comment on the behavior of interest rates implied by the term structure of eurodollar futures the paper by jegadeesh and pennacchi extends a sizable literature on continuoustime models of interest rate behavior some of it theoretical some empirical in some cases the focus is on statistical modeling frequently with the goal of a rich parameterization that captures known stylized phenomena for example current yield curve nonconstant volatility structure but that is nevertheless solvable in closed form examples of this type of approach are ho and lee 1986 and hull and white 1990 in other cases the focus is structural making a connection between interest rates and other fundamental economic variables such as inflation or production pennacchi 1991 for example has adopted this approach in an earlier paper i will argue in this comment that the present paper is a useful addition to this literature it extends the literature in a logical direction that was clearly worthwhile investigating and demonstrates a high level of technical competence however i will also argue that the interpretation of the results is overstated in terms of both statistical fit and of implications about fundamental economic relationships consider first the possible objectives of modeling interest rates one such objective is simply to capture the statistical propvrties of interest rate time series if those properties are modeled accurately the results can be applied to the pricing of financial instruments or to the management of price risk on such instruments a second alternative objective is to explain the relationship between interest rates and other economic variables this strategy could be useful in the construction of economic models and perhaps in performing policy analysis the ultimate objective of the modeling exercise determines the appropriateness of any specific interest rate model in the jegadeesh pennacchi paper both statistical modeling and structural interpretation are explicit or implicit goals modeling accuracy is a stated objective of the paper and there are suggestions that the model may be used for pricing and hedging purposes pricing and hedging however are not directly attempted in the paper structural interpretation is not explicitly a goal of the paper but it is a de facto goal as evidenced by the extensive discussions of fed credibility and of the interpretation of the estimated market prices of risk

the tree cutting problem in a stochastic environment the case of age dependent growth abstract harvest policies are derived for growing biological assets e g forests livestock subject to stochastic age dependent growth and price uncertainty the task posed is analyzed as a continuous time optimal stopping problem for diffusion processes both single and ongoing rotation problems are considered qualitative comparative static and numerical results are provided

land tenure security and investment does strength of land right really matter in rural burkina faso abstract the causal relationship between land tenure security and agricultural investment plays a crucial role in the process of rural development land property rights are key determinants for reducing poverty through agricultural productivity natural resource management and socio economic inequalities growing competition for land access increases the sensitivity in land socio economic stakes and related policies in developing countries this paper analyzes the impacts of land rights on land related investment in rural burkina faso we use rural representative panel data and appropriate methods the two stage conditional maximum likelihood approach is used for dealing with endogeneity while the generalized structural equation model allows us to control for random effects we show that stronger land rights increase land attached investment and land investment has positive and negative effect on stronger and weaker land rights respectively in rural burkina faso our study also finds that women and immigrants have less land rights than men and natives respectively our contribution to related literature includes the use of rigorous process of hierarchy in land rights the close link of the results with land right strength is of great interest for cautious practitioners in land tenure and investment moreover our results imply that a gain of efficiency can be achieved from combining practices in land tenure and investment

opec market failure or power failure abstract the actions of opec and saudi arabia are discussed in terms of their objectives and their technical and social constraints it is concluded 1 that opec does not act as a cartel and 2 that hotelling s rule is not an important feature of pricing or production opec s more specifically saudi arabia s ideal policy is to keep price moderate to try to assure a market for their high reserves over the long run such an action would require heavy investments in capacity including in excess capacity for times of interruption of supply from other countries as in the 1990s and for times of high demand as in the 2000s the action may be inconsistent with other objectives and in any case may be too difficult to achieve

poverty and landownership the author studies how landownership affects labor allocation income distribution and poverty in less developed countries he focuses on three prototypes of ownership classes landlords smallholders and landless people agents are identical except for their ownership of assets on the basis of optimizing behavior they divide into urban workers in the modern sector urban workers in the informal sector agricultural laborers subsistence farmers and landlords the impact of land reform on production and poverty depends on the amount of fertile land per capita a more egalitarian distribution of landownership reduces poverty where land is scarce but not where land is abundant copyright 1992 by american economic association

