the international transmission of interest rate shocks the federal reserve and emerging markets in latin america and asia abstract this paper analyzes the effects of changes in the u s federal reserve s federal funds rate on emerging countries interest rates using high frequency weekly data i also investigate how changes in the u s term structure affect short term rates differentials other shocks include changes in the u s dollar euro exchange rate changes in the international price of oil risk ratings and the degree of capital mobility the results indicate that there is a strong and fairly rapid transmission of changes in the federal funds rate into interest rates in the latin american countries in the sample this effect is equally large in the asian nations in the long run the adjustment path is different across the two regions however adjustment is very fast and cyclical in latin america it is gradual and slower in east asia

do landowners respond to land retirement incentives evidence from the conservation reserve enhancement program previous research on incentive responsivness in voluntary land retirement programs has utilized either hypothetical contingent response methods or actual aggregate enrollment data both of which suffer from potential biases in this paper we analyze program participation in the binary choice setting of the conservation reserve enhancement program crep using data from six states our results suggest that landowners react positively to the incentives that are offered and that increases in one time incentives offered at the time of signup are a more cost effective means to increase enrollment than increases in the incentives offered on an annual basis

the interprovincial migration of canadian physicians does income matter this study applies a multinomial logit model of human capital migration to examine the factors influencing the movement of physicians within canadian provinces between 1976 and 1992 the empirical investigation covers general practitioners and specialists it excludes interns residents between seven regions atlantic canada quebec ontario manitoba saskatchewan alberta and british columbia the results suggest that differences in real income have a positive and significant effect on a physician s decision to migrate form one province to another provinces with the highest after tax income highest expenditure per physician and highest fee per service rates have the highest net rate of in migration income differences are however not the only factor influencing a physician s choice to move working conditions within a province which we proxy with the number of hospitals beds and health expenditures per capita are also important factors likewise the ratio of rural to urban population distance b

the welfare effects of trade and capital market liberalization treatise on the welfare effects of trade and capital market liberalization consquenses of the capital account liberalization in the presence of trade restrictions specifies on the liberalization of trade in the presence of foreign borrowing constraints proves superiority of gradual liberalization of trade to an abrupt liberalization

do trade costs in goods market lead to home bias in equities abstract two of the main puzzles in international economics are the consumption and the portfolio home biases we solve for international equity portfolios in a two country two good stochastic equilibrium model with trade costs in goods markets we show that introducing trade costs as suggested by obstfeld and rogoff obstfeld m rogoff k 2000a the six major puzzles in international macroeconomics is there a common cause nber macroeconomics annual 15 is not sufficient to explain these two puzzles simultaneously on the contrary we find that trade costs create a foreign bias in portfolios for reasonable parameter values this result is robust to the addition of non tradable goods for standard calibrations of the preferences

income segregation and local progressive taxation empirical evidence from switzerland this study investigates spatial income segregation in fiscally decentralized urban areas the theoretical part proposes the progressivity of local income taxes as a new theoretical explanation for income segregation the empirical part studies how income tax differentials across municipalities affect the households location decisions i use data from the swiss metropolitan area of basel that contains tax information on all moving households in 1997 the location choice of the households is investigated within the framework of the random utility maximization model different econometric specifications of the error term structure such as conditional logit nested logit and multinomial probit are compared the empirical results show that rich households are significantly and substantially more likely to move to low tax municipalities than poor households this result holds after controlling for alternative explanations of segregation social interactions and distance from the central business district are established as other major factors for income segregation households in general tend to choose locations close to other households like themselves

the effect of incentive policies on the practice location of doctors a multinomial probit analysis in this article we estimate a spatial autoregressive multinomial probit model of the choice of location by general practitioners for establishing their initial practice this model allows us to account for potential interdependencies among location choices the model is used to assess the effect of various incentive measures introduced in quebec canada to influence the geographical distribution of physicians across 18 regions our data set covers subperiods before and after the introduction of these measures incentive policies are captured through price and income effects our results provide evidence that these measures had a significant effect on location choices

