analyzing the impact of the world s largest public works project on crime india started the implementation of a rural public works program in 2006 covering all districts of the country within 3 years the program guarantees 100 days of employment per year at minimum wage to each rural household with the goal of reducing joblessness and poverty we exploit the design and implementation of this program to investigate its employment impact on various types of crimes to provide rare evidence on the employment crime relationship in a developing country context we find that employment generated by the program has a negative impact on both property crime and violent crime the same conclusion is reached when we analyze the impact of the program using its staggered rollout structure as the source of identification in a difference in difference analysis although crime elasticities with respect to employment are small this finding represents another dimension of the social benefit generated by the program jel k4 e24 h54

distinguishing between equilibrium and integration in spatial price analysis this article introduces a new spatial price analysis methodology based on maximum likelihood estimation of a mixture distribution model incorporating price transfer cost and trade flow data this method permits differentiation between market integration and competitive market equilibrium and derivation of intuitive measures of intermarket tradability competitive market equilibrium perfect integration segmented equilibrium and segmented disequilibrium one can also use these estimates to derive semiparametric measures of time varying regime probabilities to track changing market conditions an application to trade in soybean meal among pacific rim economies demonstrates the usefulness of the method copyright 2002 oxford university press

education work and crime a human capital approach this article develops a model of crime in which human capital increases the opportunity cost of crime from foregone work and expected costs associated with incarceration older more intelligent and more educated adults should commit fewer street unskilled crimes white collar crimes decline less or increase with age and education predictions for age crime and education crime relationships receive broad empirical support in self report data from the national longitudinal survey of youth and arrest data from the uniform crime reports the effects of education training and wage subsidies as well as enforcement policies on criminal behavior are discussed

measures of agricultural support policies in transition economies 1994 1997 in the pre reform period agriculture was heavily subsidized in most central and eastern european countries ceec s around 1989 most ceec s began to open up their markets liberalize prices and reduce subsidies and the level of support provided to agriculture declined drastically while not questioning the direction of economic reforms there was concern that the decline in profitability in farning would slow down the impetus for farm restructuring in particular the drive for privatization of land as demanded by potential new farmers however after pursuing rather liberal agricultural policies at the beginning of the transition period some ceec s in recent years have reintroduced higher levels of support stefan tangerman 1996 in this paper based on estimates of various support indicators for the period beginning roughly in 1994 i will address some of the more important questions regarding agricultural support what has been the impact of trade and price policy interventions on the net income of farmers and government budgets how level has the playing field been since the reintroduction of support does the current economic environment provide an appropriate and sound basis for adjustment toward a more competitive agricultural sector this analysis is part of a comparative study by the world bank which covers bulgaria poland romania ukraine and russia in progress plus germany and turkey two reference cases geographically located at the border of the ceec s for each country employing the same methodology the study considers approximately eight commodities which are representative of the country s major import competing and export products

producer subsidy equivalents for russian agriculture estimation and interpretation in this paper we present estimates of producer subsidy equivalents pses for russian agriculture over the 1992 94 period the estimated values are highly negative indicating that russian agriculture has been heavily taxed two types of taxation have been at work first government trade and price policies at the regional as well as the federal level have operated to keep domestic producer prices below world prices second deficient russian physical and institutional infrastructure has resulted in high domestic transaction costs for russian agricultural output since in competing with goods on the world market russian producers must bear all the costs of getting their output to final users the high transaction costs in an economic sense also tax domestic production the pse methodology was created to measure the effect on agricultural prices and incomes of government policies targeted specifically at agriculture to be consistent with standard methodology one should subtract out from the initial price gap estimates for russian agricultural output that part of the price differential caused by deficient domestic infrastructure an alternative approach though is based on recognition that the deficient infrastructure was in

