede it their ability to internalize these effects makes military alliances the natural basis of agreements to open international markets the evolutionary prospects of alliances vary however ones that are the products of bipolar systems are more likely to evolve into free trade coalitions than are their multipolar counterparts i argue that less credible exit threats and stronger incentives to engage in alliance altruism explain the advantage of a two power system several important limits of the argument should be made clear immediately i argue at the systemic level i attempt to isolate the political and economic incentives for free trade that occur at the level of the international system i do not therefore consider the impact of unitlevel factors on the pursuit of these incentives for example neither the role of special interest groups nor the organization of domestic exchange via hierarchies instead of markets is considered doyle 1986 frieden 1988 ruggie 1982 the conditions i assume are those of standard international trade theory ethier 1983 and illustrative rather than systematic empirical referents are used these restrictions are appropriate given my purpose to demonstrate analytically the advantage of a bipolar international political system with respect to free trade

experimental evidence on unemployment insurance work search policies this paper describes findings from an experimental evaluation of alternative work search policies in the unemployment insurance ui program we find that the no work search treatment significantly increased ui receipt relative to the standard work search approach by 3 3 weeks and 265 per claimant and that the treatment with the most intensive requirements reduced ui payments by one half of a week or 70 per claimant the results suggest that work search requirements reduce ui spells by increasing the nonmonetary costs of remaining on ui rather than enhancing job search abilities we also find little treatment effects for wages earnings or total income suggesting that an increase in the nonmonetary costs of continued ui receipt are associated with more intensive job search rather than a reduction in the reservation wage

lessons from the u s unemployment insurance experiments recent social experiments have evaluated two reforms of the unemployment insurance ui system reemployment bonuses and job search programs the bonus experiments show that economic incentives affect the length of ui receipt and provide weak evidence that an earlier return to work does not decrease earnings the experiments do not show the favorability of a permanent bonus program as they ignore its effect on the number of the claimants the job search experiments test several more promising reforms nearly all of the combinations of services and increased enforcement reduce ui receipt and have favorable cost benefit analyses earnings often increase though the estimates are imprecise

evaluating the worker profiling and reemployment services system using a regression discontinuity approach economists have long recognized the incentives the unemployment insurance ui system provides for workers the system motivates claimants to extend their unemployment spells by subsidizing both additional job search and leisure see bruce d meyer 1995 for a review of the empirical evidence at the same time the literature does not fully recognize that modest changes in the attractiveness of ui can lead to sizeable changes in worker behavior and as a result to substantively important changes in ui expenditures black et al 2003 provide experimental evidence of a large impact of the us worker profiling and reemployment services wprs system in the state of kentucky the wprs system imposes the requirement that claimants receive low intensity in terms of both the state s money and the claimant s time re employment services early in their spells in order to continue receiving benefits black et al 2003 find that imposing this requirement leads to a substantial increase in mean earnings as well as reductions in the mean amount and duration of ui benefits received as we describe in detail in the next section however the nature of the experimental design utilized in black et al 2003 limits the generalizability of their findings