agricultural household models extensions applications and policy this book presents the basic model of an agricultural household that underlies most of the case studies undertaken so far the model assumes that households are price takers and is therefore recursive the decisions modeled include those affecting production and the demand for inputs and those affecting consumption and the supply of labor comparative results on selected elasticities are presented for a number of economies the empirical significance of the approach is demonstrated in a comparison of models that treat production and consumption decisions separately and those in which the decisionmaking process is recursive the book summarizes the implications of agricultural pricing policy for the welfare of farm households marketed surplus the demand for nonagricultural goods and services the rural labor market budget revenues and foreign exchange earnings in addition it is shown that the basic model can be extended in order to explore the effects of government policy on crop composition nutritional status health saving and investment and to provide a more comprehensive analysis of the effects on budget revenues and foreign exchange earnings methodological topics primarily the data requirements of the basic model and its extensions along with aggregation market interaction uncertainty and market imperfections are discussed the most important methodological issues the question of the recursive property of these models is also discussed

quasi option value some misconceptions dispelled abstract we discuss a couple of important issues in the recent literature on quasi option value we show that the assertion that quasi option value can be negative in a model with independent learning is based on confusion between quasi option value which is always positive and the net benefit of preservation of a natural environment subject to development which is not we also explore the significance of different assumptions about the nature of learning and show that the result that quasi option value is positive is surprisingly robust

valuing petroleum reserves using current net price i introduction the hotelling valuation principle hvp states that when valuing any depleting mineral reserve one can simply multiply the current net price price less unit extraction cost associated with those reserves by the quantity of reserves 1 v sub s lambda sub s r sub s where lambda sub s p sub s c sub s is the current time s net price and r sub s is current recoverable reserves in place miller and upton 1985a the derivation combines discounted cash flow dcf analysis with hotelling s 1931 result that in equilibrium the net price of a non renewable resource must rise at the rate of interest with net cash flows being inflated and discounted at the same rate the result is intuitive and its simplicity has drawn the attention of mineral appraisers and national income accounting agencies 1 the u s department of commerce for instance uses equation 1 as one method of valuing the stock and depletion of the nation s mineral assets carson 1994 miller and upton 1985a 24 empirically test the principle against oil and gas reserve values imputed from firm balance sheets and conclude that it provides not only reasonably good descriptions of the structure of actual market values of a sample of u s petroleum producing companies but substantially better descriptions than the publicly available alternative appraisals based on much the same underlying raw data they claim that the abstractions of the hvp constant marginal cost perfect information and perfect competition do not appear to invalidate the empirical performance and so miller and upton propose that equation 1 remains theoretically intact even when these abstractions are relaxed further investigation however has found the hvp to severely overvalue oil and gas reserves for example watkins 1992 finds that the formula overvalues oil and gas reserve transactions by an average of 85 2 indeed in miller and upton s original work the imputed reserve values are less than the hvp values in 81 of 94 valuations in the first data set and in 95 of 98 in a second data set in many cases by 50 or more 3 several empirical studies have found that the coefficient on lambda sub s r sub s in equation 1 is in the order of one half this tendency of the hvp to overstate the value of petroleum reserves is recognized by users of the principle such as bartelmus et al 1994 who nevertheless continue to rely on it for reserve valuation several economists have attempted to explain the overvaluation magliolo 1986 investigates data sources and tax effects cairns and davis 1998 and davis and moore 1998 show that for the case of hard rock mining capacity constraints on production produce a coefficient on lambda sub s r sub s that is less than one others have instead rejected not only the hvp as a valuation tool but also the entire hotelling theory underlying the principle for example adelman 1993 and watkins 1992 argue that i for practical purposes there is no binding resource stock constraint for oil and gas as explicitly assumed by hotelling 1931 and ii oil and gas net price data do not reveal hotelling s r rule mcdonald 1994 adds that regulation of well spacing and extraction rates is another important facet of oil production that is not modeled by hotelling and that this could be a cause of the empirical failure of the principle still others propose that oil reserves cannot be valued accurately using a discounted cash flow framework rather the analyst must also incorporate an option value which arises whenever producers can adjust production through time in response to realizations of stochastic events such as price fluctuations brennan and schwartz 1985 paddock siegel and smith 1988 and smit 1997 this position is valid but it does not explain the empirical failures of equation 1