elasticities of substitution in real business cycle models with home production this paper constructs a simple model of home production that demonstrates the connection between the intertemporal elasticity of substitution in market consumption ies and the static elasticity of substitution between home and market consumption ses understanding this connection is important because there is a large body of empirical evidence suggesting that the ies is small but little evidence on the size of the ses we use our framework to shed light on the properties of a home production model with a low ies we find that such a model must have three fundamental properties in order to match key aspects of aggregate u s data first the steady state growth rate of technology must be the same across sectors second shocks to technology must be sufficiently positively correlated across sectors third capital must be used more intensively in the market sector than in the home sector a home production model with these three properties can be surprisingly successful at reconciling the rbc paradigm with evidence for a low ies

legislative organization of fiscal policy in the voluminous literature on fiscal policy there is little evidence about the impact of legislative organization on shaping fiscal decisions by comparing different organizations of committee structure to control tax and spending policies this article presents such evidence regarding spending we test whether the dispersion of spending authority among multiple committees creates a problem similar to that of the common pool using american state data we find that when only one committee has the authority to spend spending is restrained relative to when spending authority is balkanized regarding taxation we hypothesize that if a single committee controls not only all spending authority but also all taxation authority that committee will have more incentive to tax than a committee that does not control spending it can obtain the benefits of increased taxation more directly again this proposition is supported by evidence at the state level

calculating levels of protection is it always appropriate to use world reference prices based on current trading status abstract protection measures such as the nominal protection coefficient npc the effective protection coefficient epc the producer subsidy equivalent pse and the consumer subsidy equivalent cse are conventionally calculated using world reference prices based on current trading status under certain conditions the conventional approach can lead to incorrect estimation of the degree and sometimes even the direction of protection this paper spells out the conditions under which use of world reference prices based on current trading status is incorrect and presents data for wheat in pakistan to illustrate how failure to consider these conditions can lead to misleading policy recommendations

the transfer efficiency and trade effects of direct payments all the different ways governments use to provide financialsupport to farmers can potentially distort trade and reduce net economic welfare however there are some types of support that are less trade distorting and more efficient than others this article reports the results of an analysis that examined different policy measures providing support to crop producers to rank them in terms of their effects on a selection of indicators with a particular focus on trade distortion and income transfer efficiency 1 we begin with an analysis of the differences in policy impacts among the three main categories of support provided to crop producers in oecd countries market price support payments based on land use and payments based on use of purchased inputs oecd 2001c that analysis is based on a two region model of equilibrium in the world market for a representative crop analytical solutions to this modelare devel oped to compare the production trade and income effects of the different support measures following procedures used in cahill and in moro and sckokai comparisons are of impact ratios using market price support as the reference category these ratios measure the effect on production trade or farm income of a given joe dewbre jesus anton and wyatt thompson are economists in the agricultural directorate of the organization for economic cooperation and development where the underlying analysis was undertaken the views expressed are our own and not necessarily those of the oecd secretariat or its member countries we thank our secretariat colleagues ken ash carmel cahill wilfrid legg and michele patterson for helpful comments on an earlier draft and stephane guillot for computer programming assistance this article was presented in a principal paper session at the aaea annualmeeting chicago il august 2001 the articl es in these sessions are not subjected to the journal s standard refereeing process 1

on the transmission of world agricultural prices two questions are asked about the relationship between domestic prices and world prices of agricultural commodities are variations in world prices transmitted to domestic prices domestic prices are regressed on world prices in various forms taking into account the possible effects of exchange rates and inflation the empirical analysis is based on data from the food and agriculture organization of the united nations for 58 countries from 1968 78 and for the countries of the european community from 1961 85 the results show that most of the variations in world prices are transmitted and that they constitute the dominant component in the variations of domestic prices

degradation of environmental capital and national accounting procedures abstract the capital theoretic approach to the environment as a wastable stock a stock with a flow of abatement services is explored in a simple ricardo like model involving wheat production and pollution production as an essential by product we then turn to how the national accounts are implicit in growth or capital theory models and how formulae emerge for accounting for the wasting of environmental capital airsheds and watersheds from excessive use