economic activity in the shadow of conflict i introduction production prices and welfare are altered when exchange emerges in an autarkic economy these same variables are likewise affected when appropriation arises in a production and exchange economy consider robinson crusoe who allocates resources to clothing and food the implicit relative price of clothing and the production consumption point are determined by crusoe s preferences and production possibilities when friday appears and exchange enters crusoe s world there is a change in all of the fundamental economic variables relative price production consumption and utility but suppose friday has the capacity to profitably seize some or all of crusoe s goods or resources crusoe might guard against such a contingency by building defenses sufficient defenses could induce friday to carry out an exchange that might otherwise not occur by allocating some of his resources to defense crusoe alters economic fundamentals including the existence of exchange itself throughout its history economics has generally ignored the effects of appropriation possibilities on production and exchange often however the three economic activities are enmeshed according to barraclough 1994 specialized production and trade became quite extensive in the ancient eurasian world because empires could provide protection for trading links more recently european colonial powers created trading empires based upon strong navies skaperdas and syropoulos 1996 mansfield 1994 today within russia and china there are numerous examples of intertwined production exchange and appropriation even in commonplace crime these activities can be interdependent a potential shoplifter could steal if the store s defenses are low or trade if defenses are high 1 when appropriation possibilities are overlooked the results of standard trade models can be misleading when the role of exchange is ignored the predictions of conflict models can be erroneous economists need a new class of models designed to investigate economic activity in the shadow of conflict where production exchange and appropriation are intertwined pure trade and pure conflict models will be special cases of these new integrated models 2 the fundamental goal of this paper is to contribute to the theoretical development of the new class of integrated models of production exchange and appropriation specifically we model a one time interaction between two agents as a sequential predator prey game with the potential for ricardian trade think of crusoe as a potential prey and friday as a potential predator crusoe moves first by allocating some resources to defensive fortifications to protect his remaining resources friday moves second and faces two options either allocate some resources to weapons in hope of seizing resources from crusoe or produce no weapons and pursue specialized production and trade the economic interactions among appropriation production and exchange depend on key parameters in the model relative resource endowments effectiveness of offensive weapons against defensive fortifications and weapons and consumer goods productivities within the model we show how conflict can be subdued by the potential of mutually beneficial exchange but at a resource cost that modifies fundamental economic variables like relative price production trade volume gains from trade and security of property the model also identifies the conditions under which conflict is so powerful that specialized production and trade cannot emerge further we discover that the integrated model opens up a new way to think about and measure the gains from trade a predator may gain from trade relative to predation or autarky but prefer that the exchange institution be precluded alternatively a predator may be indifferent about trade relative to predation or autarky but gain from the trade institution in section ii we present a general theoretical framework for integrating production exchange and appropriation in a one shot sequential game

environmental kuznets curves real progress or passing the buck abstract recent research has examined the hypothesis of an environmental kuznets curve ekc the notion that environmental impact increases in the early stages of development followed by declines in the later stages these studies have focused on the relationship between per capita income and a variety of environmental indicators results imply that ekcs may exist for a number of cases however the measures of environmental impact used generally focus on production processes and reflect environmental impacts that are local in nature and for which abatement is relatively inexpensive in terms of monetary costs and or lifestyle changes significantly more consumption based measures such co2 emissions and municipal waste for which impacts are relatively easy to externalize or costly to control show no tendency to decline with increasing per capita income by considering consumption and trade patterns the author re examines the concept of the ekc and proposes the use of alternative consumption based measures of environmental impact the author speculates that what appear to be improvements in environmental quality may in reality be indicators of increased ability of consumers in wealthy nations to distance themselves from the environmental degradation associated with their consumption

power politics and international trade r recent literature attributes the relative scarcity of open international markets to the prisoner s dilemma structure of state preferences with respect to trade we argue that the prisoner s dilemma representation does not reflect the most critical aspect of free trade agreements in an anarchic international system namely their security externalities we consider these external effects explicitly doing so leads us to two conclusions 1 free trade is more likely within rather than across political military alliances and 2 alliances are more likely to evolve into free trade coalitions if they are embedded in bipolar systems than in multipolar systems using data drawn from an 80 year period beginning in 1905 we test these hypotheses the results of the analysis make it clear that alliances do have a direct statistically significant and large impact on bilateral trade flows and that this relationship is stronger in bipolar rather than in multipolar systems in the early 1970s students of international relations began what would become a long and heated debate about the political correlates of open international markets recently however an important element of consensus has begun to emerge most contributors to this debate now seem to agree that the prisoner s dilemma structure of state preferences with respect to trade explains the relative dearth of open international markets here we argue that what has become the standard prisoner s dilemma representation neglects the most critical aspect of free trade agreements in the anarchic international system namely their security externalities we consider these external effects explicitly in order to do so we construct and analyze a simple game theoretic model the results of this analysis demonstrate that tariff games between allies differ systematically from those played between actual or potential adversaries these differences imply that free trade is more likely within rather than across political military alliances however our analysis also suggests that the evolutionary prospects of alliances vary those that are the products of bipolar systems are more likely to evolve into free trade coalitions than are their multipolar counterparts less credible exit threats and clearer responsibilities for alliance stability explain the advantage of a bipolar system we test this argument using data drawn from an 80 year period beginning in 1905 the empirical analysis supports our argument it demonstrates that alliances have a direct statistically significant and large effect upon bilateral trade moreover it shows that on average alliances have a much stronger effect on trade in a bipolar than in a multipolar world 2

