optimal control and differential game models of military expenditure in less developed countries abstract this paper presents optimal control and differential game models of military expenditure in less developed countries we emphasise the strategic interconnections between aggressive neighbours and explicitly stress the optimal resource allocation problem between civilian and military expenditure a major innovation of the analysis is to analyse the asymmetric reaction functions of the two agents and the formalisation of the stylised fact that most ldc arms races have taken place between participants of unequal size

the impact of foreign capital inflows on domestic savings reexamined the case of argentina abstract since the beginning of the 1970 s several economists have argued that there is a negative relationship between foreign capital inflows f and domestic savings s this paper attempts to demonstrate that the framework used by these authors is not appropriate to analyze the impact of f on s the early empirical results may actually be a consequence of exogenous factors such as monetary and fiscal policies

fuel demand elasticities for energy and environmental policies indian sample survey evidence india has been running large scale interventions in the energy sector over the last decades still there is a dearth of reliable and readily available price and income elasticities of demand to base these on especially for domestic use of traditional fuels this study uses the linear approximate almost ideal demand system la aids using micro data of more than 100 000 households sampled across india the la aids model is expanded by specifying the intercept as a linear function of household characteristics marshallian and hicksian price and expenditure elasticities of demand for four main fuels are estimated for both urban and rural areas by different income groups these can be used to evaluate recent and current energy policies the results can also be used for energy projections and carbon dioxide simulations given different growth rates for different segments of the indian population

government purchases and real interest rates this paper examines the dynamic impact of government purchases in a simple general equilibrium model with both durable and nondurable consumer goods as well as productive capital the model generates perhaps surprising results in particular increases in government purchases are shown to cause reductions in real interest rates the model thus provides a possible explanation for the observed behavior of real interest rates around wars copyright 1987 by university of chicago press

growth and defense pooled estimates for the nato alliance 1951 1988 in two provocative and influential contributions emile benoit 4 5 uncovered a net positive association between defense spending and economic growth for 44 less developed countries ldcs during the 1950 65 period apparently a larger defense burden as measured by the share of national income devoted to defense may have promoted growth for these countries this finding was controversial and generated an extensive literature that either found fault with benoit s methodology or else investigated the relationship between growth and defense with alternative methodologies one such methodology relied on an aggregate production function to derive an equation for the sources of growth owing to technological change labor growth investment productivity differences among sectors and externalities this supply side approach was associated with feder 13 and ram 22 when a feder ram model was used researchers typically discovered either a small positive effect or else no impact of defense on growth except for alexander 1 the feder ram approach has been applied to large cross sections of ldcs to cross sections of ldcs and developed countries or to individual countries over time the purpose of this paper is fivefold first we extend the three sector feder ram model to allow for the influence of defense spillin externalities as the defense expenditures of a nation s allies affect the nation s own defense and civilian sectors in either a positive or negative fashion spillin externalities can stem from input complementarity or substitutability procurement practices joint ventures or operational considerations second we check the data for unit roots and when appropriate cointegration these tests help us to avoid a dynamic misspecification third we estimate a three sector feder ram growth equation for each of ten nato allies for the 1951

semiparametric estimation and consumer demand this paper considers the implementation of semiparametric methods in the empirical analysis of consumer demand the application is to the estimation of the engel curve relationship and uses the british family expenditure survey household composition is modelled using an extended partially linear framework this is shown to provide a useful method for pooling non parametric engel curves across households of different demographic composition c 1998 john wiley sons ltd

the structural changes and determinants of household energy choices and energy consumption in urban china addressing the role of building type abstract understanding the energy use and choice behaviors in urban china is essential to curb its energy consumption and air pollutant emissions current energy consumption estimates for urban households in china rarely account for the effects of building types on energy choice behavior thus may lead to biased policy implications in this paper we estimate the determinants of household energy consumption for different energy choice scenarios through the seemingly unrelated regression sur model using urban household data the empirical results show that household use of various energy carriers is driven by household income fuel price demographics building attributes and lifestyles results show building types have a significant effect on household energy consumption behaviors households living in old houses have less access to clean energy such as piped gas income and price elasticities of energy consumption vary with energy type in each scenario and there exist certain substitution effects among different types of energy carriers in particular inter fuel substitute elasticities between coal and clean energy are asymmetric our study highlights the significance of city planning and infrastructure expansion policies and also offers a better basis for coordinating and designing energy policies in urban china and other developing countries

economic development and defense expenditure developing countries spend large amounts of scarce resources on military expenditure the effect of defense spending on economic growth and development is an important topic and merits close scrutiny from development economists the main purpose of this paper is to analyze the interrelationships among defense burden saving and economic growth within the context of a fully specified empirical model since benoit s seminal work published in this journal and elsewhere started the recent debate and controversy it is necessary to discuss his findings in some detail benoit made a forceful and interesting case for the existence of a causal relationship between defense expenditure and growth in less developed countries ldcs his main hypothesis was that defense burden is positively correlated to growth rates in ldcs furthermore the chain of causation is such that a high defense burden causes the growth rate to rise defense helps development policy implications of such a hypothesis are then spelled out the purpose of this section is to evaluate benoit s thesis and critically analyze its conclusions the main finding is that for a large sample of 44 countries there exists a positive correlation between rate of growth and defense burden defense expenditure as a proportion of national income benoit used the growth rate of nondefense civilian output for the index of growth to avoid the criticism of double counting there is an interesting definitional question that arises regarding the variables used by benoit here he defined growth in civilian output as growth in gdp minus growth in defense spending all in real terms defining gdp as y civilian output as v and defense spending as d we may write

public expenditures and growth the article explores the effects of public expenditures on growth among 73 countries over the 1970 89 period while much of the literature attributes weak growth to public investment and social expenditures which inhibit growth through crowding out and rent seeking the article highlights the contributions that public investment and social expenditures may make to growth the article s econometric analysis suggests that crowding out and rent seeking concerns may have been overstated in the literature