valuing lost home production of dual earner couples using a life cycle model in which women divide their time between home and market work we establish a link between retirement wealth and the value of forgone home production we use data from the health and retirement study to estimate the model s parameters and adjust the growth rate of gdp to reflect reductions in non market output we find that the value of forgone home production is modest about 25 percent of women s measured earnings

rational addiction and the effect of price on consumption legalization of such substances as marijuana heroin and cocaine surely will reduce the prices of these harmful addictive drugs by the law of the downward sloping demand function their consumption will rise but by how much according to conventional wisdom the consumption of these illegal addictive substances is not responsive to price however conventional wisdom is contradicted by becker and murphy s 1988 theoretical model of rational addiction the becker murphy b m analysis implies that addictive substances are likely to be quite responsive to price in this paper we summarize b m s model of rational addiction and the empirical evidence in support of it we use the theory and evidence to draw highly tentative inferences concerning the effects of legalization of currently banned substances on consumption in the aggregate and for selected groups in the population addictive behavior is usually assumed to involve both reinforcement and tolerance reinforcement means that greater past consumption of addictive goods such as drugs or cigarettes increases the desire for present consumption but tolerance cautions that the utility from a given amount of consumption is lower when past consumption is greater these aspects of addictive behavior imply

the ams in agricultural trade negotiations a review abstract this article reviews the role of the aggregate measure of support ams in the agricultural trade negotiations of the uruguay round contrary to expectations at the start of these negotiations the ams only occupies a subsidiary position in the final agreement in order to explain this first an economic analysis is presented of the producer subsidy equivalent pse the basic ams concept in the gatt discussions secondly the political ams debate is described and analysed using information from unpublished gatt documents although the pse concept is based on simple assumptions its measurement already meets a number of difficult problems policy coverage product coverage external reference prices currency once these are solved the concept may offer a brief insight into actual governmental support in agriculture however the calculations do not provide a sound measure of the trade distortions caused by agricultural policies mainly for that reason the idea of a pure aggregated approach based on the ams proved unsuccessful in the negotiations instead the contracting parties accepted the framework of making binding agreements on three separate areas internal support market access and export support while important and very specific commitments were made in the areas of agricultural imports and exports the ams has only found application in the internal support area

a dynamic model of differential human capital and criminal activity this paper presents a dynamic model of criminal activity individuals are endowed with legal and criminal human capital potential incomes in legal and criminal sectors depend on the level of the relevant human capital the rate of return and random shocks human capital can be enhanced by participating in both sectors legal human capital can also be enhanced through investment human capital is subject to depreciation individuals maximize expected discounted lifetime utility which depends on consumption the model allows analyses of the effects of recessions imprisonment rehabilitation scenarios sanctions and returns to human capital new insights such as hysteresis in criminal behaviour are obtained

are women more risk averse we find that single women exhibit relatively more risk aversion in financial decision making than single men using u s sample data we examine household holdings of risky assets to determine whether there are gender differences in financial risk taking as wealth increases the proportion of wealth held as risky assets is estimated to increase by a smaller amount for single women than for single men gender differences in financial risk taking are also influenced by age race and number of children greater financial risk aversion may provide an explanation for women s lower levels of wealth compared with men s jel j16 d81 g11

using electoral cycles in police hiring to estimate the effect of police on crime comment previous empirical studies have uncovered little evidence that police reduce crime possibly due to simultaneity problems this paper uses the timing of mayoral and gubernatorial elections as an instrumental variable to identify a causal effect of police on crime increases in the size of police forces are shown to be disproportionately concentrated in mayoral and gubernatorial election years increases in police are shown to substantially reduce violent crime but have a smaller impact on property crime the null hypothesis that the marginal social benefit of reduced crime equals the costs of hiring additional police cannot be rejected

help wanted economists crime and public policy beginning with gary w becker s 1968 article on crime and punishment economists have contributed important theoretical insights and empirical findings to the study of criminal behavior but the influence of economists on crime relevant research and over policy debates remains negligible this essay summarizes some basic data on the causes of crime the social costs and benefits of incarceration and replenishing social capital work on crime by economists should become influential in setting research agendas and shaping policy debates but economists will have to roll up their sleeves complexify their models and confront a real world prisoner s dilemma or two

