equivalence scales a household production approach abstract the paper uses a cost minimization version of becker s household production analysis and microdata from household expenditure and time use surveys to estimate equivalence scales or relative costs for the intrafamily classes of adults and children in australia for the period 1975 1976 the findings set reference standards for further research with economic welfare policy applications in australia

economic welfare evaluations for producers under uncertainty the validity of producer and consumer surplus measures of firm welfare under risk is examined under constant absolute risk aversion and output price uncertainty only these measures are an exact measure of firm welfare as defined by compensating variation equivalent variation or the change in the certainty equivalent under decreasing absolute risk aversion qualitative comparisons of various measures are discussed for example producer s surplus as measured by the area above the uncompensated risk averse supply curve overstates the compensating variation of a change in expected price of output procedures for calculating firm welfare under production uncertainty and a variety of economic environments are proposed generally these procedures are applicable only when absolute risk aversion is constant

the value of ideal contingency markets in agriculture an incomplete markets equilibrium in which no contingency markets are available is compared to a complete markets equilibrium formed by introducing a futures market and a crop insurance market the two regimes are compared using comparative static and welfare analyses numerical examples highlight important characteristics of the model and illustrate how the effects of introducing contingency markets can be quantified the main conclusions are that contingency markets in agriculture increase economic efficiency but there is no guarantee that farmers and consumers both benefit it is found that futures and crop insurance markets may reduce farmer welfare when the demand for farm products is price inelastic

local political business cycles evidence from philippine municipalities abstract this paper establishes the existence of short term political business cycles in the philippines over the period 2003 2009 examining a balanced panel of 1143 municipalities shows that employment levels increase in the two pre electoral quarters and drop sharply in the two quarters following elections further results are consistent with the cycles being generated by incumbents attempts to increase their chances of re election cycles are stronger in sectors that incumbents are more able to influence and when they expect stronger electoral competition evidence suggests that these cycles are detrimental to development

safety and quality regulation and stage of distribution let 0 denote the level of quality inherent in a food product that is delivered to some terminal market in this paper i characterize allocations over 0 and provide an economic rationale for regulating safety and quality standards in the food system zusman and bockstael investigate the theoretical foundations for imposing standards and stress the importance of providing a tractable conceptual foundation despite a wealth of contributions that are mainly empirical for reviews of these works see respectively caswell and antle there have been relatively few attempts to model formally the linkages between farm and food markets when food quality and consumer safety are at issue here i attempt to provide such a framework building on key contributions in the theoretical literature and linking them in a simple model of quality determination in a vertically related marketing channel the food marketing model is due to gardner spence provides a foundation for pareto improving intervention in a deterministic model of quality provision and leland building on the classic paper by akerlof investigates licensing and minimum standards when the information structure is incomplete linking these ideas in a satisfactory model of the food markets is the main objective of the paper

the influence of household composition on household expenditure patterns theory and spanish evidence a concept of demographic separability is proposed that formalizes the notion that there are groups of goods adult goods that have little or no relationship to specific classes of household demographics the numbers or ages of children that there exist adult goods demographically separable from children is a necessary but not sufficient condition for the validity of rothbarth s method for measuring child costs we propose two different methods for testing demographic separability and present results from a 1981 survey of spain the econometric evidence is in fair agreement with the theoretical presuppositions

on measuring child costs with applications to poor countries the theoretical basis for measuring child costs is discussed and detailed consideration is given to two straightforward procedures for calculation engel s food share method and rothbarth s adult good method each of these methods embodies different definitions of child costs so that the same empirical evidence can generate quite different estimates depending on the method used it is shown that true costs are generally overstated by engel s method and understated by rothbarth s procedure although the latter unlike the former can provide a sensible starting point for cost measurement our estimates from sri lankan and indonesian data suggest that children cost their parents about 30 40 percent of what they spend on themselves

errors in the numerical assessment of the benefits of price stabilization this paper presents a simple computational procedure for determining a consumer s willingness to pay to have a price stabilization policy implemented numerical simulations are then provided which demonstrate that the commonly used expected surplus measures whether hicksian or marshallian can in fact seriously misstate the true benefits of price stabilization these simulations also illustrate the extent to which the results may be dependent upon the assumptions made implicitly or explicitly regarding the consumer s attitudes toward risk thereby underscoring the need to conduct sensitivity analyses to determine the robustness of cost benefit assessments with respect to these assumptions