the economics of child labor if child labor as a mass phenomenon occurs not because of parental selfishness but because of the parents concern for the household s survival the popular argument for banning child labor loses much of its force however this assumption about parental decision making coupled with the assumption of substitutability in production between child and adult labor could result in multiple equilibria in the labor market with one equilibrium where children work and another where adult wage is high and children do not work the paper establishes this result and discusses its policy implications copyright 1998 by american economic association

are there dynamic gains from a poor area development program poor area development programs in which the government transfers extra resources to unusually poor areas have been widely used to fight poverty there has been some research on such programs but little is known about their impact on household living standards over time the authors address the issue for a sizable poor area development program in rural china china s program had a significant impact on rural living standards in the targeted areas of the sample the consumption growth model suggests that households living in the targeted areas had a higher rate of consumption growth than one would have otherwise expected nonetheless the authors found that while the gains in growth were enough to prevent an absolute decline in average living standards they were not enough to reverse the strong underlying divergent tendencies in the rural economy

environmental and gender impacts of land tenure regularization in africa pilot evidence from rwanda although increased global demand for land has led to renewed interest in african land tenure few models to address these issues quickly and at the required scale have been identified or evaluated the case of rwanda s nation wide and relatively low cost land tenure regularization program is thus of great interest this paper evaluates the short term impact some 2 5 years after completion of the pilots undertaken to fine tune the approach using a geographic discontinuity design with spatial fixed effects three key findings emerge from the analysis first the program improved land access for legally married women about 76 percent of married couples and prompted better recordation of inheritance rights without gender bias second the analysis finds a very large impact on investment and maintenance of soil conservation measures this effect was particularly pronounced for female headed households suggesting that this group had suffered from high levels of tenure insecurity which the program managed to reduce third land market activity declined allowing rejection of the hypothesis that the program caused a wave of distress sales or widespread landlessness by vulnerable people implications for program design and policy are discussed

the green paradox of the economics of exhaustible resources abstract the green paradox states that an increasing tax on emissions of carbon dioxide consonant with the expected increase in their marginal damages may induce oil producers to shift their production toward the present and thereby to exacerbate the problem of climatic change the model is based on hotelling models of resource use that do not take the natural and technical features of oil production into account natural features include the decline of production through time according to a decline curve technical features include the requirement to sink investment in productive capacity a model of a profit maximizing firm indicates that if these features are taken into account the prediction of the green paradox is unlikely

the effect of uncertainty on investment timing in a real options model abstract this paper examines the effect of uncertainty on investment timing in a canonical real options model we show that the critical value of a project that triggers the exercise of the investment option exhibits a u shaped pattern against the volatility of the project this is due to the two countervailing risk and return factors in effect we further show that such a u shaped pattern is inherited by the expected time to exercise the investment option thus for relatively safe projects greater uncertainty shortens the expected exercise time and thus enhances investment this is in sharp contrast to the negative investment uncertainty relationship commonly found in the extant literature finally we show that the positive investment uncertainty relationship is more likely for high growth projects than for low growth projects

the effect of mean reversion on investment under uncertainty abstract mean reverting processes are appropriate for most real option investment models yet geometric brownian motion gbm processes are generally used for tractability hassett and metcalf j econom dyn control 19 1995 1471 1488 argue that using a gbm process is justified because mean reversion has two opposing effects it brings the investment trigger closer and also reduces the conditional volatility thereby lowering the likelihood of reaching the trigger and the overall effect on investment should be negligible for most reasonable parameter values this paper extends the hassett and metcalf model by incorporating a third factor the effect of mean reversion on systematic risk the main result is that mean reversion in general does have a significant impact on investment moreover this effect could be either positive or negative depending on various factors such as project duration cost of investing interest rate etc thus it is generally inappropriate to use the gbm process to approximate a mean reverting process