intrahousehold resource allocation in rural pakistan a semiparametric analysis we estimate semiparametric engel curves for rural pakistan using a large household survey this allows us to obtain consistent estimates of the effects of household size and composition on consumption patterns even when these demographic variables are correlated with an unknown function of income the coefficients on the household composition variables are used to infer patterns of intrahousehold allocation while there is little evidence of gender bias amongst children adult males appear to get more than adult females there is a tendency amongst males for workers to get more than dependents there is no evidence of differential treatment of the elderly and higher birth order children we identify substantial economies of size in food consumption we also find that engel curces for food adult goods and child goods are nonlinear which suggests that the piglog class of demand models in inappropriate

international income inequality measuring ppp bias by estimating engel curves for food there are large differences between rich and poor people in the world this is of major concern to economists as well as to policy makers the magnitude of the dif ferences however depends on the measure used for comparisons to illustrate per capita income in china is more than five times larger if one uses penn world table pwt 1 incomes rather than exchange rate based ex incomes in this paper we study pwt incomes which aim at correcting for price level dif ferences across countries and identify the bias in them by estimating engel curves for food furthermore we study the relationship between the bias and the income of a country the pwt produces purchasing power parity ppp adjusted incomes and thus the associated bias is referred to as the ppp bias having estimated the bias in pwt incomes we provide new estimates of real income and refer to these as the engel curve ec incomes by comparing the estimated ec incomes and the pwt incomes the issue of how the bias influences estimated inequality is discussed finally we discuss whether ex incomes which simply transform each country s nominal income into one common currency provide better estimates of income than do pwt incomes this paper reports three main findings first there is substantial and systematic ppp bias in the pwt incomes the poorer the country the more its income tends to be overestimated 2 second the ppp bias causes a substantial and robust underesti mation of international inequality the gini index increases substantially when one adjusts for the bias third whereas pwt incomes provide better estimates than the ex incomes for the richer countries the ex incomes which implicitly assume that ppp holds provide better estimates for the poorer countries as we know that price levels differ across countries there is consensus that the seminal work on establishing the pwt was a well founded initiative and the data have been extensively used 3 still although many studies rely on pwt data few focus on the ppp bias in this dataset some contributors focus on one component of the bias however the so called substitution bias and use macro data to measure this

the impact of military burden on long run growth and welfare abstract this paper presents an endogenous growth model to examine how a government s resource allocation between the defense and non defense sectors will govern both economic growth and social welfare we demonstrate that there exists an optimal defense expenditure share that maximizes the economic growth rate but this rate is smaller than the welfare maximizing share this result can be viewed as a possible vehicle to explain why in many developing countries arms limitation and disarmament negotiations usually have low performance even failing

determinants of the levels and distribution of pl 480 food aid 1955 1979 abstract this paper reports the results of statistical tests of hypotheses related to a number of debates surrounding the determinants of the levels and distribution of us food aid the statistical results supported the following hypotheses 1 pl 480 food aid is influenced by the need of the recipient country 2 pl 480 food aid is tied to political and military concerns of the us 3 pl 480 food aid is influenced by the political party occupying the white house 4 pl 480 food aid and us commercial sales of agricultural commodities are substitutes and 5 pl 480 food aid is inversely related to a recipient s foreign exchange holdings

lag length selection and tests of granger causality between money and income one of the most widely accepred relationships in macroeconomics is the positive relationship between the rate of growth of the money supply and the rate of growth of income a diversity of opinion arises however with the attempt to identify a causal relationship between these variables while friedman and schwartz 1963 initiated the empirical investigation of money income causality sims 1972 made the most significant contribution to this literature with a practical application of the criterion developed by granger 1969 for identifying a causal relationship since the appearance of sims s approach and an alternative one advanced by sargent 1976 many researchers have applied these techniques to the investigation of the causal relationship between money and income l with two exceptions hsiao 1981 and mcmillin and fackler 1984 these researchers have arbitrarily chosen the lengths of their distributed lags the purpose of this paper is to test for granger causality between money and income this paper differs from previous work in that considerably more attention is focused on the effect of the lag specification on the test results in particular we investigate the extent to which rules of thumb arbitrary lag specifications and

modelling household energy expenditures using micro data this paper is concerned with the empirical modeling of domestic demand for energy in the united kingdom at the level of the individual household a two stage budgeting model of household demand for energy conditional on durable ownership is developed at the first stage income is allocated between energy and nonenergy consumption while at the second stage energy expenditure is disaggregated the second stage allocation is assumed to be between gas electricity and a composite good other fuels estimation takes place using a sample of some 50 000 households drawn from the annual u k family expenditure survey for the years 1972 83 a source that has not been fully exploited in the analysis of energy demand to date copyright 1989 by royal economic society

the latin american state the role of the state in latin american economic development is undergoing fundamental reconsideration even while political scientists have been bringing the state back in economists have been busy trying to take it out evans rueschmeyer and skocpol 1985 reduced government intervention has seemingly been the winning side earlier presumptions about the clear benefits of public guidance no longer orient development strategy in most countries in the region instead there is new vitality to the claims for the advantages of market liberalization and privatization of state enterprise an apparent new consensus regarding a diminished role for the state in latin america has emerged reinforced by the rising liberal tendencies in industrialized countries and the precipitate rejection of central planning in the socialist bloc this debate is central to development economics as a field so much so that deepak lal 1985 p 53 identifies its demise with this new recognition of the importance of policy induced and thus far from inevitable distortions created by irrational dirigisme but this reconsideration takes on a special significance in latin america for two reasons first the model of state led industrialization through import substitution is identified with the region raul prebisch and the economic commission for latin america 1950 were the most prominent advocates of this new post world war ii development strategy and it still is esteemed by many latin americans second countries of the region have experienced a sharp break with past growth trends in the 1980s experiencing a cumulative average decline in per capita income of some 10 percent during the decade there is strong impetus for a new approach

the dynamics of natural gas consumption and gdp in bangladesh abstract reserves of natural gas in bangladesh are very large and total demand has increased secularly in recent years this paper examines the causal relationship between the consumption of natural gas and gdp in bangladesh over the period 1980 to 2010 we find that there is a positive unidirectional causality running from gdp to natural gas consumption movements in gdp affect the consumption of natural gas but not vice versa while our results rest on several statistical assumptions they support the pursuit of policies that are in line with energy conservation implementing these policies will be of particular significance in light of the fact that bangladesh s current reserves of natural gas will not meet its current level of consumption demand beyond the next two decades

