cost uncertainty and the rate of investment abstract this paper examines the effect of cost and price uncertainty on the optimal rate of investment by firms within a general equilibrium framework former works which have studied this issue like hartman 1972 and abel 1983 1984 1985 have come to the conclusion that this effect is positive since increased price uncertainty raises expected profitability but these studies assume a fixed discount rate which is equivalent to assuming that consumers are risk neutral this paper shows that if consumers are risk averse the effect of uncertainty may be reversed and investment may be depressed when price or cost uncertainty is increased

oil price volatility and the asymmetric response of gasoline prices to oil price increases and decreases this paper analyzes the effect of volatility in oil prices on the degree of asymmetry in the response of gasoline prices to oil price increases and decreases several time series measures of the asymmetry between the responses of gasoline prices to oil price increases and decreases and several measures of the oil price volatility are constructed in all models the degree of asymmetry in gasoline prices declines with an increase in oil price volatility the results support the oligopolistic coordination theory as a likely explanation of the observed asymmetry and are not consistent with the standard search theory and the search theory with bayesian updating

a note on competitive investment under uncertainty uncertainty over future output prices or input costs can affect investment by a riskneutral firm in two opposing ways first it can increase the value of the marginal unit of capital which leads to more investment this only requires that the stream of future profits generated by the marginal unit be a convex function of the stochastic variable by jensen s inequality the expected present value of that stream is increased this result was demonstrated by richard hartman 1972 and later extended by andrew abel 1983 and others in their models constant returns to scale and the substitutability of capital with other factors ensure that the marginal profitability of capital is convex in output price and input costs even with fixed proportions however this convexity can result from the ability of the firm to vary output so that the marginal unit of capital need not be utilized at times when the output price is low or input costs are high if investment is irreversible and can be postponed a second effect of uncertainty is to create an opportunity cost of investing now rather than waiting for new information to arrive before committing resources this increases the full cost of investing in a marginal unit of capital which reduces investment 2 hence the net effect of uncertainty on irreversible investment depends on the size of this opportunity cost relative to the increase in the value of the marginal unit of capital the sign of the net effect is significant because of its possible policy implications pindyck 1988 and giuseppe bertola 1989 developed models in which a firm faces a downward sloping demand curve and found the net effect to be negative ricardo caballero 1991 has recently studied investment by an individual firm facing a stochastically shifting demand curve he shows that as returns to scale become constant and the elasticity of demand faced by the firm rises this opportunity cost of investing now rather than waiting approaches zero thus in the limit of constant returns and an infinitely elastic demand curve an increase in uncertainty tends to raise rather than decrease current investment even if that investment is irreversible it is important to stress that caballero s limiting result treats the firm in isolation and describes the effect of a meanpreserving increase in price uncertainty and not an increase in industry wide demand uncertainty this note shows that in a competitive market the key interactions between irreversibility and uncertainty occur at the industry level and can only be understood by making price and industry output endogenous 3 doing so restores the positive opportunity cost associated with irreversible investment in addition caballero s result is based on a model with convex adjustment costs an innovative aspect of the model is that these costs can be asymmetric thereby allowing for partial or complete irreversibility complete irreversibility corresponds to a cost of massachusetts institute of technology cambridge ma 02139 this work was supported by the national science foundation under grant no ses 8618502 and by mit s center for energy policy research my thanks to julio rotemberg and especially ricardo caballero for very helpful comments and discussions 1then the marginal profit of capital at each time t in the future is max o pt ct where ct is variable cost thus a unit of capital represents a set of all options on future production which are worth more the greater the variance of pt or ct 2for a detailed discussion of this point and a survey of the recent literature on irreversibility and its implications for investment and market evolution see pindyck 1991 3studies that make price endogenous include steven lippman and richard rumelt 1985 avinash dixit 1989 1991 and john leahy 1990

buying votes vs supplying public services political incentives to under invest in pro poor policies this paper uses unique survey data to provide for the first time in the literature direct evidence that vote buying in poor economies is associated with lower provision of public services that disproportionately benefit the poor various features of the data and the institutional context allow the interpretation of this correlation as the equilibrium policy consequence of clientelist politics ruling out alternate explanations such as for example poverty driving both vote buying and health outcomes the data come from the philippines a country context that allows for measuring vote buying during elections and services delivered by the administrative unit controlled by winners of those elections the data reveal a significant robust negative correlation between vote buying and the delivery of primary health services in places where households report more vote buying government records show that municipalities invest less in basic health services for mothers and children and quite strikingly as a summary measure of weak service delivery performance a higher percentage of children are severely under weight