urban squatting and community organization in developing countries abstract it is estimated that up to 30 35 percent of the total urban population of the third world about 185 million people live in squatter settlements this paper presents from an economic perspective of tenure choice under uncertainty a unified and consistent theoretical framework of this phenomenon which has heretofore been studied mainly by other social scientists the model is able to explain why land invasions occur furthermore it provides some insights as to why the number of squatters in an urban area depends on a squatter community s ability to form coalitions to fully protect its members rights it is shown in the paper that if a community is successful in controlling its size government efforts which are meant to reduce the number of squatters may lead to the opposite results in particular the imposition of heavier fines or the increase of government expenditures on eviction activity threat campaigns eviction in other jurisdictions etc will likely lead to an increase in the optimal number of squatters unless the decline in expected utility caused by these efforts is so great that squatting no longer becomes viable at any community size

does city structure affect job search and welfare we develop a model in which workers search efficiency is negatively affected by access to jobs workers location in a city is endogenous and reflects a trade off between commuting costs and the surplus associated with search different configurations emerge in equilibrium notably the unemployed workers may reside far away segregated city or close to jobs integrated city we prove that there exists a unique and stable market equilibrium in which both land and labor markets are solved for simultaneously we find that despite inefficient search in the segregated city equilibrium the welfare difference between the two equilibria is not so large due to differences in commuting costs we also show how a social planner can manipulate wages by subsidizing taxing the transport costs and can accordingly restore the efficiency

property rights and finance which is the tighter constraint on private sector investment weak property rights or limited access to external finance from a survey of new firms in post communist countries we find that weak property rights discourage firms from reinvesting their profits even when bank loans are available where property rights are relatively strong firms reinvest their profits where they are relatively weak entrepreneurs do not want to invest from retained earnings

temporal aggregation and the continuous time capital asset pricing model we examine how the empirical implications of the capital asset pricing model capm are affected by the length of the period over which returns are measured we show that the continuous time capm becomes a multifactor model when the asset pricing relation is aggregated temporally we use hansen s generalized method of moments gmm approach to test the continuous time capm at an unconditional level using size portfolio returns the results indicate that the continuous time capm cannot be rejected in contrast the discrete time capm is easily rejected by the tests these results have a number of important implications for the interpretation of tests of the capm which have appeared in the literature few results in finance are as familiar or as widely used as the linear relation between expected returns and market betas implied by the capital asset pricing model capm however because both the discrete and continuous time versions of the capm lead to this linear relation 1 the literature often fails to distinguish between their respective empirical implications for example discrete and continuous time models are frequently used interchangeably to motivate empirical tests that use discretely observed return data 2 this paper examines how the empirical implications of the capm are affected by the length of the period over which returns are measured 3 we show that if this period differs from the implicit time frame of the model then the familiar linear capm relation need not hold for the observed returns for example the capm can imply a multifactor expression for expected returns when the asset pricing relation is properly aggregated this aspect has many important implications for applied work as well as the interpretation of empirical tests of the capm that have appeared in the literature we illustrate the importance of the temporal aggregation issue by deriving the

squatters rights and urban development an economic perspective up to 35 per cent of urban dwellers in third world cities are squatters the characteristics of the squatting phenomenon are both varied and puzzling of particular interest are the observations that 1 landowners often do not collect rent from squatters for use of the land and 2 costly evictions are sometimes used without subsequent development of the land which in many cases is resettled by squatters we present an economic model of landowner squatter interaction which is consistent with these observations this model is then used to enlighten certain aspects of socially optimal land management policy for squatter areas the phenomenon of squatting in third world cities is widespread and growing recent studies have shown that up to 35 per cent of the total urban population of developing countries lives in squatter settlements the current and mostly non economic literature has mixed views regarding whether squatting is a problem or a solution to efficient urbanization attitudes concerning squatter settlements range from disgust concerning living conditions in such illegal or quasi illegal spontaneous settlements to admiration for the resourcefulness of the inhabitants as they provide themselves with at least some shelter using the minimal inputs available the literature has consequently not provided a useful conceptual framework to guide government policy in this paper we develop a formal economic model to understand the various forms of squatting in third world cities we then use the model to address some vexing policy questions do private landowners evict squatters too frequently or too infrequently should any or all squatters be evicted should they be provided with basic infrastructure services should they be given unambiguous property rights to the land they occupy applying the coase theorem to the squatting problem we might conclude that the observed rate of evictions was just right evictions occur only if the value of land use to squatters is less than the sum of the alternative development value to the landowner plus the cost of evictions this economic logic follows since squatters would outbid any competing use of the land if indeed they valued it more thus any policy that gave more property rights to squatters would be a pure transfer from landowners to squatters social welfare would be unaffected however transaction and bargaining costs associated with the transfer of ownership of land to squatters which are likely to be important in the squatting problem can invalidate this simple intuition 2 landowners incur costs when they try to enforce property rights either by collecting rent or evicting collect ing rent formalizes the relationship between renter and landowner the land owner would then have to incur the costs of providing basic services water