prices technology and farm size in this paper we construct and empirically test a theory of the agricultural firm which explains the long term growth in farm size in the united states typically the u s farm unit is a family enterprise consequently the ratio of the opportunity cost of farm labor to the price of machinery services determines the size of the farm operation by influencing the machine labor ratio applying the model to u s data we explain virtually all of the growth in the machine labor ratio and in farm size over the 1930 70 period by changes in relative factor prices without reference to technological change or economies of scale

the determination of spot and futures prices with storable commodities this paper analyzes the effects of futures trading in a market for a storable commodity in which producers and speculators are assumed to be risk averse and specifications of the aggregate supply and inventory demand functions are derived from explicit optimization a critical aspect is how the parameters of these functions change with the introduction of the future market as it is through these induced parameter changes that the futures market exerts its influence on the spot price the effects of the futures market on both the long run average spot price and its variance are analyzed while we are unable to draw any definitive conclusions on this issue we find that in all cases considered the futures market stabilizes the spot price as well as lowering its long run mean for many years now the question of the effects of futures trading on the stability of spot prices has been extensively debated this topic has been discussed at various levels for example farmers and agricultural interest groups have claimed that futures trading destabilizes spot prices thereby imposing welfare losses on the economy in the united states congress has decided that futures trading can cause price destabilization and has subjected futures trading to the regulation of the commodity futures trading commission at a more analytical level economists have been investigating the issue both empirically and more recently theoretically as well

unemployment and small cap returns the nexus in other work moscarini and postel vinay 2008 2009a we find a distinct cyclical pattern of the relative performance of large and small businesses in terms of net job creation large employers destroy proportionally more jobs during and right after recessions and create proportionally more jobs late in expansions relative to small employers differential size growth between small and large firms is strongly positively correlated with the unemployment rate this pattern is observer both in a 1978 2005 census of u s employers the business dynamics statistics and among listed companies in compustat in this paper we show that this cyclical pattern of relative performance is also reflected in stock returns specifically we show that the difference in returns between benchmark portfolios of small cap stocks and portfolios of large cap stocks is also positively correlated with the unemployment rate financial consultants and fund managers commonly recommend investing in small cap stocks during business cycle recoveries our findings while consistent with that advice pertain to all phases of the business cycle we propose an explanation of both facts based on dynamic competition between employers of different sizes and different productivities the model is a stochastic dynamic version of the job search and wage posting model of kenneth burdett and dale t mortensen 1998 which we analyze in detail in moscarini and postel vinay 2009b it is a job ladder model where smaller firms are smaller because they are less productive offer lower wages therefore are less attractive to workers and less successful in poaching workers out of competing firms this lack of competitiveness on the labor market is more of a drawback

the choice of techniques and the optimality of market equilibrium with rational expectations this paper shows that in the absence of a complete set of risk markets prices provide incorrect signals for guiding production decisions even if all individuals have rational expectations concerning the distribution of prices which will prevail on the market next period the market allocation is in general not a constrained pareto optimum essentially the only conditions under which for all technologies the market equilibrium is a constrained pareto optimum are those in which risk markets are redundant we derive the necessary and sufficient conditions for redundancy of risk markets which turn out to be extremely restrictive

contemporaneous and intertemporal child costs equivalent expenditure vs equivalent income scales abstract parents may provide for their children by drawing on savings or borrowing as well as by reducing current consumption this means that child costs may be partly paid from reducing consumption in periods when the children themselves are not in the family static comparisons of consumption costs between households with and without children are therefore affected by the extent to which parents are willing and able to meet child costs through intertemporal transfers this paper analyses the implications of this argument for the estimation of adult equivalent scales and provides empirical illustrations using individual household data

optimal food price stabilization in a small open developing country in poor countries most governments implement policies aiming to stabilize the prices of staple foods which often include storage and trade measures insulating their domestic market from the world market it is of crucial importance to understand the precise motivations and efficiency of those interventions because they can have consequences worldwide this paper addresses those issues by analyzing the case of a small open developing country confronted by shocks to both the crop yield and foreign price in this model government interventions may be justified by the lack of an insurance market for food prices considering this market imperfection the authors design optimal public interventions through trade and storage policies they show that an optimal trade policy largely consists of subsidizing imports and taxing exports which benefits consumers at the expense of producers import subsidies alleviate the non negativity of food storage in other words when stocks are exhausted subsidizing imports prevents domestic price spikes one striking result an optimal storage policy on its own is detrimental to consumers since its stabilizing benefits leak into the world market and it raises the average domestic price by contrast an optimal combination of storage and trade policies results in a powerful stabilizing effect for domestic food prices