asymmetric error correction models for the oil gasoline price relationship abstract the existing literature on price asymmetries does not systematically investigate the sensitivity of the empirical results to the choice of a particular econometric specification this paper fills this gap by providing a detailed comparison of the three most popular models designed to describe asymmetric price behavior namely asymmetric ecm autoregressive threshold ecm and ecm with threshold cointegration each model is estimated on a common monthly data set for the gasoline markets of france germany italy spain and uk over the period 1985 2003 all models are able to capture the temporal delay in the reaction of retail prices to changes in spot gasoline and crude oil prices as well as some evidence of asymmetric behavior however the type of market and the number of countries which are characterized by asymmetric oil gasoline price relations vary across models the asymmetric ecm prescribes that long run price asymmetries are most likely to be found in the second stage of the transmission chain conversely the ecm with threshold cointegration suggests that long run price asymmetries vary across countries and markets short run price asymmetries are captured by the asymmetric ecm specification and the tar ecm the latter model suggests that all european countries are likely to be affected by asymmetries at the distribution stage while the results obtained with the asymmetric ecm are mixed

when credit bites back using data on 14 advanced countries between 1870 and 2008 we document two key facts of the modern business cycle relative to typical recessions financial crisis recessions are costlier and more credit intensive expansions tend to be followed by deeper recessions in financial crises or otherwise and slower recoveries we use local projection methods to condition on a broad set of macro economic controls to study how past credit accumulation impacts key macro economic variables such as output investment lending interest rates and inflation the facts that we uncover lend support to the idea that financial factors play an important role in the modern business cycle

what matters and what does not in households decision to invest in malaria prevention this paper examines the take up of a new malaria control device by rural households in kenya and tests whether the demand curve for the device varies with the framing of marketing messages and with the gender of the person targeted by the marketing previous research suggests that the demand for malaria prevention is highly price sensitive jessica cohen and dupas 2008 even though the private returns to preventing malaria are very large christian lengeler 2004 in the standard model of investment in human capital individuals invest in a health product if the expected benefits from the product outweigh its costs michael grossman 1972 in this framework the low take up observed at relatively moderate prices by cohen and dupas 2008 could be due to people underestimating the expected benefits of investing in prevention or due to people being credit constrained and unable to pay the cost up front it is also possible that the standard model does not apply because people have time inconsistent preferences or because they are uncertain about their own preferences and rely on external cues to resolve their own uncertainty when they need to make a decision an extensive literature in psychology and marketing suggests that decision making can be affected by frames or cues that do not add information about a product but can be effective at persuading individuals to invest in it for example in a recent field experiment in south africa marianne bertrand et al 2008 found what matters and what does not in households decision to invest in malaria prevention

voting technology political responsiveness and infant health evidence from brazil this paper studies the introduction of electronic voting technology in brazilian elections estimates exploiting a regression discontinuity design indicate that electronic voting reduced residual error ridden and uncounted votes and promoted a large de facto enfranchisement of mainly less educated citizens estimates exploiting the unique pattern of the technology s phase in across states over time suggest that as predicted by political economy models it shifted government spending toward health care which is particularly beneficial to the poor positive effects on both the utilization of health services prenatal visits and newborn health low weight births are also found for less educated mothers but not for the more educated

the provision of public goods under alternative electoral incentives politicians who care about the spoils of office may underprovide a public good because its benefits cannot be targeted to voters as easily as pork barrel spending we compare a winner take all system where all the spoils go to the winner to a proportional system where the spoils of office are split among candidates proportionally to their share of the vote in a winner take all system the public good is provided less often than in a proportional system when the public good is particularly desirable we then consider the electoral college system and show that it is particularly subject to this inefficiency