forest resource trade between japan and southeast asia the structure of dual decay abstract forest resource trade between southeast asia and japan has been noteworthy because of its documented effects on the deforestation of southeast asia s environment this paper expands the focus of this issue to include an examination of the effects of this trade on japanese domestic forests our goal is to redefine the scope of discussions of trade environment issues we assert that the environmental problems of the importer and the exporter can be understood as a set of structurally connected phenomena which we refer to as dual decay we examine the underlying dynamics of renewable resource trade and the effects of trade liberalization on both importers and exporters environments

openness of the economy terms of trade and arms it is estimated that world military spending in 2011 amounted to over 2 5 of the world s gross domestic product gdp this corresponds to a spending of 233 per person in the world at 2010 constant prices an amount close to the gdp per capita of the poorest country in the world therefore it is important for economists to understand the allocation of resources to this sector of the economy i present a model that explores the determinants of a country s level of military spending i show how greater gains from trade can lead to greater military expenditures to protect them it is also found that expansion in the demand for a country s tradable commodities that is an improvement in that country s terms of trade will impact defense spending several other propositions emerge from the model which are then empirically tested using both pooled and time series data the statistical results support the model s propositions

guns butter and anarchy a state in the international system implicit in realism must allocate its limited resources between satisfying its intrinsically valued ends and the means of military power i formalize this guns versus butter problem in a simple infinite horizon model in which two states must continually decide how to allocate their resources and whether to attack the other state the analysis establishes sufficient conditions to ensure the existence of an equilibrium in which neither state attacks shows that there is a strictly pareto dominant pair of peaceful equilibrium payoffs characterizes the unique peaceful markov perfect equilibrium that yields them and describes the comparative statics of the equilibrium allocations more broadly the analysis also suggests that the notion of anarchy has little if any substantive significance distinctively related to international politics and that the problem of absolute and relative gains is superfluous

impact of reemployment bonuses on insured unemployment in the new jersey and illinois separate social experiments conducted in new jersey and illinois tested the effect of offering unemployment insurance ui claimants a cash bonus for rapid reemployment the illinois bonus was constant over time while the new jersey bonus declined over time so that the bonus received was greater the earlier that reemployment occurred this paper compares the effects of the bonus offers on the rate at which claimants exited ui the new jersey and illinois bonus offers generated similar increases in the ui exit rate during the period in which claimants could qualify for the bonus however the declining new jersey bonus had little impact on long term claimants who exhausted their ui benefits in contrast the constant illinois bonus had a substantial impact on long term claimants thereby reducing the rate at which claimants exhausted their ui benefits this finding at least partly explains why the illinois bonus had a larger impact on ui receipt than the new jersey bonus

anarchy and its breakdown anarchy defined as a system in which participants can seize and defend resources without regulation from above is not chaos but rather a spontaneous order however anarchy is fragile and may dissolve either into formless amorphy or into a more organized system such as hierarchy under anarchy each contestant balances between productive exploitation of the current resource base and fighting to acquire or defend resources anarchy is sustainable only when there are strongly diminishing returns to fighting effort the decisiveness parameter is sufficiently low and incomes exceed the viability minimum these considerations explain many features of animal and human conflict

is the threat of reemployment services more effective than the services themselves evidence from random assignment in the ui system we examine the effect of the worker profiling and reemployment services system this program profiles unemployment insurance ui claimants to determine their probability of benefit exhaustion and then provides mandatory employment and training services to claimants with high predicted probabilities using a unique experimental design we estimate that the program reduces mean weeks of ui benefit receipt by about 2 2 weeks reduces mean ui benefits received by about 143 ana increases subsequent earnings by over 1 050 most of the effect results from a sharp increase in early ui exits in the treatment group relative to the control group jel j650

basic attributes of trade and environment what do the numbers tell us abstract this paper analyzes 79 categorical case studies in trade and the environment to determine basic attributes of the field it intends to describe these attributes organized into four intellectual clusters in order to set some basic standards for measuring trends and making initial quantitative generalizations about policy in the trade and environment field this general review and categorization is a necessary step in the development of any field of study and absolutely critical to building a basis for cumulative research and advancement of knowledge the findings suggest that the data mirror general beliefs about trade and environment with respect to the types of problems actors involved remedies industries and other key attributes notably the findings highlight the difference between process and product in environmental cases and the relation between rich and poor countries in trade and environment issues