good timing the economics of optimal stopping abstract this paper presents an economic interpretation of the optimal stopping of perpetual project opportunities under both certainty and uncertainty prior to stopping the expected rate of return from delay exceeds the rate of interest the expected rate of return from delay is the sum of the expected rate of change in project value and the expected rate of change in the option premium associated with waiting at stopping the expected rate of return from delay has fallen to the rate of interest viewing stopping in this way unifies the theoretical and practical insights of the theory of stopping under certainty and uncertainty

new ways to assess and enhance land registry sustainability evidence from rwanda summary rwanda has recently implemented a nation wide program of first time land regularization ltr that many believe set new standards for the region we use administrative data combined with household survey and program rollout information to explore sustainability of the infrastructure created in this process including the impact of public efforts to increase registration of subsequent transactions we find that the program provided significant benefits in terms of gender equality and credit access while opening up new opportunities in terms of land taxation or land use planning but that high level of rural informality may undermine these in the medium to long term while public efforts to decentralize service provision helped to significantly reduce informality additional efforts are likely to be needed to ensure sustainability of the registry we discuss how rwanda can further move in this direction and draw out implications for other countries considering first time adjudication and registration of property rights

untitled a study of formal and informal property rights in urban ecuador we explore the substitutability of formal and informal property rights using new survey data from ecuador where households have both formal and informal claims to urban residential property we develop a model of property transactions that distinguishes between transferable and non transferable claims and show how this distinction affects the interpretation of hedonic price regressions the unconditional effect of title is to raise properties value by 23 5 however we also find that informal property rights can substitute effectively for formal property rights and suggest that titling programmes should be targeted at young disorganised communities if they are to benefit the recipients

a markup interpretation of optimal investment rules we re examine the basic investment problem of deciding when to incur a sunk cost to obtain a stochastically fluctuating benefit the optimal investment rule satisfies a trade off between a larger versus a later net benefit we show that this trade off is closely analogous to the standard trade off for the pricing decision of a firm that faces a downward sloping demand curve we reinterpret the optimal investment rule as a markup formula involving an elasticity that has exactly the same form as the formula for a firm s optimal markup of price over marginal cost this is illustrated with several examples consider what is probably the most basic irreversible investment problem a project can be undertaken that requires a sunk cost c and yields a benefit v the cost is known and constant over time but the benefit measured as the present value at the time the cost is incurred fluctuates as an autonomous markov process vt with continuous sample paths time is continuous and

timing of investment under technological and revenue related uncertainties the effects of two forms of uncertainty on the timing of irreversible investment are considered technological uncertainty is modeled as a poisson arrival process that reduces the cost of investment while revenue uncertainty is modeled as a diffusion process technological uncertainty has no effect on the optimal investment policy when revenue uncertainty is absent however when combined with revenue uncertainty increased technological uncertainty makes investment less attractive relative to waiting the paper also makes a more general point in clarifying the difference in how diffusion type of uncertainty and unidirectional stochastic progress affect investment timing

information and the concept of option value this paper examines the arrow fisher henry concept of option value and analyzes its properties including its relationship to the value of information and the effects of increasing uncertainty about the future consequences of irreversible development it is shown that this option value is distinct from but bounded by the value of information in the overall decision problem also it is distinct from a concept of option value that appears in b s bernanke quart j econom 98 85 106 1983 however when there is a continuum of development levels rather than a binary choice between full development and no development some of these conclusions need to be modified