real options delay vs pre emption do industrial characteristics matter this paper presents an empirical study of the channels of influence from uncertainty to fixed investment suggested by real options theory using panel data from the confederation of british industry cbi industrial trends survey we report ols estimates of the impact of uncertainty on investment where the regressors are augmented by cross sectional averages of the dependent variable and of the individual specific regressors as recently suggested by pesaran pesaran m h 2006 estimation and inference in large heterogeneous panels with a multifactor error structure econometrica 74 967 1012 the cross industry pattern of results is checked for consistency with the pattern predicted by real options theory using a specially constructed data set of industrial characteristics we find that irreversibility is able to predict the pattern detected but only when combined with a measure of the information advantage of delay there is also evidence for expansion options effects industries with high r d and advertising intensities tend to have positive uncertainty effects

prices rise faster than they fall output prices tend to respond faster to input increases than to decreases this tendency is found in more than two of every three markets examined it is found as frequently in producer goods markets as in consumer goods markets in both kinds of markets the asymmetric response to cost shocks is substantial and durable on average the immediate response to a positive cost shock is at least twice the response to a negative shock and that difference is sustained for at least five to eight months unlike past studies which documented similar asymmetries in selected markets gasoline agricultural products etc this one uses large samples of diverse products 77 consumer and 165 producer goods accordingly the results suggest a gap in an essential part of economic theory as a start on filling this gap the study finds no asymmetry in the resonse of an individual decision maker a supermarket chain to its costs but it finds above average asymmetry where a cost shock is filtered through a fragmented w

decentralizing antipoverty program delivery in developing countries we study the effects on accountability in government service delivery of decentralizing administration of an antipoverty program while governments at both central and local levels are vulnerable to antipoor policy biases owing to political capture centralized delivery systems are additionally prone to bureaucratic corruption owing to problems in monitoring bureaucratic performance decentralizing the delivery system promotes cost effectiveness and improves intraregional targeting at low program scales but interregional targeting may deteriorate as central grants to high poverty regions shrink owing to high capture of local governments by local elites in such regions

the real effects of uncertainty on merger activity firm values can substantially change between the time deal terms are set and the actual deal closing risking renegotiation or termination we find increases in market volatility decrease subsequent deal activity but only for public targets subject to an interim period the effect is strongest when volatility is highest for deals taking longer to close and for larger targets merging parties attempt to shorten the interim window as risk increases firm and industry level uncertainty measures reveal similar findings ruling out an unobserved macro variable we conclude interim uncertainty contributes to understanding the timing and intensity of public firms merger activity received february 12 2015 accepted may 23 2016 by editor david denis

politician family networks and electoral outcomes evidence from the philippines we demonstrate the electoral importance of politician family networks and provide evidence of the mechanisms behind the relationship we use a 20 million person dataset allowing us to reconstruct intermarriage networks for over 15 000 villages in 709 municipalities in the philippines we show that politicians are disproportionately drawn from more central families and that controlling for candidate fixed e ects candidates receive a higher vote share in villages where their families are more central we present evidence that centrality confers organizational and logistical advantages that facilitate clientelistic transactions such as vote buying and do not operate through popularity name recognition or through the choice of policies more aligned with their constituents preferences

investment in new activities and the welfare cost of uncertainty abstract recent literature has shown that trade distortions are associated with first order costs stemming from the induced drop in the formation of new activities we demonstrate that uncertainty may induce similar welfare costs and that these costs apply also to a closed economy this argument is illustrated in romer s model of a dependent economy where foreign direct investment is needed to enable the importation of capital goods and intermediate products used in domestic production we show that knightian uncertainty inhibits the formation of new activities leading to first order losses whereas risk aversion alone leads to second order losses

industry wide versus firm specific uncertainty and investment british company panel data evidence this paper presents evidence on the prediction that the impacts of firm specific and industry wide uncertainty on investment will be different results show that these work in opposing directions and that the effect of industry specific uncertainty is stronger in concentrated industries

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

local inequality and project choice theory and evidence from ecuador this paper provides evidence consistent with elite capture of social fund investment projects in ecuador exploiting a unique combination of data sets on village level income distributions social fund project administration and province level electoral results we test a simple model of project choice when local political power is unequally distributed in accordance with the predictions of the model poorer villages are more likely to receive projects that provide excludable private goods to the poor such as latrines controlling for poverty more unequal communities are less likely to receive such projects consistent with the hypothesis of elite capture these results are sensitive to the specific measures of inequality and elite power used in the empirical analysis and are strongest for expenditure shares at the top of the distribution