physicians choices of specialty location and mode a reexamination within an interdependent decision framework in this paper physicians decisions regarding the specialty community size and mode of their first practices are analyzed in a simultaneous decision model using a nested logit specification physicians face a choice set consisting of eight specialties seven community sizes and three practice settings data come from the longitudinal survey of the class of 1960 income is found to be statistically significant and the average income elasticity is 1 05 which is considerably larger than previous estimates however the elasticity estimate is very sensitive to the assumed decision process a series of policy simulations are then performed to estimate the effect of specified income based policies on the predicted distribution of physicians across specialties community sizes and modes

seigniorage and political instability the importance of seigniorage relative to other sources of government revenue differs markedly across countries this paper tries to explain this regularity by studying a political model of tax reform the model implies that countries with a more unstable and polarized political system will have more inefficient tax structures and thus will rely more heavily on seigniorage this prediction of the model is tested on cross sectional data for seventy countries the authors find that after controlling for other variables political instability is positively associated with seigniorage copyright 1992 by american economic association

a nested logit migration model with selectivity in this paper we specify a multiple choice migration model with selectivity we estimate this model using observations on individuals drawn from the 1971 census of venezuela there are two main innovations in this paper we apply a correction for the presence of selectivity in wage equations in the context of a multiple choice migration model and we apply a less restrictive technique for modelling multiple discrete choices than in previous studies we study the choices of individuals among 23 states of venezuela each individual is observed to have chosen one state so one wage is observable per person our hypothesis is that individuals choose where to locate on the basis of an evaluation of costs and benefits associated with choosing each state we measure the benefits associated with choosing a given state by means of the wage a person could earn in this state since we observe only one wage for each person we have to impute the unobserved wages for the states this person did not choose in order to study the role of wages in migration however it is possible that unobserved factors which affect both an individual s choice of location and his wages may result in sample selection bias if we try to estimate state specific wage equations by ols on the basis of the self selected samples we apply an estimator proposed by lee 1983 to estimate state specific wage equations free from sample selection bias the wage equations permit us to investigate whether individuals who choose particular states earn different wages from observationally identical individuals drawn from the population at random in the context of a developing country where internal migration flows are large evidence on the selectivity of migration will enhance our understanding of an important labor market adjustment mechanism evidence that people who choose particular locations earn more in those locations than would observationally identical individuals drawn at random from the population positive selection will suggest that migration decisions are made according to the principle of comparative advantage in modelling the choice of location we test whether subsets of states are more highly similar to each other than to other states unobserved similarities between states may arise because of similar amenities or economic conditions which are not otherwise explicitly controlled for in the model we implement the

good bye financial repression hello financial crash some unintended consequences of financial liberalization in latin america are analyzed in this paper intrinsic imperfectious in financial markets and the policy dilemmas they pose are reviewed first the stylized facts of southern cone experiments in financial liberization are then presented alternative ways of organlzing domestic capital markets under latin american conditions are discussed and an eclectic reform mongering program is proposed

home bias in open economy financial macroeconomics standard theory would predict that investors hold a well diversified portfolio of equities across the world but despite the process of financial globalization investors still hold a disproportionate share of local equities in their portfolio the equity home bias french and poterba 1991 we review the various explanations of this puzzling phenomenon in the context of recent developments in macroeconomic modelling that have allowed to incorporate sophisticated international portfolio choices in standard two country general equilibrium models we refer to this literature as open economy financial macroeconomics we focus on three broad classes of explanations i hedging motives in frictionless financial markets real exchange rate and non tradable income risk ii asset trade costs in international financial markets such as transaction costs differences in tax treatments between national and foreign assets iii informational frictions and behavioural biases these recent developments raise the need for new portfolio facts beyond the equity home bias and we will present some new evidence on cross border asset holdings across different types of assets equities bonds and bank lending we also present some new micro data on institutional holdings of equity at the fund level these data should inform macroeconomic modelling of the open economy and a growing literature of models of delegated investment