background risk of food insecurity and insurance behaviour evidence from the west bank this paper explores behavioural changes resulting from the presence of a uninsurable background risk due to markets incompleteness not all risks are insurable we empirically test the theory and the intuition suggesting that people bearing an uninsurable background risk are less willing to bear other insurable risks and therefore increase their demand for insurance against insurable risks we present a case study on the palestinian territories we consider the implications of a background risk of food insecurity a major formally uninsurable risk using nationally representative household data using a bivariate probit model we find that exposure to severe food insecurity risk increases the propensity to insure against health risks and this propensity is increasing in background risk intensity our findings point to possible incentive changes towards the desirability of insurance that have implications for policy design

demographic variables in demand analysis in this paper the authors discuss five procedures for incorporating demographic variables into theoretically plausible demand systems translating scaling and the gorman reverse gorman and implicit prais houthakker procedures these five procedures are used to incorporate a single demographic variable the number of children in a household into the generalized ces demand system using household budget data for the united kingdom for the period 1966 1972 excerpt

shifting foundations of agricultural policy analysis welfare economics when risk markets are incomplete the neat alignment of resources output and prices specified by the perfect competition model is far from duplicated in free markets and the equally neat alignment assumed under the constraints of a program is not experienced when programs are in effect in particular areas under empirically determined supply curves are unlikely to represent opportunity costs the basic theory is invaluable in providing a conceptual orientation for the analysis of programs but the assumptions implicit in the literal use of simple forms of it for policy conclusions are breathtakingly heroic

consumption technology and the intrafamily distribution of resources adult equivalence scales reexamined adult equivalence scales are supposed to measure differences in the needs of households of different demographic composition formally they purport to measure the change in the cost of attaining a certain welfare level when the family composition varies this paper shows that the definition and the measurement of these scales depend crucially on the concept of welfare used when welfare is the utility parents derive from their own consumption one has to assume separability of parents and children s consumption this assumption implies that the only way of imputing the intrafamily allocation of resources is by observing the consumption patterns of adult goods regardless of the definition used one cannot separate the factors reflecting home technology i e needs from those determining the intrafamily distribution rule i e wants out of consumption data

on the costs of food price fluctuations in low income countries abstract conventional welfare measures of the costs of food price fluctuations in low income countries are extended to allow for both economic growth and food security effects the analysis reveals that growth and food security effects may dominate more conventional welfare costs of food price fluctuations although estimating the empirical magnitude of the effects is hampered by the lack of consensus on the extent to which food price fluctuations actually reduce economic growth and food security even if the welfare costs of food price fluctuations are high there are many challenges to the design and successful implementation of price stabilization schemes

information and economic analysis a perspective ten years ago i delivered a paper before this group with the title information and economic analysis i chose the title deliberately i did not call the subject on which i was speaking the economics of information because to do so would have been to suggest that my topic like the economics of agriculture or the economics of industry or the economics of labour represented another branch of specialisation within economics i wanted to suggest that informational considerations were in fact central to the analysis of a wide variety of phenomena that they constituted a central part of the foundations of economic analysis at the time though economists had long paid lip service to the importance of information there was little formal literature the last decade has seen a burgeoning of the literature it has become to the late 7o s and early 8o s what growth theory was to the early 6o s and it has been greeted with some of the same scepticism there seems to be a myriad ofspecial cases and few general principles the little examples are often contrasted unfavourably with the generality of general equilibrium theory what have we learned have diminishing returns set in are there fruitful directions for future research and if so what are they these are the questions which i wish to address here the work of the past decade has made i think a fundamental and lasting contribution to economic analysis the contributions have been both negative and positive we have learned that much of what we believed before is of only limited validity that the traditional competitive equilibrium analysis though having the superficial appearance of generality in terms of superscripts and subscripts is indeed not very general the theory is not robust to slight alterations in the informational assumptions it is but a special and not very plausible example among the possible set of informational assumptions which can be employed to characterise an economy at the same time the theory has been able to provide insights into phenomena about which the traditional model had nothing to say or which seemed inconsistent or inexplicable within the competitive paradigm it has provided some of the micro foundations for macro economics it has provided the basis of a new theory of the firm of a new new welfare economics and of a theory of economic organisation including a comparison of economic