anticipated development assistance temporary relief aid and consumption behaviour of low income countries much debate about the effectiveness of foreign aid to developing countries focuses on the assumption that aid flows mainly enhance current consumption rather than being channelled into investment this paper seeks to establish what proportion of foreign assistance is used to finance current consumption the principal hypothesis to be tested is that aid transfers include very heterogeneous components with different marginal propensity to raise consumption estimating the average marginal propensity to consume of all the components of aid as is commonly done may lead to erroneous results the flow of foreign aid from high to low income countries can be classified into two types the first includes income transfers of a relief nature such as emergency and distress relief including drought related food transfers medical and refugee relief and balance of payments crisis support these transfers are generally a temporary response to unanticipated events or shocks to the economy they can be perceived as an attempt by the donor community to help finance what is denoted in the permanent income theory as transitory consumption friedman i957 in addition they can be viewed as an attempt to maintain a subsistence level of consumption by absorbing the shocks to income entirely by changes in savings the low level of savings however and the constraints on foreign borrowing lead to dependency on foreign transfers and prevent domestic savings from being the residual that is almost all of

estimation of a complete system of nonlinear engel curves further evidence from box cox engel curves for sri lanka the specification and estimation of engle curves has drawn much attention over many years since the earliest attempt of working 1943 among the many approaches a complete system of engel curves stood out as more appealing as it explicitly imposes the important budget constraint in the allocation of family budgets further extended researches were undertaken on nonlinear specifications as they are likely to produce results that are closer to the reality than the linear systems beneito 2003 attempted box cox form of nonlinear specification but ended up estimating a set of linear equations using seemingly unrelated regression equations method the present research extends the previous work on engle curves in two ways first by incorporating key demographic characteristics into the determination of expenditures in the specification of the box cox form of nonlinear system and second by using primary micro data from large household surveys to estimate the system by nonlinear estimation methods our esti

causality relationship between electricity consumption and gdp in bangladesh in this paper we examine the causal relationship between the per capita electricity consumption and the per capita gdp for bangladesh using cointegration and vector error correction model our results show that there is unidirectional causality from per capita gdp to per capita electricity consumption however the per capita electricity consumption does not cause per capita gdp in case of bangladesh the finding has significant implications from the point of view of energy conservation emission reduction and economic development

engel curves and systems of demand functions abstract the functional forms of the engel curves implied by several popular complete systems of demand functions are discussed among the systems are those generated by generalized quadratic indirect utility the translog system the generalized leontief system etc the linear and quadratic expenditure systems and deaton and muellbauer s pigl and aids a new system which can produce the engel curves of all these systems as special cases is suggested the different engel curves are tested against data from a norwegian survey of consumer expenditure this is done both in a complete system of engel curves for eight commodities and commodity by commodity

tax base choice by local governments limitations on general property tax rates and or levies existed in 28 states as of 1983 an increase from only 6 states prior to 1970 acir 1984 what began with property tax circuit breakers and homestead exemptions led in some cases to statewide campaigns to limit property tax rates and assessments research on the genesis of these state and local government slg tax and spending limitations has found that voters appear to dislike high taxes rapid spending growth and perceived government inefficiency but do not favor major cuts in service provision ladd and wilson 1982 1983 frieman and grasso 1982 courant et al 1980 voter desire for reduced taxes without ser

innovation in structural change of local government rural development has become a national concern as many local communities in rural areas of the united states are increasingly confronted with fiscal stress from several sources these sources include structural change in the local economic base demographic shifts reduced intergovernmental revenues and lower property values short of state and national rural development initiatives the range of choices for local government officials encompasses economic development efforts raising effective tax rates reducing services and or restructuring institutions to provide services more efficiently institutional restructuring or innovation in local government structure refers to internal restructuring functional consolidation geographical consolidation and or privatization community choice regarding institutional innovation is often

military expenditures and economic growth in less developed countries an augmented model and further evidence a study of the impact of military expenditures on economic growth and development examines the differences in the results of previous studies which led to contradictory conclusions the authors find that these differences are due to sample variations specificational choices and the different time periods examined the data indicate that there is no consistent statistically significant connection between military spending and economic growth augmentation of the models suggests that military expenditures neither help nor hurt economic growth to any significant extent 2 tables

financial development and economic growth international evidence the importance of the relationship between financial development and economic growth has been well recognized and emphasized in the field of economic development 1 although recent writings on this subject seem to accept the hypothesis that financial development is crucial for successful economic growth 2 patrick asked the critical question which sector financial or real leads in the dynamic process of economic development patrick identified two possible patterns in the causal relationship between financial development and economic growth in the first growth induces an expansion of the financial system 3 according to this view called demand following the lack of financial growth is a manifestation of the lack of demand for financial services as the real side of the economy develops its demands for various new financial services materialize and these are met rather passively from the financial side in the second pattern the expansion of the financial system precedes the demand for its services channeling scarce resources from small savers to large investors according to relative rates of return the financial sector precedes and induces real growth the deliberate establishment and promotion of financial institutions in many less developed countries ldcs might reflect this belief in the supply leading relationship between the two developments a natural question then concerns the direction of causality between financial development and economic growth patrick asserted that the direction of causality changes over the course of development in his view financial development is able to induce real innovation type investment before sustained modern economic growth gets under way and as the process of real growth occurs the supply leading impetus gradually becomes less important and the demand following financial response

infrastructural investment in long run economic growth south africa 1875 2001 summary productive public expenditure in the area of infrastructure such as roads transportation and housing can play an important role in promoting economic growth and encouraging private investment developments in endogenous growth theory introduce the possibility of a productive role for public expenditure this paper seeks to explain the relationship between investment in economic infrastructure and long run economic growth by examining the experience of south africa in a time series context the main findings that emerge from our examination of economic growth and economic infrastructure in south africa may be summarized as follows investment in infrastructure does appear to lead economic growth in south africa and does so both directly and indirectly the latter by raising the marginal productivity of capital there is weak evidence of feedback from output to infrastructure while the finding of an infrastructure growth impact is robust

