ingredients of famine analysis availability and entitlements famines often take place in situations of moderate to good food availability without any significant decline of food supply per head the paper presents an alternative approach to famines which does not concentrate on availability but on people s ability to command food through legal means available in the society including the use of production possibilities trade opportunities entitlements vis a vis the state etc the approach is explained focusing on exchange entitlement mappings fluctuations in which can lead to big shifts in the intergroup distribution of food command the approach is then applied to the bengal famine of 1943 the ethiopian famine in wollo in 1973 and the bangladesh famine in 1974 and some general conclusions are drawn about the nature and classes of famines

women as policy makers evidence from a randomized policy experiment in india this paper uses political reservations for women in india to study the impact of women s leadership on policy decisions since the mid 1990 s one third of village council head positions in india have been randomly reserved for a woman in these councils only women could be elected to the position of head village councils are responsible for the provision of many local public goods in rural areas using a dataset we collected on 265 village councils in west bengal and rajasthan we compare the type of public goods provided in reserved and unreserved village councils we show that the reservation of a council seat affects the types of public goods provided specifically leaders invest more in infrastructure that is directly relevant to the needs of their own genders

dynamic models for fixed income portfolio management under uncertainty abstract we develop multi period dynamic models for fixed income portfolio management under uncertainty using multi stage stochastic programming with recourse the models integrate the prescriptive stochastic programs with descriptive monte carlo simulation models of the term structure of interest rates extensive validation experiments are carried out to establish the effectiveness of the models in hedging against uncertainty and to assess their performance vis a vis single period models an application to tracking the salomon brothers mortgage index is reported with very encouraging results results that establish the efficacy of the models in hedging against out of sample scenarios are also reported for an application from money management the multi period models outperform classical models based on portfolio immunization and single period models

institutional markets financial marketing and financial innovation firms and institutions are monitored and controlled through a complex set of implicit and explicit contractual relations because of these agency theoretic relations institu tional behavior in financial markets is not a simple reflection of the preference structures of individuals institutional preferences give rise to a demand for new financial instru ments and innovations even when the returns on these instruments are spanned in the sense of complete pricing the innovations can be thought of as solving moral hazard problems an agency theoretic example serves to illustrate the demand supply and financial marketing of stripped securities in short institutions matter the past two decades have witnessed an explosion of financial innovations the changes are too varied and diffuse to permit an easy taxonomy but broadly they seem to fall into two classes first there are the new securities and their markets beginning with puts and calls we have moved on to euromarkets mortgage pass throughs and cmo s strips straps and swaps putable converti bles primes and scores and s p futures and all of the other instruments that inhibit the financial zoo second there are the dynamic trading strategies that make heavy use of the new instruments basket and program trading the asset pricing theories that now characterize different types of money management and the various incarnations of portfolio insurance have changed financial decision making as dramatically as the available array of instruments has changed along with these changes has come an enormous increase in the demand for the services of financial economists we are called upon not only to value the new instruments and the new strategies but to design them as well like engineers

the political economy of public goods some evidence from india we are interested in how public goods get allocated by a centralized state we use data on public goods and social structure from parliamentary constituencies in rural india to understand the allocation of these goods over the 1970s and 1980s national policies and political agendas during this period emphasized universal access to basic amenities and financed a rapid expansion in rural infrastructure we find evidence of considerable equalization in many of these facilities reflecting perhaps the importance of these commitments among the historically disadvantaged social groups those that mobilized themselves politically gained relative to the others measures of social heterogeneity that have been emphasized in the recent empirical literature on public goods are relevant but not overwhelming in their importance

political competition and pork barrel politics in the allocation of public investment in mexico this paper examines the effect of political competition in local elections in re gional allocation of public investment the study employs data on mexican elections covering the period 1990 95 characterised by an increase in electoral competition and coupled with increasing demands for decentralisation throughout the states empirical evidence supports the hypothesis that regional allocation of public investment by central government was driven by political opportunism and local pork barrel politics a positive relationship was found between the regional allocation of public investment and support for the central ruling party this might indicate that local spending inefficiencies were partially explained by the specific support for the incumbent party