modelling farmer uptake of perennial energy crops in the uk abstract the uk biomass strategy suggests that to reach the technical potential of perennial energy crops such as short rotation coppice src willow and miscanthus by 2020 requires 350 000 hectares of land this represents a more than 20 fold increase on the current 15 546 hectares previous research has identified several barriers to adoption including concerns over security of income from contracts in addition farmers perceive returns from these crops to be lower than for conventional crops this paper uses a farm level linear programming model to investigate theoretical uptake of energy crops at different gross margins under the assumption of a profit maximising decision maker and in the absence of known barriers to adoption the findings suggest that while src willow at current prices remains less competitive returns to miscanthus should have encouraged adoption on a wider scale than at present this highlights the importance of the barriers to adoption recently announced contracts for miscanthus appear to offer a significant premium to farmers in order to encourage them to grow the crops this raises the question of whether a more cost effective approach would be for government to provide guarantees addressing farmers concerns including security of income from the contracts such an approach should encourage adoption at lower gross margins

incomplete markets and government agriculture policy this paper investigates the welfare effects of several stereotypical agricultural policies in an economy with production risk and incomplete contingent claim markets the policies analyzed include target price deficiency payment programs the brannan plan production controls the cochrane plan and land set asides when there is no trading in contingent claims and when economic parameters take on values characteristic of staple food markets the paper finds that ajoint brannan plan production control program is often welfare increasing however production controls on their own tend to be welfare decreasing in addition land set asides are generally welfare reducing even in the presence of a brannan plan these results are derived analytically in a simple equilibrium model they are illustrated with a numerical example which demonstrates that welfare benefits from typical agricultural policy interventions can be large

spending on daughters versus sons in economic recessions although parents often try not to favor one child we examine whether specific environmental factors might bias parents to favor children of one sex over the other this research draws on theory in evolutionary biology suggesting that investment in female versus male offspring depends on resource availability applying this to consumers a series of experiments show that poor economic conditions favor resource allocations to daughters over sons for example poor conditions led people to bequeath more assets to girls in their will and to choose girls to receive a us treasury bond and a beneficial extracurricular activity it is proposed that this happens because spending on children represents a reproductive investment and that boys and girls relative reproductive value varies with economic conditions supporting this account perceptions of which child will have more children statistically mediates the effect of economic conditions on preferences for girls consequently the effect is strengthened as a child approaches reproductive age and it is moderated by individual differences risk aversion and monogamy directly related to our theoretical model this research contributes to the consumer behavior literature by revealing how why and when environmental factors influence spending on girls versus boys

toward a theory of agricultural insurance in this paper we develop a theory of crop insurance we start by reaffirming the risk spreading role of competitive crop insurance markets it is argued however that once the problems of imperfect information are recognized a competitive crop insurance market may not exist at all two candidates present themselves first is market insurance with the public sector as a source of costly information gathering and dissemination and second is the direct provision of crop insurance by the public sector we focus on the latter and develop a model of public insurance as a decentralized plan where the farmer determines factor utilization taking the insurance contract as given in turn the insurance agency taking factor utilization as determined by the farmer chooses the optimal contract so as to maximize the value of aggregate output in the economy

adult equivalence scales and the size distribution of income 1990 adult equivalence scales and the size distribution of income applied economics vol 22 no 11 pp 1611 1623

spatio temporal modeling of agricultural yield data with an application to pricing crop insurance contracts this article presents a statistical model of agricultural yield data based on a set of hierarchical bayesian models that allows joint modeling of temporal and spatial autocorrelation this method captures a comprehensive range of the various uncertainties involved in predicting crop insurance premium rates as opposed to the more traditional ad hoc two stage methods that are typically based on independent estimation and prediction a panel data set of county average yield data was analyzed for 290 counties in the state of parana brazil for the period of 1990 through 2002 posterior predictive criteria are used to evaluate different model specifications this article provides substantial improvements in the statistical and actuarial methods often applied to the calculation of insurance premium rates these improvements are especially relevant to situations where data are limited

food price policy the rationale for government intervention abstract policy makers in the most successful developing countries have not accepted either of the two major schools of thought on food price policy the neo classical school favours free trade to maximize efficiency of resource allocation the structuralist school favours interventions to satisfy goals for income distribution especially in the rapidly growing rice based economies of asia policy makers have been more concerned about stability of domestic prices than their level relative to world prices this concern traditionally dismissed by economists as purely political is justified on economic grounds because of improved macroeconomic and dynamic efficiency from stable food prices the paper identifies both the benefits from food price stability and the costs of achieving it