consumer behaviour theory and empirical evidence a survey this survey is designed to emphasize the relationship between empirical a nd theoretical considerations in the analysis of consumer behavior a lthough it focuses primarily on analysis at the individual or micro l evel it tries where possible to draw implications for the estimati on of aggregate relationships the importance of micro level analysis stems from the rapid expansion in available panel and survey data se ts this development has generated its own theoretical and empirical issues many of which are raised in this survey copyright 1988 by royal economic society

defense spending economic structure and growth evidence among countries and over time there is no way of telling from economic theory whether a greater military effort will slow down or accelerate output growth the results of a single empirical study have been used to support the widely held belief that in poor countries a high share of defense in gdp is associated with a high growth rate this paper shows that as is often the case such conventional wisdom is wrong across countries a greater defense burden is associated with slower growth in a regression equation estimated for 69 countries over some or all of the period 1952 70 an increase of 10 percentage points in the defense burden share of defense in gdp leads to a reduction of annual growth by 0 13 a nontrivial loss as we discuss in detail below growth retardation to approximately the same extent also is recorded in regional regression estimates though precise coefficients differ from area to area besides slowing the growth rate a changing defense burden has other macroeconomic effects for the same sample of countries and time period increases in military spending are associated with lower saving and investment shares in gdp a greater tax burden and a shift in economic activity from agriculture including food production toward the manufacturing sector when estimated econometrically the extent to which defense spending replaces investment is consistent in magnitude with the growth rate reductions mentioned above in describing these results more thoroughly in section i we review informally the channels through which arms spending can affect the growth rate and present a simple formal model in section ii the resulting reduced form equation is estimated empirically in section iii with the findings summarized above to measure other effects of military outlays on the economic structure we go on in section iv to incorporate the defense burden into the regression equations and data

the impact of military technology transfer on economic growth international evidence the purpose of this article is to measure the impact of military technology transfer on economic growth for 67 selected countries during the period 2000 to 2005 through the application of the malmquist productivity index which is broken down into efficiency change and technical change our main findings are as follows first technology diffusion is all pervading in half of the sampled countries due to pure efficiency and scale efficiency changes second a higher income level and an excess of arms imports lead to innovative activities third middle income countries have higher efficiency and pure efficiency changes these contribute to higher total productivity change finally after separating the impact of capital investment from that of arms imports the diffusion of military technology has a more positive and substantial impact on economic growth thereby revealing the presence of externalities between countries

consumption preferences structure of greek households the alternative engel s curves have already been used as a classical method for the analysis of household budgets engel s equations have been used to derived income elasticities for a system of four types of commodities besides the income and its effects there are many other socio economic characteristics which influence the consumption of commodities especially for energy socio economic characteristics have a great influence on consumption a principal components analysis method is used for the investigation of the influence household characteristics have on consumer preferences the residuals from the income influence are analysed in principal components the aim of this analysis is to reveal the preference structure of greek households as well as the correlation of this structure with the different socioeconomic characteristics

foreign assistance investment and defense a methodological study with an application to israel 1960 1979 this paper develops a method for examination of the relations among outlays on capital formation and national defense and receipts of foreign assistance in developing and other aid receiving countries this model and its results should be of interest to any policy analyst concerned with the effects of aid on the indigenous allocation choices by recipients since it allows one to trace out the effect of aid on these allocative decisions the essence of the method and its novelty is to exploit the price changing feature of foreign aid as seen from the recipient s viewpoint to obtain an estimate of the price responsiveness of the recipient country with the response to prices so determined ownand cross price elasticities with respect to defense investment consumption and so forth can be calculated and the corresponding complementarities or substitutabilities among these categories of demand inferred as will become clear this question is closely related to the question of the extent to which there is a de facto diversion of military or nonmilitary foreign aid to other uses 1 this method is applied to israel chosen because of the urgency of its security and development objectives the availability of data and the magnitude of its foreignassistance receipts however the method is applicable to ldcs in general many of which in a struggle to improve living standards and simultaneously guard against perceived security threats turn increasingly to developed states for assistance the effect of aid on investment and growth has concerned economists for a generation and the possibility that aid might be diverted into consumption has long been recognized as well 2 but trade offs between development and defense especially have concerned economists in recent years e benoit found strong positive relations be

foreign aid and domestic savings in less developed countries some tests for causality abstract the negative correlation between foreign aid and domestic savings rates in less developed countries is an accepted fact in the existing literature the direction of causality however remains a subject of dispute in this paper we use time series data to investigate causal relationships we conclude that causal relationships are not universal and it is suggested that in those countries where they do hold the direction of causality may depend upon the proportions of aid from bilateral and multilateral sources

directly unproductive profit seeking dup activities this paper propses directly unproductive profit seeking dup activities as a general concept that embraces a wide range of recently analyzed economic activities including the subset of rent seeking activities considered by krueger it then proceeds to provide a synthesis and generalization of the welfare theoretic analysis of such activities by developing a fourfold categorization of cases depending on the levels of distortions before and after the dup activity thus a unification and overview of the subject are achieved

rationing in an open economy fix price equilibrium and two gap models abstract two gap models have been criticized severely for the lack of realism of their assumptions but are still prominent in development planning and implicitly in discussions of short run policy problems here the model s applicability outside a command economy is considered by comparing it with a rationing model with proper micro foundations it is shown that the two gap model in general violates fix price equilibrium properties but that the fix price model generates quite similar results

energy poverty in rural bangladesh energy poverty is a well established concept among energy and development specialists international development organizations frequently cite energy poverty alleviation as a necessary condition to reduce income poverty several approaches used to measure energy poverty over the past 20 years have defined the energy poverty line as the minimum quantity of physical energy needed to perform such basic tasks as cooking and lighting this paper uses a demand based approach to define the energy poverty line as the threshold point at which energy consumption begins to rise with increases in household income at or below this threshold point households consume a bare minimum level of energy and should be considered energy poor this approach was applied using cross sectional data from a comprehensive 2004 household survey representative of rural bangladesh the findings suggest that some 58 percent of rural households in bangladesh are energy poor versus 45 percent that are income poor the findings also suggest that policies to support rural electrification and greater use of improved biomass stoves might play a significant role in reducing energy poverty