land and power theory and evidence from chile many employment relationships concede rents to workers depending on the political institutions the presence of such rents allows employers to use the threat of withdrawing them to control their workers political behavior such as their votes in the absence of secret ballot we examine the effects of the introduction of the secret ballot in chile in 1958 on voting behavior before the reforms localities with more pervasive patron client relationships tended to exhibit a much stronger support for the right wing parties traditionally associ ated with the landed oligarchy after the reform however this difference across localities completely disappeared jel d72 n46 o13 o15 o17

exposing corrupt politicians the effects of brazil s publicly released audits on electoral outcomes author s finan frederico ferraz claudio abstract this paper examines the extent to which access to information enhances political accountability based upon the results of brazil s recent anti corruption program that randomly audits municipal expenditures of federally transferred funds it estimates the effect of the disclosure of local government corruption practices upon the re election success of incumbent mayors in municipal elections comparing municipalities which were randomly audited before the elections with those audited after the analysis shows that the disclosure of audit results had a significant impact on the re election rates of mayors found to be corrupt for a one standard deviation increase in reported corruption the audit policy reduced the incumbent s likelihood of re election by 25 percent this effect is more pronounced in municipalities where radio stations are present and higher levels of corruption are identified these findings highlight the value of information and the role of the media in reducing informational asymmetries in the political process thus enabling voters to not only hold corrupt politicians accountable but also to reward non corrupt politicians

the unequal benefits of fuel subsidies a review of evidence for developing countries summary this paper reviews evidence on the impact of fuel subsidy reform on household welfare in developing countries on average the burden of subsidy reform is substantial and is approximately neutrally distributed across income groups a 0 25 decrease in the per liter subsidy results in a 5 decrease in income for all groups more than half of this impact arises from the indirect impact on prices of other goods and services consumed by households fuel subsidies are a costly approach to protecting the poor due to substantial benefit leakage to higher income groups in absolute terms the top income quintile captures six times more in subsidies than the bottom

value for money vote buying and politician accountability abstract the prevalence of vote buying is widely identified as a cause of poor governance in the developing world potential mechanisms for this relationship include the selection of lower quality politicians and the reduced accountability experienced by politicians once elected in this paper we present the first experimental evidence in support of the second channel of reduced accountability using data from laboratory experiments conducted in the u s and kenya we find that vote payments reduce voters willingness to hold politicians accountable holding fixed politician identity voters who receive payments are less willing to punish the politician for rent seeking and this reduction in punishment is larger in magnitude when payments are widely targeted unsurprisingly the politician then engages in a higher level of rent seeking a simple model of multi faceted social preferences encompassing reciprocity and inequality aversion is consistent with these findings

the economic policy uncertainty and firm investment in australia this paper examines the impact of economic policy uncertainty epu on the australian firm investment activity we find a significant positive relationship between the epu and the firm investment o

investment in risky r d programs in the face of climate uncertainty we analyze how the socially optimal technology rd and that uncertainty in damages interacts with uncertainty in the returns to rd and r d that reduces the emissions to output ratio and argue that this is a good representation of r d into fossil fuel technologies for r d programs into non carbon technologies optimal investment is higher in riskier programs our empirical model indicates that the optimal investment in a risky program is about 3 1 2 times larger than in a program with certain returns for r d programs aimed at reducing emissions in fossil fuel based technologies our results show that qualitatively investment is higher in less risky programs under most uncertain damage scenarios our empirical model shows however that the risk profile of fossil fuel based r d programs generally has little quantitative impact on optimal investment the exception is that when the probability of a catastrophe inducing full abatement is very high investment is about twice as high in risky programs compared to programs with certain returns