measuring sustainable welfare a new approach to the isew abstract sustainability and welfare assessment is a contemporary theme of major scientific and policy relevance requiring the consideration of multiple dimensions and diverse perspectives the economic approach to sustainability and welfare assessment has frequently relied on alternatives or adjustments to gdp widely used as an indicator of macroeconomic performance several authors have proposed alternative indicators such as the isew which intend to measure sustainability and economic welfare in a way that avoids the limitations of gdp namely accounting for the value of externalities the distribution of income and natural resources depletion since daly and cobb 1989 there have been proposed improvements to the isew however its aptitude to represent a sound alternative to gdp is still the subject of scientific debate this paper presents a new approach to the isew named modified isew including new components and methodological changes for the estimation of the index these have the purpose of avoiding some of the index shortcomings and allow for a direct comparison with the gdp which are advantages over previous studies an application is developed for the us case taking advantage of wide data availability and the possibility of comparing the results with previous works the results obtained provide a clearer picture of the success or failure of environmental and social policies namely by avoiding the tampering effect resulting from the cumulative accounting of environmental externalities this work also emphasizes the inadequacy of gdp as a welfare indicator as well as the need to develop and adopt alternative indicators

housework fixed effects and wages of married workers although the primacy of household responsibilities in determining gender differences in labor market outcomes is universally recognized there has been little investigation of the direct effect of housework on wages using data from the panel study of income dynamics cross sectional wage regressions reveal a substantial negative relation between wages and housework for wives which persists in specifications controlling for individual fixed effects the evidence for husbands is inconclusive married women s housework time is on average three times that of married men s the addition of housework time to the wage equations increases the explained component of the gender wage gap from 27 30 percent to 38 percent

measuring personal savings consumption and disposable income in canada this paper highlights the fact that more adequate measurement of personal savings as well as a consumption and disposable income in canada yields a totally different picture from that projected by the national accounts niea the author measures of consumption excludes purchases of durables but includes their depreciation savings are measured as the change in the net real market value of the end of year balance sheet while according to the niea the savings income ratio reached 15 percent in 1981 their measure suggests that this ratio was negative and amounted to 10 5 percent in conclusion possible implications of the mismeasurement of savings on economic policy decisions are considered

the european union enlargement the case of agriculture in slovenia abstract the costs and benefits of eu accession for slovenian agriculture were estimated and discussed by use of comparative and empirical analyses the structural and natural conditions of slovenian agricultural production and policies differ a lot from the european ones the production is small in scale the support is based on price subsidies producer prices are almost at the level of the european prices and hence they are significantly higher than on the world market the pse computed shows that slovenian agricultural support is at the average level of the oecd member states which directly implies the highest agrarian protection level amongst all ceec candidates by using the static deterministic income model for slovenian agriculture the consequences of various scenarios of accession to the common agricultural policy cap have been estimated also indicating the potential policy changes running the present cap the net income in agriculture would increase further changes of cap and restrictive policy towards new member countries would abate the attractiveness of eu for the slovenian agricultural producers the budget benefits of the eu accession could be described as slightly positive their volume depends on negotiations results as well as on the preparation of domestic policy the eu accession and trade liberalisation process by slovenia calls for a reform of domestic agricultural policy

use of the producer subsidy equivalent as a measure of support to agriculture in transition economies measurements of total support or assistance to agriculture using the producer subsidy equivalent pse have become a standard tool of policy analysts in the last decade from its initial use by josling at the food and agriculture organization fao josling fao the pse grew in popularity in parallel with the gatt uruguay round agricultural trade negotiations failure in previous gatt rounds to bring agriculture adequately within gatt rules and disciplines had been attributed in particular to difficulties in capturing the effects of the multiplicity of domestic measures and nontariff barriers to trade in agricultural products grogan pp 297 306 a common yardstick capturing the effects of all these policy measures was needed the organization for economic cooperation and development oecd developed the methodology and applied it progressively to all oecd countries and recently to economies in transition see oecd 1994 1995c and 1995d