household level effects of electricity on income abstract this paper studies the effect of electricity on income using the nepal living standards survey iii nlssiii carried out in the years 2010 11 to account for endogeneity issues we use a two stage probit least squares 2spls model we find that causality runs both ways that is income explains whether a household is connected to electricity but also a household being connected to electricity has a very large and significant effect on income

longitudinal working models estimates of household energy consumption in australia abstract the paper uses household expenditure survey data and alternative functional specifications of engel s laws to establish an empirical pattern of disaggregate energy ie electricity gas other fuels and gasoline demand characterized by different demographic attributes for use in a combined panel data model of energy consumption and impact in australia the findings lend support in terms of statistical efficiency and economic theoretic plausibility to the dominance of the working form over the conventional linear allen bowley function energy as a whole is a necessity while at the disaggregate level gasoline is considered a luxury the findings indicate in this respect the existence of demand elasticity bias in aggregate energy models

a dynamic model of capital and arms accumulation how does competitive arms accumulation affect investment and capital accumulation in a dynamic optimization framework including both investment and military spending we find that when the utility function is separable between consumption and the weapon stocks an unanticipated rise in current military threat reduces current investment and an anticipated rise in future military threat stimulates current investment but when the utility function is nonseparable between consumption and the weapon stocks a current military threat may not decrease the short run investment in the long run capital accumulation is independent of the military conflicts among countries regardless of the form of the utility function

autoregressive modelling and money income causality detection abstract a step wise procedure based on granger s concept of causality and abaike s final prediction error criterion is suggested as a practical means to identify the order of lags of each variable in a multivariate autoregressive process the model seems useful because it can serve as a reduced form formulation to avoid imposing often spurious or false restrictions of the model it also provides a reasonably powerful test of causality the idea is applied to u s postwar money and income data it is found that between m1 and gnp a bivariate feedback model fits the data best between m2 and gnp a one way causal model from money to income performs better diagnostic checks applied to our model seem to indicate the adequacy of our approach

evidence from time series on militarizing the economy the case of iraq robust evidence is provided of causality between defence spending and economic growth in the case of iraq over the period 1950 to 1980 the findings of other studies are questioned studies that use the procedure of differencing the yearly data prior to testing for causality this is because the differencing procedure destroys any long run economic information therefore such studies arrive at the wrong conclusions

engel curves household characteristics and low user tariff schemes in natural gas abstract we explore the relative importance of income and household characteristics such as family size in explaining differences in household consumption of natural gas and lpg in a simple model of vertically willingness to pay ordered households we posit that the relative importance of the income elasticity of demand vs the family size elasticity depends positively on the price faced by households thus very low prices tend to depress the across households income elasticity of demand relative to the characteristic elasticity and the opposite holds for under high prices we test this hypothesis using for the first time in argentina data from the household expenditure survey on natural gas and lpg and compare the cross consumption equations for both fuels which have quite different price regimes finally we explore welfare implications for low user tariff scheme reforms in natural gas

energy and output dynamics in bangladesh the relationship between energy consumption and output is still ambiguous in the existing literature the economy of bangladesh having spectacular output growth and rising energy demand as well as energy efficiency in recent decades can be an ideal case for examining energy output dynamics we find that while fluctuations in energy consumption do not affect output fluctuations movements in output inversely affect movements in energy use the results of granger causality tests in this respect are consistent with those of innovative accounting that includes variance decompositions and impulse responses autoregressive distributed lag models also suggest a role of output in bangladesh s energy use hence the findings of this study have policy implications for other developing nations where measures for energy conservation and efficiency can be relevant in policymaking

defence spending economic growth and temporal causality evidence from taiwan and mainland china 1952 1995 this paper uses a cointegration analysis and a vector autoregressive model var to examine the causal relationship between defence spending and economic growth for taiwan and mainland china over the period 1952 1995 it is found that these two variables are not cointegrated for both countries studied the results of the granger causality tests suggest bidirectional granger causality feedback between defence spending and economic growth for taiwan unidirectional granger causality running from economic growth to defence spending for mainland china and unidirectional granger causality running from taiwan s defence spending to mainland china s defence spending for cross country studied these results further indicate that there exists no arms race between two countries from both sides of taiwan strait furthermore impulse responses and variance decompositions are incorporated into the analysis the results from the impulse responses and variance decompositions tell a similar story

military spending and economic growth in china a regime switching analysis this article investigates the impact of military spending changes on economic growth in china over the period 1953 to 2010 using two state markov switching specifications the results suggest that the relationship between military spending changes and economic growth is state dependent specifically the results show that military spending changes affect the economic growth negatively during a slower growth higher variance state while positively within a faster growth lower variance one it is also demonstrated that military spending changes contain information about the growth transition probabilities as a policy tool the results indicate that increases in military spending can be detrimental to growth during slower growth higher growth volatility periods

booming sector and de industrialisation in a small open economy this paper presents a theoretical analysis of the dutch disease the phenomenon whereby a boom in one traded goods sector squeezes porfitability in other traded goods sectors both by directly bi

the macroeconomic impact of development aid a critical survey the early literature explained aid s macroeconomic impact in the context of the dual gap model showing a clear link between aid and growth many now believe that the empirical evidence shows there to be no such relationship this paper critically reviews the different theoretical perspectives the dual gap model the savings debate recipient fiscal response and aid as dutch disease and the empirical debates on aid savings and growth the basis for denying a relationship between aid and growth is shown to be weak though more recent areas of research offer promising directions for future work

exports growth and causality in developing countries abstract previous empirical studies have interpreted results in regressions of output variables on export variables as providing support for an export promotion development strategy such an interpretation is questionable since these regressions provide no means of determining the direction of causality this paper performs causality tests between exports and growth for 37 developing countries the results cast considerable doubt on the validity of the export promotion hypothesis

fundamental similarities in consumer behaviour diversities and similarities in international consumption patterns are highlighted a large body of data is used to identify cross country consumption differences and to understand these in terms of the familiar utility maximizing framework in which observed differences in prices and incomes play the key role taken as a whole the results reveal a surprising degree of similarity in international consumption patterns and support the idea that tastes are constant at least with respect to broad commodity groups