on the sign of the investment uncertainty relationship understanding the effects of uncertainty over any decision variable has fascinated economists for a long time risk aversion and incomplete markets are likely to make the investment uncertainty relationship negative e g roger craine 1989 joseph zeira 1989 what happens in the absence of risk aversion and incomplete markets is however ambiguous richard hartman 1972 and andrew b abel 1983 1984 1985 found that in the presence of symmetric convex costs of adjustment mean preserving increases in price uncertainty raise investment of a competitive firm as long as the profit function is convex in prices on the other hand the recent literature on irreversible investment e g robert s pindyck 1988 giuseppe bertola 1988 has shown that increases in uncertainty lower investment all these results have been derived under either risk neutrality or complete markets intuition suggests that the explanation for such a difference lies with the asymmetric nature of adjustment costs in the irreversible investment case as compared with the symmetry of the adjustment cost mechanisms proposed by abel and hartman although this intuition is confirmed in this paper asymmetric adjustment costs are shown not to be sufficient to explain why the results differ in fact a more hidden but at least as important difference between these two literatures is that the former assumes perfect competition and constant returns to scale whereas the latter assumes either imperfect competition or decreasing returns to scale or both 2 the purpose of this paper is to highlight the role of the decreasing marginal return to capital assumption due to either imperfect competition or decreasing returns to scale or both in determining the effects of adjustment cost asymmetries on the sign of the response of investment to changes in uncertainty under risk neutrality for this the paper develops a simple model with a cost of adjustment mechanism general enough to consider both symmetric convexity and irreversibility as special cases one of the most important findings is the lack of robustness of the negative relationship between investment and uncertainty under asymmetric adjustment costs3 to changes in the degree of competition in fact when firms are nearly competitive the conclusion of hartman and of abel holds no matter how asymmetric adjustment costs are studying adjustment cost mechanisms has a central role in understanding the dynamics of investment and its business cycle implications but conclusive results about the sign of the instantaneous relationship between uncertainty and investment should not be department of economics columbia university new york ny 10027 i am grateful to giuseppe bertola prajit dutta glen hubbard anil kashyap richard lyons and the referees for their useful comments 1the financial literature on investment has considered risk aversion through a premium in the discount rate determined by the capm capital asset pricing model intertemporal capm or consumption capm however often this discount rate is left unchanged when studying the response of investment to uncertainty changes e g pindyck 1988 pp 974 5 thereby omitting the effect of changes in uncertainty on investment due to risk aversion and incomplete markets 2in the typical version of the irreversible investment problem there is no cost of upward adjustments thus imperfect competition and or decreasing returns to scale are required to bound the size of the firm 3in this paper asymmetric adjustment cost refers to the case in which it is more expensive to adjust downward than upward certainly the opposite case is a trivial extension of the case studied in this paper

vote buying general elections we examine the consequences of vote buying assuming this practice were allowed and free of stigma two parties compete in a binary election and may purchase votes in a sequential bidding game via up front binding payments and or campaign promises platforms that are contingent on the outcome of the election we analyze the role of the parties and voters preferences in determining the winner and the payments to voters

why fuel prices differ fuel taxes differ largely between countries this paper reviews a number of considerations from the theory of public finance that may explain these differences based on a multiple regression model we find for tax competition in europe that small countries tend to be more aggressive than large countries by charging lower fuel taxes to attract customers from neighbouring countries there is strong evidence that fuel is just considered as one of the many sources for government expenditure as the share of government expenditure in gdp is higher the fuel tax tends to be higher no support is found for the hypothesis that fuel taxes are higher in countries where externality problems are more severe proxied by car density of the country in this respect the normative literature on pricing externalities has found little support in the realities of transport policy

policy uncertainty and mergers and acquisitions this research examines the relationship between policy uncertainty and mergers and acquisitions m as we find that policy uncertainty is negatively related to firm acquisitiveness and positively related to the time it takes to complete m a deals in addition policy uncertainty motivates acquirers to use stock for payment and to pay lower bid premiums acquirers on average create larger shareholder value from m a deals undertaken during periods of high policy uncertainty which is attributable to their prudence as well as the wealth transfer from the financially constrained targets to acquirers

decentralized targeting of an antipoverty program abstract developing country governments often delegate authority over the targeting of antipoverty programs to community organizations while retaining control over how much goes to each community we offer a theoretical characterization of the information structure in such programs and the interconnected behavior of the various players our model motivates an econometric specification for explaining distributional outcomes results for bangladesh s food for education ffe program indicate that within village targeting improved with program size lower land inequality less remoteness fewer shocks and less private redistribution there is no sign that the center took account of village attributes conducive to reaching the poor