repeated real options optimal investment behaviour and a good rule of thumb abstract this paper extends the standard investment under uncertainty set up with a single investment option to the case of infinitely repeated options analytical solutions are derived and it is shown that repeated options not only imply a smaller value of waiting than in the case of a single option but also that the optimal stopping rule is affected differently by changes in underlying parameters this is shown to allow for the use of a simple hurdle rate rule as a good and robust approximation to optimal behaviour when investment options are repeated something which is unlikely in the single option case

entitled to work urban property rights and labor supply in peru this brief summarizes the results of a gender impact evaluation study entitled entitled to work urban property rights and labor supply in peru new legal rights were issued in 1996 project teams providing titling service through 2003 in peru the study observed that between 1996 and 2003 the peruvian government issued property titles to over 1 2 million urban households the largest titling program targeted at urban squatters in the developing world this paper examines the labor market effects of increases in tenure security resulting from the program pre program squatters in program neighborhoods were significantly more likely to report improved tenure security by 60 percent similarly program participants were 18 8 percentage points less likely to report a high likelihood of eviction or invasion and 18 8 percentage points more likely to report that their dwelling was currently very secure from eviction or invasion the likelihood of working inside the home significantly falls by 11 6 percentage points for the average squatter family with two program periods

credit constraints job mobility and entrepreneurship evidence from a property reform in china this paper provides new evidence on the impact of private property rights on entrepreneurship i explore this issue in the context of a housing reform in urban china that allowed state employees renting state owned housing the opportunity to buy their homes at subsidized prices using the reform as an exogenous change in the capital constraints and mobility costs that inuence individuals entry

the odd notion of reversible investment abstract irreversible investment and the attendant concept of real option value have been well discussed complete reversibility has been frequently invoked but less studied especially for the case of lumpy investment typically considered in capital budgeting we examine a simple lumpy investment problem for the full range from complete irreversibility to completely reversibility with a focus on the latter the optimal stopping rules under complete reversibility are to invest when the project generates enough net cash flow to cover jorgenson s opportunity cost of investment and to disinvest when it does not given the static nature of these rules net present value as a timing criterion under reversibility is not pertinent investments that are partially reversible have much in common with completely irreversible investments but nothing in common with completely reversible investments the case of reversible investment provides a foil for understanding that the distinguishing feature of investment as treated in corporate finance is that it entails at least some irreversibility

land property rights and international migration evidence from mexico abstract in this paper i ask whether there is a relationship between land property rights and international migration in order to identify the impact of property rights i consider a country wide land certification program that took place in mexico in the 1990s my identification strategy exploits the staggered implementation and the households eligibility for the program i find that the program increased the eligible households likelihood of having one or more members abroad by 12 in terms of the number of migrants my coefficient estimates explain 26 of the 1994 1997 increase in migrants from ejido areas and 13 15 of the increase from all of mexico consistent with our theoretical model the impact is strongest for households without a land will this implies that land inheritance issues drive at least part of the effect

harvest decisions and asset valuation for biological resources exhibiting size dependent stochastic growth optimal harvest rules and preharvest valuation procedures are derived for biological assets with stochastic size dependent growth in a stochastic price environment these issues are analyzed as continuous time optimal stopping problems both the single rotation and ongoing rotations problems are addressed the sensitivity of harvest and valuation rules is assessed the results are compared with those derived from a myopic look ahead procedure and with the corresponding findings for age dependent growth copyright 1990 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

geology or economics testing models of irreversible investment using north sea oil data this paper tests the main implications of models of irreversible investment using data from operations in the oil fields in the north sea discrete time hazard regression models are used to ascertain the influence of economic variables the expected price of oil the variance of the price of oil and the level of reserves on the lag between the discovery of a field and the decision to develop the field we are able to control for heterogeneity in the data by incorporating variables which account for both the geological features of each field and individual operator characteristics the results indicate that the expected price of oil and the level of reserves are important in influencing the appraisal duration but that the variance of the oil price is not variables capturing the non economic features of the individual fields are also found to be significant factors affecting the appraisal lag copyright 1994 by royal economic society