functional form of engel curves for foodstuffs abstract employing individual household expenditure data for six foodstuffs we test five three parameter and four two parameter engel curves against a more general form all two parameter functions must be rejected including working s function it appears that a transformation of the budget share is in order to capture the observed curvature

government size and economic growth a new framework and some evidence from cross section and time series data a study of the impact of government size on economic performance and growth is important theoretically one point of view suggests that a larger government size is likely to be detrimental to efficiency and economic growth because for example i government operations are often conducted inefficiently ii the regulatory process imposes excessive burdens and costs on the economic system and iii many of government s fiscal and monetary policies tend to distort economic incentives and lower the productivity of the system at the other extreme one can identify some points of view that assign to the government a critical role in the process of economic development and could argue that a larger government size is likely to be a more powerful engine of economic development there are several arguments on which the latter point of view is based these include besides others i role of the government in harmonizing conflicts between private and social interests ii prevention of exploitation of the country by foreigners and iii securing an increase in productive investment and providing a socially optimal direction for growth and development

a regional analysis of food consumption in spain abstract working s model of the engel curve is applied to food and staple food expenditures with two years spanish provincial data the functional form of working s model is tested against two other specifications and cannot be rejected the estimation results are quite comparable with those obtained by other authors we also find that spain has experienced a substantial change in the pattern of food consumption during the 1970s

military spending and the growth maximizing allocation of public capital a cross country empirical analysis i introduction public spending promotes economic growth by enhancing the productive capacity of private firms the literature recognizes the possibility that different types of public spending e g infrastructure education health and military expenses can exert different impacts on economic growth military spending is a case in point given its value in maintaining both internal and external security military spending increases the incentives to accumulate private capital and attract foreign investment the defense sector also provides a variety of public infrastructure e g roads and communication networks while also enhancing human capital accumulation through training and provision of educational services on the other hand military spending diverts resources that could be more productive for the economy in nonmilitary uses in this sense defense spending may degrade long run economic growth 1 the characterization of the external effect of public spending on private firm decisions has focused on the context of a production function with the specification of the aggregate flow of public spending barro 1990 or the aggregate stock of public capital turnovsky 1997 a line of research takes care to break out different forms of public spending devarajan swaroop and zou 1996 recognize productive and unproductive public spending play distinct roles in an endogenous growth model using a production function kalaitzidakis and kalyvitis 2004 break down public spending into infrastructure and maintenance expenditure while chen 2006 into productive and consumptive spending benoit s 1973 1978 seminal work decomposes growth rates to investigate defense expenditure rates on economic growth for a panel of 44 less developed nations between 1950 and 1965 with a view toward assessing the impact of different forms of public capital on economic growth the production function approach has been undertaken to investigate the impact of government spending by type on growth e g baffes and shah 1998 cross country panel evans and karras 1994 for a panel of states in the united states devarajan swaroop and zou 1996 investigate the impact of public capital types by focusing on growth rates and assume linear relations between the different types of government spending and the growth rate of real per capita gross domestic product gdp 2 however a theoretical growth model developed recently by shieh lai and chang 2002 suggests that the effect of the budget share of military spending on gdp growth is nonlinear following an inverse u shaped pattern building upon theoretical construction in shieh lai and chang 2002 this study derives the growth maximizing values of the shares of public investment allocated to the two different types of public capital i e military and nonmilitary spending as well as the growth maximizing tax rate focusing on a panel of both developed and developing economies an empirical investigation is undertaken to assess the theoretical implications of the model that both the effect of the budget share of military spending and that of the tax rate on long run growth are nonlinear following an inverse u shaped pattern the rest of the paper is organized as follows section ii sets up a representative firm model and derives the growth maximizing levels of the tax rate and the shares of public capital investment section iii sets up the econometric procedures followed and presents an empirical investigation of the theoretical model in a sample of developed and developing economies finally section iv concludes the paper ii theoretical framework we consider a closed economy populated by identical agents consuming and producing a single commodity y without population growth the labor force is equal to the population with labor supplied inelastically on the production side the representative firm j produces its output using a conventional cobb douglas technology i

price elasticities of residential electricity demand estimates from household panel data in bangladesh abstract we collect a household level panel dataset to estimate the price elasticities of electricity demand for different types of urban households in bangladesh we use an instrumental variable estimation strategy which exploits exogenous variation in average electricity prices induced by a value added tax shock the results indicate significant heterogeneity in price elasticities by electricity consumption levels we conduct a number of simulations under alternative policy scenarios to illustrate how incorporating the heterogeneous nature of price elasticities into pricing policy can help decrease electricity demand supply mismatch and inequality in electricity consumption the results have important policy implications for developing countries aiming to address major energy issues by implementing tariff reforms

understanding the energy gdp elasticity a sectoral approach abstract this paper uses per capita data for 132 countries over 1960 2010 to estimate elasticities of sectoral energy use with respect to national gross domestic product gdp we estimate models in both levels and growth rates and use our estimates to sectorally decompose the aggregate energy gdp elasticity our estimates show that residential energy use is very inelastic to gdp if primary solid biofuels are counted in energy use tallies especially at low income levels residential use of electricity is more tightly linked to gdp as is energy use by the transportation industrial and services sectors agriculture typically accounts for a small share of energy use and has a modest energy gdp elasticity the aggregate energy gdp elasticity tends to be higher for countries at higher income levels in large part because traditional use of primary solid biofuels is less important gasoline prices winter temperature population and land area are among other factors influencing sectoral energy use

poverty and distributional effects of carbon pricing in low and middle income countries a global comparative analysis abstract even though concerns about adverse distributional implications for the poor are one of the most important political challenges for carbon pricing the existing literature reveals ambiguous results for this reason we assess the expected incidence of moderate carbon price increases for different income groups in 87 mostly low and middle income countries building on a consistent dataset and method we find that for countries with per capita incomes of below usd 15 000 per year at ppp adjusted 2011 usd carbon pricing has on average progressive distributional effects we also develop a novel decomposition technique to show that distributional outcomes are primarily determined by differences among income groups in consumption patterns of energy rather than of food goods or services we argue that an inverse u shape relationship between energy expenditure shares and income explains why carbon pricing tends to be regressive in countries with relatively higher income since these countries are likely to have more financial resources and institutional capacities to deal with distributional issues our findings suggest that mitigating climate change raising domestic revenue and reducing economic inequality are not mutually exclusive even in low and middle income countries