ethnic diversity social sanctions and public goods in kenya abstract this paper examines ethnic diversity and local public goods in rural western kenya the identification strategy relies on the stable historically determined patterns of ethnic land settlement ethnic diversity is associated with lower primary school funding and worse school facilities and there is suggestive evidence that it leads to poor water well maintenance the theoretical model illustrates how inability to impose social sanctions in diverse communities leads to collective action failures and we find that school committees in diverse areas do impose fewer sanctions on defaulting parents we relate these results to the literature on social capital and economic development and discuss implications for decentralization in less developed countries

corruption and the costs of redistribution micro evidence from indonesia this paper examines the degree to which the corruption in developing countries may impair the ability of governments to redistribute wealth among their citizens specifically i examine a large antipoverty program in indonesia that distributed subsidized rice to poor households i estimate the extent of corruption in the program by comparing administrative data on the amount of rice distributed with survey data on the amount actually received by households the central estimates suggest that on average at least 18 of the rice appears to have disappeared ethnically heterogeneous and sparsely populated areas are more likely to be missing rice using conservative assumptions for the marginal cost of public funds i estimate that the welfare losses from this corruption may have been large enough to offset the potential welfare gains from the redistributive intent of the program these findings suggest that corruption may impose substantial limitations on developing countries redistributive efforts and may help explain the low level of transfer programs in developing countries d 2005 elsevier b v all rights reserved

traditional governance citizen engagement and local public goods evidence from mexico summary we study the governance of public good provision in poor communities in oaxaca mexico we estimate the effect of usos y costumbres a form of participatory democracy prevalent in indigenous communities on the provision of local public goods because governance is endogenous we address selection effects by matching on municipal characteristics and long term settlement patterns using a first differences design we show that these municipalities increase access to electricity sewerage and education faster than communities ruled by political parties we also show they are places of vibrant political participation not authoritarian enclaves protecting the political monopoly of local bosses 2013 elsevier ltd all rights reserved

the productivity of financial intermediation and the technology of financial product management financial intermediaries banks thrifts and life insurance companies have experienced low productivity over the last decade or two low productivity has manifested itself as a declining market share of their products relative to capital market assets in some cases low productivity caused a failure to meet contractual obligations embodied in their financial products these failures resulted in customer losses and or taxpayer losses when failed intermediaries were guaranteed by government agencies this productivity problem has been analyzed mostly from an economic science perspective by r c merton merton r c 1990 the financial system and economic performance j fin serv res 263 300 and z bodie bodie z 1990 pension funds and financial innovation finan mgmt autumn the focus of the economic analysis is the improvement of regulatory measures for intermediaries whose financial products are guaranteed by government agencies in this paper we take a management science perspective by

a one factor model of interest rates and its application to treasury bond options 1990 a one factor model of interest rates and its application to treasury bond options financial analysts journal vol 46 no 1 pp 33 39

evaluating callable and putable bonds an eigenfunction expansion approach abstract we propose an efficient method to evaluate callable and putable bonds under a wide class of interest rate models including the popular short rate diffusion models as well as their time changed versions with jumps the method is based on the eigenfunction expansion of the pricing operator given the set of call and put dates the callable and putable bond pricing function is the value function of a stochastic game with stopping times under some technical conditions it is shown to have an eigenfunction expansion in eigenfunctions of the pricing operator with the expansion coefficients determined through a backward recursion for popular short rate diffusion models such as cir vasicek 3 2 the method is orders of magnitude faster than the alternative approaches in the literature in contrast to the alternative approaches in the literature that have so far been limited to diffusions the method is equally applicable to short rate jump diffusion and pure jump models constructed from diffusion models by bochner s subordination with a levy subordinator