can cross listing relax financial frictions in trade and equity holdings a sector level analysis previous studies have documented the positive mutual relationship between bilateral aggregate goods trade and asset holdings this article examines whether financial frictions play an important role in this mutual relationship instrumental variable poisson pseudo maximum likelihood iv ppml estimation method is applied to a new panel of data on us imports and foreign equity holdings in 20 manufacturing sectors from 43 countries over the period 2001 2007 the results confirm the significantly positive relationship between goods trade and equity holdings and show that financial frictions are an important factor causing this positive correlation in addition we find that equity cross listings in the us stock markets provide external funds to relax financial frictions and promote goods trade this impact varies with different measures of financial frictions in developing and developed countries

disguised carry trade and the transmission of global liquidity shocks evidence from china s goods trade data abstract currency carry trade disguised as goods trade can potentially channel external financial shocks to domestic economic environment despite capital controls we identify this channel in the context of post gfc china using variations in product characteristics and a policy shock we show that trade volumes of cost efficient products responded significantly more to carry returns however such differential responses to carry returns vanished after the government s clampdown on illicit capital flows at the aggregate level we demonstrate further that the surge in disguised carry trades led to a significant expansion of china s shadow banking credit but not its traditional bank lending credit

workers compensation moral hazard and the composition of workplace injuries this paper provides evidence that workers compensation insurance wc affects not only the occurrence but also the composition of reported injuries in our theoretical approach wc is the source of two interrelated moral hazard problems underprovision of accident preventing efforts by the insured worker ex ante moral hazard and false reporting of injuries ex post moral hazard our model predicts that under certain assumptions the impact of wc benefits is stronger on the probability of reporting a difficult to diagnose injury than on the probability of reporting an injury that is easy to diagnose panel data on 9 800 workers in the quebec construction industry over each month of the period 1977 86 combining administrative data from the quebec construction board with data from the quebec workers compensation board are used for the estimates the parameters of the model are estimated using a threealternative logit kernel hybrid multinomial probit mnp framework with individual random effects our results confirm our theoretical pre

the specification and estimation of dynamic stochastic discrete choice models a survey our main goal is to quantify the returns to a career in the united states congress we specify a dynamic model of career decisions of a member of congress and estimate this model using a newly collected dataset given estimates of the structural model we

fee for service payment and consultation length in general practice a work leisure trade off model for french gps this article presents an adaptation of the labour supply model applied to the independent medical sector first we model simultaneous general practitioner gp decisions on both the leisure time and the consultation length for two payment schemes fixed fees and unregulated fees the objective of this econometric study is to validate the theoretical prediction that doctors under unregulated fees may make choices about the length of patient consultations independent of their personal leisure decision indeed according to our empirical results the bidirectional link between leisure choice and consultation length verified with fixed fees does not hold any longer under unregulated fees our findings can be seen as a necessary but not a sufficient condition to legitimize unregulated fees in general practice