a complete system of engel curves in the spanish economy the main goal of this article is the estimation of the consumption income relationship along with socio economic factors using cross section data from the spanish household expenditure survey 1991 the data has been grouped according to exogenous criteria to avoid the problem of null expenditure first a non linear system of equation is estimated from which the linear form that best fits the used data is tested finally income elasticities are calculated considering three alternative formulations depending on how an initial income increment is distributed among consumers income elasticities are shown for the whole income distribution

is public expenditure productive abstract this paper considers the relationship between aggregate productivity and stock and flow government spending variables the empirical results indicate that i the nonmilitary public capital stock is dramatically more important in determining productivity than is either the flow of nonmilitary or military spending ii military capital bears little relation to productivity and iii a core infrastructure of streets highways airports mass transit sewers water systems etc has most explanatory power for productivity the paper also suggests an important role for the net public capital stock in the productivity slowdown of the last fifteen years

income and energy use in bangladesh a household level analysis abstract we examine how energy use at the household level moves with income in bangladesh using the 2010 wave of bangladesh household income and expenditure survey data our analyses indicate a u shaped relationship of both electricity use and other types of energy use combined with household expenditure the findings imply that as income grows households increase their energy expenditure less than proportionally up to a threshold level of income beyond the threshold income energy use increases as a proportion of income particularly for electricity use we identify the threshold turning point for both electricity and other types of energy use based on the current level of expenditure and its growth reaching the turning point would require 17years for the former category but only 7years for the latter group

the foreign exchange constraint suppression of the trade deficit and the shadow price of foreign exchange in a fix price economy abstract the foreign exchange gap is analysed as a possible feature of a fix price economy the implications of closing the gap by means of import rationing are then discussed finally a set of shadow rates of exchange is derived these shadow prices are conditional on the prevailing regimes and include the paradoxical possibility of a negative shadow rate of exchange

external military threat and the response of the member states of the gulf co operation council gcc the study shows that procurements of traditional arms by two countries have the possibility of moving together over time this is demonstrated with reference to iran and the member states of the gulf co operation council gcc for the period 1961 1996 acquiring arms by the member states of the gcc is shown to be only a response to the perception of their leaders to the external threat posed by iran throughout the varying regimes that have ruled teheran in the light of the recent emergence of macroeconomic problems such as unemployment in the economies of the gcc coupled with the ineffectiveness of the financially exhausting build up of arms as a military deterrent policy one important implication of the study is that the priority of the gcc leaders will have to turn to a more effective deterrent policy such as acquiring nuclear technology rather than engaging in a costly and unsuccessful arab military alliance as experienced in the 1970s

a median voter analysis of variations in the use of property taxes among local governments this paper explores the variations among local governments in the composition of tax revenues or more specifically in the relative use of property taxes using a median voter framework various hypotheses are developed concerning the factors that should influence the relative use of property taxes a cross sectional sample of central cities is employed to test the hypotheses the empirical results are consistent with the hypotheses

an analysis of support for tax limitation referenda explanations for recent upsurges in support for tax reduction measures include 1 a desire to reduce the scope of government activity attiyeh and engle 1979 cbs 1978 1 2 a desire to cut taxes independent of changes in government services levy 1975 levy and zamola 1978 critin 1979 3 a dissatisfaction with the incidence of taxation reid 1979 decanio 1979 none of these explanations predicts when dissatisfaction with taxes will be great enough to cause citizens to act the literature suggests several catalysts that may produce or fail to produce a tax revolt first sales and income taxes produce less revolt since there is relatively little awareness of the amount being paid the incidence of the property tax is much more obvious enrick 1963 wagstaff 1965 gensemer 1965 wagner 1976 ordeshook 1979 a second catalyst is the recency of the assessment reassessment ordeshook 1979 argues that people do not compare their tax burdens with the burdens of others or with the level of government services provided they lack information for such an analysis rather taxpayers react when they experience recent and substantial changes in taxes this paper analyzes certain characteristics of people who sign a petition calling for a referendum to impose a tax limit and of their neighborhoods we hypothesize that

explaining the decision to repeal an optional local tax county governments in pennsylvania have had the option to repeal the intangible property tax since 1978 as of 1992 27 of pennsylvania s 66 counties had repealed it an attempt is made to explain empirically the probability of repeal in this paper the empirical model accounts for a large part of the variation across counties the results show that the probability of levying the intangible property tax is positively related to the projected change in the real estate tax rate further it was found that revenue diversification and several taste and political variables significantly influence the repeal decision these findings are consistent with those of previous tax adoption studies the evidence however does not show the exportation of real estate taxes to have the expected effect on the probability of repeal

income inequality and carbon dioxide emissions the case of chinese urban households abstract this paper draws on chinese survey data to investigate variations in carbon dioxide emissions across households with different income levels rich households generate more emissions per capita than poor households via both their direct energy consumption and their higher expenditure on goods and services that use energy as an intermediate input an econometric analysis confirms a positive relationship between emissions and income and establishes a slightly increasing marginal propensity to emit mpe over the relevant income range the redistribution of income from rich to poor households is therefore shown to reduce aggregate household emissions suggesting that the twin pursuits of reducing inequality and emissions can be achieved in tandem

oil windfalls in a small parliamentary democracy their impact on trinidad and tobago in common with other oil exporters trinidad and tobago reaped large windfall gains after 1973 their use was heavily influenced by its distinctive political economy and resulted in substantial weakening of its non oil traded sectors the dutch disease attempts to diversify through gas based industrialization are not likely to replace shrinking oil income this paper traces the relationship from political objectives to use of oil windfalls and the effects on the non oil economy