financial innovation the last twenty years and the next the word revolution is entirely appropriate for describing the changes in financial institu tions and instruments that have occurred in the past twenty years the major impulses to successful financial innovations have come from regulations and taxes the outlook for the future is for a slowing down of the rate of financial innovation but much growth and improvement are still in prospect

a model for designing callable bonds and its solution using tabu search abstract we formulate the problem of designing callable bonds as a non linear global optimization problem the data of the model are obtained from simulations of holding period returns of a given bond design which are used to compute a certainty equivalent return viz some target assets the design specifications of the callable bond are then adjusted so that the certainty equivalent return is maximized the resulting problem is multi modal and a tabu search procedure implemented on a distributed network of workstations is used to optimize the bond design the model is compared with the classical portfolio immunization model and the tabu search solution technique is compared with simulated annealing for solving the global optimization program it is shown that the global optimization model yields higher returns than portfolio immunization it is also shown that tabu search is computationally more efficient than simulated annealing in solving the model and it produces better solutions

tribe or nation nation building and public goods in kenya versus tanzania this article examines how government policies affect ethnic relations by comparing outcomes across two nearby districts one in kenya and one in tanzania using colonial era boundary placement as a natural experiment despite similar geography and historical legacies governments in kenya and tanzania have followed radically different language education and local institutional policies with tanzania consistently pursuing more serious nation building the evidence suggests that nation building has allowed diverse communities in rural tanzania to achieve considerably better local public goods outcomes than diverse communities in kenya to illustrate while kenyan communities at mean levels of diversity have 25 percent less local school funding than homogeneous communities on average the comparable figure in the tanzanian district is near zero the kenya tanzania comparison provides empirical evidence that serious reforms can ameliorate social divisions and suggests that nation building should take a place on policy agendas especially in africa

complete prepayment models for mortgage backed securities the estimation of prepayment rates for pools of mortgages is a critical component in determining the value of mortgage backed securities mbs for short and derivative products this paper discusses the development of prepayment models for pools of fixed rate mortgages the models are complete calibrated functional forms are given for all of the factors that determine prepayment rates hence the models can be used as benchmarks against the simple models of the public securities association the federal housing administration experience or the variety of projected prepayment rates generated by proprietary industry models the key factors that determine prepayment rates are 1 refinancing incentive 2 seasonal variations 3 seasoning of the mortgage pool and 4 burnout effect each factor is modeled separately and is calibrated using historical data a multiplicative relationship determines the prepayment rate of the mortgage pool a novel feature of our model is the use of basis functions that cap

can good projects succeed in bad communities abstract the lack of social capital is frequently given as an explanation for why communities perform poorly yet to what extent can project design compensate for these community specific constraints i address this question by examining determinants of collective success in a costly problem for developing economies the upkeep of local public goods it is often difficult to obtain reliable outcome measures for comparable collective tasks across well defined communities in order to address this i conducted detailed surveys of community maintained infrastructure projects in northern pakistan the findings show that while community specific constraints do matter their impact can be mitigated by better project design inequality social fragmentation and lack of leadership in the community do have adverse consequences but these can be overcome by changes in project complexity community participation and return distribution moreover the evidence suggests that better design matters even more for communities with poorer attributes the use of community fixed effects and instrumental variables offers a significant improvement in empirical identification over previous studies these results provide evidence that appropriate design can enable projects to succeed even in bad communities

economics as progress the lse approach to econometric modelling and critical realism as programmes for research in the face of claims that economics is increasingly driven merely by fashion this paper draws out certain similarities and differences between two self consciously progressive and developmental research programmes namely the lse approach to econometric modelling and critical realism in economics the argument is that while these two programmes of research share a common point of departure and possess many common elements what at root distinguishes them is their adoption of opposing philosophical orientations the comparison enables both the nature of each programme and the relevance of their common concerns to be more easily appreciated and helps clarify the sort of evidence that would provide a basis for selecting one project over the other copyright 2005 oxford university press