asymmetry in retail gasoline and crude oil price movements in the united states an application of hidden cointegration technique abstract there is a common belief that gasoline prices respond more quickly to crude oil price increases than decreases some economists and politicians believe that asymmetry in oil and gasoline price movements is the outcome of a non competitive gasoline market requiring that governments take policy action to address unfair pricing there is no consensus as to the existence or nature of the asymmetric relationship between prices of gasoline and crude oil much of this literature specifies asymmetry in the speed of adjustment and short run adjustment coefficients in contrast granger and yoon s granger c w and yoon g hidden cointegration university of california san diego department of economics working paper 2002 crouching error correction model cecm identifies asymmetry of the cointegrating vectors between components cumulative positive and negative changes of the series applying the cecm to retail gasoline and crude oil prices for the u s we find that there is only evidence of cointegration between positive components of crude oil prices and negative components of gasoline prices in contrast to the literature which attributes asymmetric price movements to market power of refiners these findings suggest that gasoline prices in the long run are more influenced by the technological changes on the demand side than crude oil price movements on the supply side

optimal capital structure and investment with real options and endogenous debt costs we examine the joint optimization of financial leverage and irreversible capacity investment in a real options framework with risky debt and endogenous interest costs higher capacity ceteris paribus increases operating leverage and default probability but lowers ex post adjustment costs and generates larger tax shields a key insight is that financial leverage and capacity are substitutes in the debt market equilibrium we develop novel predictions about the effects of capital adjustment costs operating costs and uncertainty on optimal financial leverage and capacity that may potentially help explain ambiguous empirical results in the literature regarding the determinants of capital structure and investment received march 17 2016 editorial decision july 8 2017 by editor itay goldstein

clientelism in indian villages abstract we study the operation of local governments panchayats in rural maharashtra india using a survey that we designed for this end elections are freely contested fairly tallied highly p

new evidence on asymmetric gasoline price responses in a 1997 paper borenstein cameron and gilbert bcg claim that gasoline prices rise quickly following an increase in the price of crude oil but fall slowly following a decrease this note estimates an error correction model with daily spot gasoline and crude oil price data over the period 1985 1998 and finds no evidence of asymmetry in wholesale gasoline prices the sources of the difference in results are twofold first we use the standard engle granger two step estimation procedure whereas bcg used a nonstandard estimation methodology second even using bcg s nonstandard specification the use of daily rather than weekly data yields little evidence of price asymmetry

adjustment costs uncertainty and the theory of investment the case of non renewable natural resources abstract this paper examines the effects of mineral price and extraction cost uncertainty on the investment program of a competitive resource extracting industry that faces convex costs of adjustment the results show that depletion of mineral reserves will slow down if the marginal adjustment cost function is concave or linear whereas the effect will be ambiguous if the function is convex

is economic recovery a myth robust estimation of impulse responses we estimate the impulse response function irf of gdp to a banking crisis using an extension of the local projections method we demonstrate that though robust to misspecifications of the data generating process this method suffers from a hitherto unnoticed bias which increases with the forecast horizon we propose a correction to this bias and show through simulations that it works well applying our corrected local projections estimator to the data from a panel of 99 countries observed between 1974 and 2001 we find that an average banking crisis yields a gdp loss of just under 10 in 10 years with little sign of recovery like the original local projections method our extension of it is widely applicable

state and development the need for a reappraisal of the current literature this essay tries to bring out some of the complexities that are overlooked in the usual treatment of the state in the institutional economics literature and supplement the latter with a discussion of some alternative approaches to looking at the possible developmental role of the state it refers to a broader range of development goals including the structural transformation of the economy and focuses on problems like the resolution of coordination failures and collective action problems the conflicting issues of commitment and accountability and the need for balancing the trade offs they generate some ingredients of state capacity and political coalition building usually missed in the literature the possible importance of rent sharing in a political equilibrium the advantages and problems of political centralization and decentralization and the multidimensionality of state functions that may not be addressed by markets or private firms