economic integration and political disintegration in a world of trade restrictions large countries enjoy economic benefits because political boundaries determine the size of the market under free trade and global markets even relatively small cultural linguistic or ethnic groups can benefit from forming small homogeneous political jurisdictions this paper provides a formal model of the relationship between openness and the equilibrium number and size of countries and successfully tests two implications of the model firstly the economic benefits of country size are mediated by the degree of openness to trade secondly the history of nation state creations and secessions is influenced by the trade regime

do subsidies to private capital boost firms growth a multiple regression discontinuity design approach there is still little consensus among economists on the effectiveness of business support policies the evaluation of such policies requires a reliable identification procedure that is hardly achieved in empirical studies we analyse the impact of a policy instrument law 488 92 l488 the main italian regional policy that allocates subsidies to private firms by a multiple ranking system thanks to the peculiar l488 selection process that creates the conditions for a local random experiment we are able to assess the effectiveness of these types of incentives for a relevant subgroup of firms we propose a nonparametric multiple rankings regression discontinuity design that exploits the sharp discontinuities in the l488 rankings and extends the regression discontinuity design rdd approach to a context where the treatment is assigned by multiple rankings with different cut off points we find that the impact of the subsidies on employment investment and turnover is positive and statistically significant while the effect on productivity is mostly negligible the new subsidised capital is additional but non complementary with the owner financed investment the results are robust to different specifications and not due to intertemporal substitution

unemployment duration and the restart effect some experimental evidence in this paper we analyse the effect of ihe restart programme in the united kingdom this programme consisis of an interview of tbe long term unemployed to counsel them on effective job search failure to attend the interview carries the threat of the cessation of unemployment benefits the results using experimental data indicate that the programme has a significant effect of reducing unemployment duration estimation of an independent competing risks model distinguishing between exits from unemployment to a job a training placement or to signing off unemployment benefit shows that the channels through which restart works differs according to exit type

optimal workfare with voluntary and involuntary unemployment this paper addresses the welfare implications of introducing workfare into unemployment benefit policy we consider a population composed of employed and unemployed workers and of individuals who do not seek employment job search behavior is unobservable which means that voluntarily unemployed individuals can claim unemployment insurance ui benefits intended for unemployed workers as a consequence pecuniary benefit schemes underinsure workers against unemployment we show that requiring unproductive activities workfare in exchange for ui benefits may generate a pareto improvement by facilitating better unemployment insurance for workers and we characterize the situations where this is the case

guns butter and openness on the relationship between security and trade sovereign states arm to defend real or hypothetical interests presumably because they cannot engage in complete long term contracting that would prevent such arming international trade therefore takes place within an essentially anarchic context and we can expect trade regimes and security policies to be related indeed many embargoes sanctions and various other forms of trade restrictions that have been used throughout history and continue to be used today can be considered extensions of security policies whereas some security policies can be attributed to trade policy the relationship between trade and security however has been barely explored within economics we could fairly characterize the prevailing view within the discipline as the classical liberal view according to which the expansion of international trade does not just increase the welfare of the trading partners but can also patch up any differences they might have over other contentious issues solomon polachek 1980 represents a rare articulation of this widely held perspective more boldly it could be argued that the expansion of trade always alleviates conflict by forcing the adoption of measures that manage conflict nevertheless one does not need to dig much into history to show that while trade and economic interdependence can contribute to the peaceful resolution of disputes they are not sufficient by themselves to guarantee the absence of war and the reduction of arming many observers before world war i for example considered that the hitherto unprecedented expansion of trade and interdependence between britain and germany made war unthinkable and impossible yet war occurred and with much ferocity and destruction furthermore as donald kagan 1995 pp 373 80 has argued the british policy of appeasement toward germany during the 1930 s was based on similar arguments about the use of economic caltots to avoid war what can inter