another look at growth and defense in less developed countries lim challenges evidence showing that defense spending encouraged the economic growth of 44 less developed countries ldcs over the 1950 65 periods by reexamining the relationship between defense and growth for 54 ldcs over the 1965 73 period regional analyses cover 21 african 13 western hemisphere 11 asian and 9 middle eastern and southern european ldcs the results show that defense spending was detrimental to economic growth although adverse effects that were marked in africa and the western hemisphere were absent in asia the middle east and southern eurpoe 4 references 2 tables

economic growth and defense spending granger causality abstract this paper uses granger causality to check the assumed exogeneity of military spending relative to economic growth in previous studies of the relationship between economic growth and military spending the test results performed using two measures of military spending consistently show that military spending is not a strongly exogenous variable implying that previous work in this area is flawed

government expenditure and economic growth a cross country study this paper examines the relationship between the share of government consumption expenditure in gdp and the rate of growth of real per capita gdp the work of the u n international comparison project has recently made available new estimates for over 100 countries of both per capita gdp and the share of government consumption these new estimates are based on direct price comparisons rather than exchange rate conversions as a result the statistics for different countries are more comparable and cross country studies will be more reliable

defense spending and economic growth an alternative approach to the causality issue abstract this paper re examines the defense growth causality issue using a 21 country sample and granger causality methods developed by hsiao we find a feedback relationship existx for most countries this implies that neither growth nor defense can be considered exogenous a result suspected by joerding in earlier work but masked by his choice of an arbitrary lag structure

military expenditure spin off and economic development abstract this paper analyses the strategic causes and the economic spin off effects of military expenditure in less developed countries a formal optimising model is used to show that defence burden in ldcs may be analysed principally in terms of strategic factors such as security and threat and is determined relatively autonomous of economic factors given this autonomousness we scrutinise the widely held belief that defence expenditure has a substantial spin off in the form of technological progress r d skill creation effective demand all of which has positive developmental effects econometric evidence for india shows that such claims are exaggerated and economic spin off from defence to development is weak

welfare effects of tied food aid abstract an important part of the overall u s aid program is public law 480 food aid the design of the program seeks to satisfy numerous and often conflicting objectives several constraints have been placed on the use by recipient countries of that aid to insure that the intentions of the program are achieved this paper examines the implications for recipient country welfare of both the traditional and the proposed restrictions on pl480 aid it also seeks to clarify the interpretation of empirical work on the effects of this aid it is shown that the net value of such commodity tied aid is simply the grant component of the subsidized sale and may easily be realized by substituting food aid imports for commercial imports restrictions which prevent aid recipients from doing so are costly to the recipient and could lead even to immuserization empirical evidence obtained by others is consistent with the notion that such restrictions are circumvented where possible by food aid recipients the results presented indicate that a schultzian disincentive effect is characteristic of a closed economy typical interventions on the part of recipient country governments do not effectively reclose the economy hence open economy models are more appropriate frameworks for evaluating the effects of pl480 aid

is foreign aid fungible the case of indonesia this paper considers whether foreign aid given for specific categories of expenditure is fungible among them and whether aid reduces tax effort by the recipient government models developed to analyze the fiscal relations among different levels of government in the united states are applied to analysis of the impact of foreign aid econometric analysis of data for indonesia reveals that aid is largely spent as the donors intended that aid does not lead to a reduction in tax effort and that aid is not diverted to nondevelopment current expenditures copyright 1990 by royal economic society

estimation of complete demand systems from household budget data the linear and quadratic expenditure systems in this paper we explore two issues in empirical demand analysis the estimation of complete systems of demand equations using household budget data section i and the incorporation of demographic characteristics into such systems section ii although there are numerous studies which use time series data to estimate complete demand systems and many which estimate engel curves from household budget data there are virtually none which combine budget data from different periods to estimate complete systems since each budget study corresponds to a single price situation one might conjecture that estimation of complete systems would not be possible unless budget studies were available from a large number of periods this is incorrect in section i we argue that interesting complete demand systems can be estimated from a small number of budget studies despite the limited price variability represented in such data to demonstrate this we use budget study data for two periods to estimate a pair of related demand systems the familiar linear expenditure system les and a quadratic expenditure system qes a generalization of les in which the demand equations are quadratic in total expenditure the inclusion of demographic variables in the analysis of household consumption patterns is desirable because there are likely to be systematic differences in the consumption behavior of households with different demographic characteristics but the effects of demographic characteristics have seldom been studied within the framework of complete demand systems in section ii we propose translating as a general method for incorporating demographic variables into complete systems of demand equations this method has not previously been discussed as a general technique for bringing demographic variables into demand systems although it has been employed in several studies to improve the estimates of the les and the qes presented in section i we reestimate these two systems using translating to incorporate family size

quadratic engel curves and consumer demand this paper presents a model of consumer demand that is consistent with the observed expenditure patterns of individual consumers in a long time series of expenditure surveys and is also able to provide a detailed welfare analysis of shifts in relative prices a nonparametric analysis of consumer expenditure patterns suggests that engel curves require quadratic terms in the logarithm of expenditure while popular models of demand such as the translog or the almost ideal demand systems do allow flexible price responses within a theoretically coherent structure they have expenditure share engel curves that are linear in the logarithm of total expenditure we derive the complete class of integrable quadratic logarithmic expenditure share systems a specification from this class is estimated on a large pooled data set of u k households models that fail to account for engel curvature are found ro generate important distortions in the patterns of welfare losses associated with a tax increase

dynamic analysis of an endogenous growth model with public capital this paper develops an endogenous growth model with productive public capital along with private capital in a spirit similar to that of r j barro 1990 since the authors model includes two stock variables it has transitional dynamics unlike most of the previous studies on endogenous growth including barro s where concerns are restricted to the steady state analysis first they show that the transitional path is unique and stable second the character of the transitional path is explored third the authors show that the optimal tax rate is smaller than the rate that maximizes the national growth rate with a log linear utility function copyright 1993 by the editors of the scandinavian journal of economics

on some estimates of an asian savings function abstract recent empirical studies have led many economists to argue that a number of countries in asia could stimulate savings if they permitted higher rates of interest and accepted less foreign aid this paper critically examines the econometric basis of these claims for this purpose the model specifications found in past work are encompassed within a more general model so that they may be replicated and tested as restricted forms