the pass through of oil prices into euro area consumer liquid fuel prices in an environment of high and volatile oil prices abstract crude and refined oil prices have been relatively high and volatile on a sustained basis since 1999 this paper considers the pass through of oil prices into consumer liquid i e petrol diesel and heating fuel prices in such an environment the pass through of oil prices into consumer liquid fuel prices has already been addressed extensively in the literature nonetheless much of this literature has either focused on the united states or on a time period when oil prices were relatively stable or has used monthly data the main contribution of this paper is a comprehensive combination of many features that have been considered before but rarely jointly these features include 1 the analysis of the euro area as an aggregate and a large number of countries the initial 12 member states 2 the consideration of different time periods 3 the modelling of the data in raw levels rather than in log levels this turns out to have important implications for our findings 4 the use of high frequency weekly data which as results will suggest are the lowest frequency one should consider 5 the investigation of the different stages of the production chain from crude oil prices to retail distribution refining costs and margins distribution and retailing costs and margins 6 the examination of prices including and excluding taxes excise and value added 7 the modelling of prices for three fuel types passenger car petrol and diesel separately and home heating fuel oil 8 lastly we also address the issue of possible asymmetries allowing for the pass through to vary according to a whether price are increasing or decreasing and b whether price levels are above or below their equilibrium level the main findings are as follows first as distribution and retailing costs and margins have been broadly stable on average the modelling of the relationship between consumer prices excluding taxes and upstream prices in raw levels rather than in logarithms has important implications for the stability of estimates of pass through when oil price levels rise significantly second considering spot prices for refined prices improves significantly the fit of the estimated models relative to using crude oil prices it also results in more economically meaningful results concerning the extent of pass through third oil price pass through occurs quickly with 90 occurring within three to five weeks fourth using a relatively broad specification allowing for asymmetry in the pass through from upstream to downstream prices there is little evidence of statistically significant asymmetries furthermore even where asymmetry is found to be statistically significant it is generally not economically significant lastly these results generally hold across most euro area countries with few exceptions

dynamic fuel price pass through evidence from a new global retail fuel price database abstract we estimate the dynamic effects of crude oil price shocks on retail fuel prices the pass through using the local projection approach of jorda 2005 using a novel monthly dataset of retail fuel prices in 162 countries over the period from 2000 1 to 2014 12 we find that i retail gasoline prices respond positively to crude oil price shocks but the responses vary across regions and income groups ii there is also some variation across country groups in the persistence of the effects of crude oil price shocks on retail gasoline prices and iii declines in crude oil prices lead to smaller effects on retail gasoline prices than increases in crude oil prices pointing to an asymmetry in the fuel price pass through

the political resource curse this paper studies the effect of additional government revenues on political corruption and on the quality of politicians both with theory and data the theory is based on a political agency model with career concerns and endogenous entry of candidates the data refer to brazil where federal transfers to municipal governments change exogenously at given population thresholds allowing us to implement a regression discontinuity design the empirical evidence shows that larger transfers increase observed corruption and reduce the average education of candidates for mayor these and other more specific empirical results are in line with the predictions of the theory jel d72 d73 h77 o17 o18

what wins votes why some politicians opt out of clientelism in a context where clientelism is widespread why do some politicians choose not to condition the delivery of goods and services to citizens on individual political behavior i argue that the answer to this question lies in the heretofore unexamined electoral costs of clientelism clientelism decreases support from nonpoor constituents even while it generates votes from among the poor taking into account these costs and other factors that shape politician incentives i posit that the interaction between political competition and poverty will explain variation in clientelism i test this claim using an original measure of clientelism that assesses mayoral involvement in social policy implementation in argentine municipalities the results of statistical analysis suggest that high levels of political competition are compatible with clientelism when poverty is also high only when high competition is coupled with low rates of poverty does clientelism decline

do gasoline prices respond asymmetrically to crude oil price changes the authors test and confirm that retail gasoline prices respond more quickly to increases than to decreases in crude oil prices among the possible sources of this asymmetry are production inventory adjustment lags and market power of some sellers by analyzing price transmission at different points in the distribution chain the authors attempt to shed light on these theories spot prices for generic gasoline show asymmetry in responding to crude oil price changes which may reflect inventory adjustment effects asymmetry also appears in the response of retail prices to wholesale price changes possibly indicating short run market power among retailers

clientelism and vote buying lessons from field experiments in african elections electoral clientelism and vote buying are widely perceived as major obstacles to economic development this is because they may limit the provision of public goods in this paper we review the literature on clientelism and vote buying and propose the use of field experiments to evaluate empirically the consequences of these phenomena we provide an overview discuss implementation and interpret the main results of recent field experiments conducted by the authors in west african countries clientelism and vote buying seem to be effective and to enjoy widespread electoral support the results suggest that increased access to information and political participation by women may limit clientelism in addition voter education campaigns may undermine the effects of vote buying on voting behaviour we argue that our findings may inform the design of development aid interventions as a way effectively to increase public good political accountability we also discuss directions for fruitful future research copyright 2009 oxford university press