integrated simulation and optimization models for tracking indices of fixed income securities increasing performance pressures on fixed income managers have led to a search for new and creative ways to add to portfolio returns the largest pension plan sponsors insurance companies foundations and money management firms are using indexed portfolios as their fixed income assets management strategies since the late 1970s tracking a fixed income index is a difficult task due to transaction costs portfolio size and diversification restrictions liquidity requirements bid ask spreads etc this paper develops an integrated simulation and optimization approach for tracking fixed income indices the model was implemented at metropolitan life insurance company we introduce a simulation model for generating scenarios of holding period returns of the securities in the index then we develop optimization models to select a portfolio that tracks the index the models penalize downside deviations of the portfolio return from the index the developed framework is used to track the salomon brothers mortgag

local capture evidence from a central government transfer program in uganda according to official statistics 20 percent of uganda s total public expenditure was spent on education in the mid 1990s most of it on primary education one of the large public programs was a capitation grant to cover schools nonwage expenditures using panel data from a unique survey of primary schools we assess the extent to which the grant actually reached the intended end user schools the survey data reveal that during 1991 1995 the schools on average received only 13 percent of the grants most schools received nothing the bulk of the school grant was captured by local officials and politicians the data also reveal considerable variation in grants received across schools suggesting that rather than being passive recipients of flows from the government schools use their bargaining power to secure greater shares of funding we find that schools in better off communities managed to claim a higher share of their entitlements as a result actual education spending in contrast to budget allocations is regressive similar surveys in other african countries confirm that uganda is not a special case

a stochastic programming model for money management abstract portfolio managers in the new fixed income securities have to cope with various forms of uncertainty in addition to the usual interest rate changes uncertainy in the timing and amount of cashflows changes in the default and other risk premia and so on complicate the portfolio manager s problem we develop here a multi period dynamic portfolio optimization model to address this problem the model specifies a sequence of investment decisions over time that maximize the expected utility of return at the end of the planning horizon the model is a two stage stochastic program with recourse the dynamics of interest rates cashflow uncertainty and liquidity default and other risk premia are explicitly modeled through postulated scenarios simulation procedures are developed to generate these scenarios the optimization models are then integrated with the simulation procedures extensive validation experiments are carried out to establish the effectiveness of the model in dealing with uncertainty in particular the model is compared against the popular portfolio immunization strategy and against a portfolio based on mean absolute deviation optimization

determinants of collective action on the local commons a model with evidence from mexico i develop a model of cooperation in small irrigation systems i give conditions under which an equalizing redistribution of wealth increases the level of equilibrium cooperation but also show that some redistributions that increase inequality can also increase cooperation the distributive rule a combination of arrangements for maintenance cost sharing and water allocation also affects the cooperation level i estimate statistical models of cooperation for three maintenance indicators using field data from a study of mexican irrigation societies social heterogeneity and landholding inequality are significantly associated with lower maintenance distributive rules that allocate water proportionally to landholding size likewise reduce maintenance

designing portfolios of financial products via integrated simulation and optimization models we analyze the problem of debt issuance through the sale of innovative financial products the problem is broken down to questions of designing the financial products specifying the debt structure with the amount issued in each product and determining an optimal level of financial leverage we formulate a hierarchical optimization model to integrate these three issues and provide constructive answers input data for the models are obtained from monte carlo simulation procedures that generate scenarios of holding period returns of the designed products the hierarchical optimization model is specialized for the problem of issuing a portfolio of callable bonds to fund mortgage assets the upper level optimization program is multimodal and a tabu search procedure is developed for its solution empirical results illustrate the efficacy of the developed models in designing the appropriate structure of the callable bonds and making optimal allocations of equity and debt among the designed products computational results with the implementation of tabu search on both serial and parallel computers are also presented