reported vs actual job search by unemployment insurance claimants this study compares self reported job search contacts of unemployment insurance recipients with independently verified job search contacts for the total sample reported contacts averaged 2 61 per week compared with actual contacts of only 1 78 per week nearly one fifth of the sample made no job contacts for the single weeks analyzed the separate equations estimated for reported and actual job contacts suggest that systematic misreporting may distort the conclusions particularly for the impact of unemployment insurance benefits on search intensity that would result from analyzing reported rather than actual contacts some implications of the findings for reported unemployment rates also are explored

estimating the effect of financial aid offers on college enrollment a regression discontinuity approach an important problem faced by colleges and universities that of evaluating the effect of their financial aid offers on student enrollment decisions is complicated by the likely endogeneity of the aid offer variable in a student enrollment equation this article shows how discontinuities in an east coast college s aid assignment rule can be exploited to obtain credible estimates of the aid effect without having to rely on arbitrary exclusion restrictions and functional form assumptions semiparametric estimates based on a regression discontinuity rd approach affirm the importance of financial aid as an effective instrument in competing with other colleges for students

conflict war and redistribution this article analyzes the circumstances under which conflict leads to the outbreak of war using a formal model which incorporates both the redistribution of resources as an alternative to war and imperfect information countries act as rational agents concerned with both consumption and the public bad of a war in the first period both countries can either consume or build arms whereas in the second period there can be either the threat or the use of force to reallocate resources if both countries are fully informed then there will be no war but rather a voluntary redistribution of resources in a situation of asymmetric information however in which one country is fully informed and the other is not a war can occur if the uninformed country uses a separating equilibrium strategy precommitting itself to a positive probability of war in order to prevent bluffing by the informed country

improving incentives in unemployment insurance a review of recent research abstract this paper provides a review of the recent literature on how incentives in unemployment insurance can be improved we are particularly concerned with three instruments i e the duration of benefit payments or more generally the time sequencing of benefits monitoring in conjunction with sanctions and workfare our reading of the theoretical literature is that the case for imposing a penalty on less active job search is fairly solid a growing number of empirical studies including randomized experiments are in line with this conclusion

peer effects teacher incentives and the impact of tracking evidence from a randomized evaluation in kenya to the extent that students benefit from high achieving peers tracking will help strong students and hurt weak ones however all students may benefit if tracking allows teachers to better tailor their instruction level lower achieving pupils are particularly likely to benefit from tracking when teachers have incentives to teach to the top of the distribution we propose a simple model nesting these effects and test its implications in a randomized tracking experiment conducted with 121 primary schools in kenya while the direct effect of highachieving peers is positive tracking benefited lower achieving pupils indirectly by allowing teachers to teach to their level jel i21 j45 o15

swords or plowshares a theory of the security of claims to property this paper develops a general equilibrium model of the allocation of resources among appropriative and productive activities the model emphasizes the distinction between offensive weapons which are the instruments of predation and fortifications which provide defense against predation the analysis of this model shows how the equilibrium security of claims to property is determined the analysis focuses on the possibility of a nonaggressive equilibrium in which no resources are allocated to offensive weapons and claims to property are fully secure we also analyze the complex relation between economic welfare and the security of claims to property we find for example that a relatively poor agent could be better off in an equilibrium with less secure claims to property

impacts of tariff escalation on the environment literature review and synthesis abstract writers on trade and environment often claim that tariff escalation harms the environment it skews exports toward raw materials and away from processed goods so to the extent that primary production degrades the environment more than processing it will harm exporting countries this paper reviews the literature on tariff escalation and the environment focusing on 1 a impact of escalating tariffs on the allocation of production and processing between exporters and importers 2 b comparison of the environmental impacts of primary production and processing 3 c impact of increased income from removing tariff escalation on environmental protection expenditures 4 d environmental impact of decreased transport of freight it concludes that tariff escalation is not likely to be a significant source either of economic distortion or of environmental harm

appropriation possibilities in a simple exchange economy abstract appropriation possibilities cause relative price trade volume and welfare to vary considerably from the predictions of the standard edgeworth box when attack effectiveness is low a tariff designed to punish a nation s piracy effort expands trade volume welfare and security of property when attack effectiveness is high the anti piracy tariff causes the piracy rate to increase and the security of property to fall