land tenure and investment incentives evidence from west africa abstract the existing literature on the relationship between property rights in land and agricultural investment in africa has given results that are often confusing and contradictory i make two clarifying contributions to this literature first i pull together existing studies and investigate whether the results they find have been affected by research methods or local contexts studies with small sample sizes those that use binary investment measures and those that control for household fixed effects are less likely to find a statistically significant link between land tenure and investment self reported tenure security has been a poor predictor of investment outcomes second i test for a relationship between land tenure and agricultural investment in nine data sets from west africa while the link between tenure and investment is significant for fallow and tree planting it is less robust for labor use and other inputs such as manure or chemical fertilizer

property rights and investment in urban slums this paper examines the effect of changes in tenure security on residential investment in urban squatter neighborhoods to address the endogeneity of property rights i make use of variation in ownership status induced by a nationwide titling program in peru in a difference in difference analysis i compare the change in housing investment before and after the program among participating households to the change in investment among two samples of nonparticipants my results indicate that strengthening property rights in urban slums has a significant effect on residential investment the rate of housing renovation rises by more than two thirds of the baseline level the bulk of the increase is financed without the use of credit indicating that changes over time reflect an increase in investment incentives related to lower threat of eviction jel o12 o18 p25 p26

schooling and labor market consequences of school construction in indonesia evidence from an unusual policy experiment between 1973 and 1978 the indonesian government engaged in one of the largest school construction programs on record combining differences across regions in the number of schools constructed with differences across cohorts induced by the timing of the program suggests that each primary school constructed per 1 000 children led to an average increase of 0 12 to 0 19 years of education as well as a 1 5 to 2 7 percent increase in wages this implies estimates of economic returns to education ranging from 6 8 to 10 6 percent

what does the term structure tell us about future inflation abstract this empirical analysis indicates that for maturities of six months or less the term structure of nominal interest rates provides almost no information about the future path of inflation but does provide information about the term structure of real interest rates however as maturities lengthen to nine and twelve months the nominal term structure begins to contain information about future inflation but ceases to provide information about the real term structure these results are explained by differences in the relative variability of expected future inflation changes and real term structure slopes at different points in the term structure

empowerment and efficiency tenancy reform in west bengal the paper analyzes the effect of agricultural tenancy laws offering security of tenure to tenants and regulating the share of output that is paid as rent on farm productivity theoretically the net impact of tenancy reform is shown to be a combination of two effects a bargaining power effect and a security of tenure effect analysis of evidence on how contracts and productivity changed after a tenancy reform program was implemented in the indian state of west bengal in the late 1970s suggests that tenancy reform had a positive effect on agricultural productivity there

employment separation and health insurance coverage abstract we study the interrelationship between employment separation and insurance coverage we first document that employment separation is associated with large reductions in insurance coverage even conditioning on underlying tastes for insurance we then show that reducing the cost of insurance through state laws mandating continued access to employer provided health insurance for the non employed increases the likelihood of having insurance after separating from a job by 6 7 these mandates also increase the number of individuals who separate and the total amount of time spent jobless finally at least some of this increased non employment appears to be spent in productive job search as the availability of continuation coverage is related to significant wage gains among those who separate from their jobs

tenure security and urban squatting while recent studies have shown that up to 35 of the total urban population of the third world live in squatter settlements there is a dearth of economic analysis on the phenomenon of squatting this paper attempts to fill this gap the equilibrium model argues that the difference in unit housing prices between the non squatting formal sector of a city and its squatting informal sector reflects the premium associated with a secure tenure status the empirical portion of this paper uses hedonic price techniques to derive the average premium on tenure security in a medium sized philippine city davao results show that formal sector unit dwelling prices are about 18 renters to 58 owners more than in the informal sector these equilibrium price differentials were found to be greater for lower income groups larger household sizes and households with older heads for renters and younger heads for

irreversible decisions and record setting news principles in the now classical real options theory the price of an underlying asset is modeled as a geometric brownian motion and optimal exercise strategies are described by simple explicit formulas this paper extends the classical theory to allow any geometric levy process to model prices such processes may account for fat tails and skewness of probability distributions of commodity prices the optimal exercise strategies are specified in the paper in terms of statistics of record setting low or high prices the formulas derived extend those observed in the gaussian case but the form of the result is novel even for that case jel d81 g3