financial opening and development evidence and policy controversies this paper outlines possible channels linking commercial and financial openness this inquiry is motivated by a salient feature of the global economy in recent decades the embrace by developing countries of financial reforms the adjustment process to the growing financial integration has been rocky frequently associated with financial crises these developments have led to a spirited debate concerning the wisdom of unrestricted capital mobility between oecd and emerging market countries various studies have identified circumstances in which unlimited capital mobility may be suboptimal this paper argues that notwithstanding the above debate the strongest argument for financial opening may be the pragmatic one like it or not greater trade integration erodes the effectiveness of restrictions on capital mobility hence for successful emerging markets that engage in trade integration financial opening is not a question of if but of when and how some insight into the possible linkages between financial and trade opening is obtained by looking at the patterns of changes in openness in the last 30 years in order to evaluate the statistical significance of the association between financial and trade openness i apply a panelregression methodology the units of observations are nonoverlapping five year changes in the openness measures throughout 1969 1998 for all countries subject to data availability table 1 presents the regressions where the dependent variable is the change in financial openness the explanatory variables are changes in trade openness and changes in the level of gdp per capita allowing for country fixed effects regression i reports all developing countries subject to data availability regression ii excludes from the sample developing economies countries that are characterized by financial openness that exceeds 100 percent or by trade openness that exceeds 60 percent and small island economies finally regression iii deals only with the oecd countries the first two regressions indicate a highly significant positive association between changes in financial and commercial openness in developing countries this effect in the oecd countries is positive but at a substantially lower significance level in aizenman and ilan noy 2003 annual data are used to investigate the impact of political economy and other structural variables on the links between trade and financial openness an extended version of our model where political economy considerations determine the efficiency of the tax system suggests that democracies are associated with lower financial openness our empirical investigation 317 social sciences 1 department of economics university of california santa cruz 1156 high st santa cruz ca 95064 and nber e mail jaizen ucsc edu i thank shang jin wei for sharing the data on financial openness and ilan noy and bill koch for excellent research assistance useful comments by mike dooley michael hutchison phil mccalman graciela kaminsky and ken kletzer are gratefully acknowledged 1 a useful survey of financial liberalization is john williamson and molly mahar 1998 see carlos diaz alejandro 1985 dani rodrik 1999 and thomas hellmann et al 2000 for skeptical assessments of the gains from financial liberalization for studies dealing with the financial instability associated with capital account opening see the papers in sebastian edwards and jeffrey frankel 2002 on the association between financial integration and financial crises see asli demirguc kunt and enrica detragiache 1998 guillermo calvo 1998 and graciela kaminsky and carmen reinhart 1999 2 financial openness measures gross private capital inflows gross private outflows 100 gdp using the data documented and applied by shang jin wei and yi wu 2002 and eswar prasad et al 2003 trade openness measures exports imports 100 gdp using the world development indicators wdi data 3 the inclusion of gdp per capita as an explanatory variable is suggested by the linkages between gdp per capital level and financial depth 4 following the approach of alex cukierman et al 1992 one expects less polarized societies and better functioning democracies to be characterized by more efficient taxcollection systems applying this conjecture a more efficient tax system would be associated also with lower tax

explaining demand for green electricity using data from all u s utilities abstract green electricity programs enable households to voluntarily contribute to the development of renewable electricity by purchasing green electricity through their local utility using a dataset of all utilities in the united states this paper explores the utility consumer and program characteristics that influence participation levels in green electricity as well as whether a utility chooses to offer a program among other results we find that the key determinants of program participation are the education of the consumer base and the affordability of the green electricity program our results enhance understanding of private provision of environmental public goods and could aid in ex ante evaluations of whether a green electricity program is likely to cover its administrative costs or be a cost effective way of improving environmental quality

globalization and developing countries a shrinking tax base abstract this paper evaluates the impact of globalisation on tax bases of countries at varying stages of development we see globalisation as a process that induces countries to embrace greater trade and financial integration this in turn should shift their tax revenue from easy to collect taxes tariffs and seigniorage towards hard to collect taxes value added and income taxes we find that trade and financial openness have a positive association with the hard to collect taxes and a negative association with the easy to collect taxes

green power voluntary purchases price elasticity and policy analysis abstract green power schemes offer electricity from renewable energy sources to customers for a higher price than ordinary electricity this study examines the demand characteristics of green power in australia and policies which could increase its sales a sample of 250 pooled time series and cross sectional observations was used to estimate a statistically significant elasticity of demand for green power with respect to price of 0 96 with a 95 confidence interval of 68 the wide variation in market penetration between jurisdictions and between countries for green power and the low awareness of green power found by surveys indicate that green power sales could be increased by appropriate marketing and government policies the most cost effective means to increase sales was found to be advertising campaigns although only one australian example was found in the state of victoria in 2005 it was also found that full tax deductibility of the green power premium to residential customers exemption from the goods and services tax and a tax rebate for green power are all probably less cost effective for promoting sales than direct government purchase of green power in terms of cost per unit of increased sales