analysing agricultural policy reforms under transition in bulgaria abstract the elaboration of an appropriate incentive system including measures of agricultural price and trade policy has important consequences for bulgarian agriculture this paper offers a brief picture of the process of reform towards the establishment of a market economy in bulgaria as well as of the main developments in its agricultural sector an analysis is then presented of the impact of alternative agricultural price and trade policy scenarios for the period up to 2002 the results show that the impact of price and trade policies is modest when compared to that of technological change and the increase in incomes adoption of the cap will stimulate production decrease demand and have strong adverse effects on consumers and taxpayers and wider negative effects on the competitiveness of the food industry thus the issue of extending financial support for structural policies rather than granting direct aid requires further investigation

crime fertility and economic growth theory and evidence abstract this paper studies the link between crime and fertility and the way by which they jointly impact on economic growth in a three period overlapping generations model where health status in adulthood depends on health in childhood adult agents allocate their time to work leisure child rearing and criminal activities an autonomous increase in the probability offenders face in escaping apprehension increases both crime and fertility non monotonically giving rise to an ambiguous effect on growth a cross country empirical examination based on data that span four decades supports the non linear effects on both crime and fertility at the same time it reveals a negative effect on output growth

international business cycles financial markets and household production abstract this paper investigates the properties of an international real business cycle model with household production we show that a model with disturbances to both market and household technologies reproduces the main regularities of the data and improves existing models in matching international consumption investment and output correlations without irrealistic assumptions on the structure of international financial markets sensitivity analysis shows the robustness of the results to alternative specifications of the stochastic processes for the disturbances and to variations of unmeasured parameters within a reasonable range

a theory of rational addiction we develop a theory of rational addiction in which rationality means a consistent plan to maximize utility over time strong addiction to a good requires a big effect of past consumption of the good on current consumption such powerful complementarities cause some steady states to be unstable they are an important part of our analysis because even small deviations from the consumption at an unstable steady state can lead to large cumulative rises over time in addictive consumption or to rapid falls in consumption to abstention our theory also implies that cold turkey is used to end strong addictions that addicts often go on binges that addicts respond more to permanent than to temporary changes in prices of addictive goods and that anxiety and tensions can precipitate an addiction

the concept of income in a general equilibrium this paper derives a concept of aggregate real income for a competitive economy in general equilibrium consisting of heterogeneous infinitely lived people and relates it to current and future consumption possibilities an important characteristic of our measure of income which we call real income is that deflation is carried out using a consumption deflator rather than any price index of output we suggest that it may be inappropriate to regard capital gains as income we also present a coherent treatment of the effects of changes to the terms of trade on real income and explain the implications of this for resourceexporting economies hicks 1939 defined income as the maximum amount a man can spend and still be as well off at the end of the week as at the beginning since then there has been a succession of attempts to apply this definition the problem is as hicks acknowledged that the correct interpretation of as well off is by no means clear weitzman 1976 and asheim 1997 suggest that income is equal to the level of consumption which could be sustained indefinitely out of the capitalized value of current income and equate this to being as well off at the end of the week as at the beginning eisner 1988 argues specifically that in a total incomes system effects arising from asset price changes and conventionally regarded as capital gains should be included with income here building on earlier work by sefton and weale 1996 asheim and weitzman 2001 and pemberton and ulph 2001 we provide a comprehensive account of the implications of the idea that as well off should be understood to mean that the present discounted value of current and future utility should be unchanged over the interval considered we work in the context of a general equilibrium taking the prices established in the general equilibrium as given we first look at income from the production side showing that in an economy where prices and the interest rates satisfy an intertemporal efficiency condition income along an equilibrium path can be interpreted as a weighted average of the value of the current and future consumption bundle plus a term adjusting for changes in the nominal price level converting prices to real prices by deflating by the divisia consumption price index removes the need for this adjustment these results are suggestive first they offer a way of defining the income of a household entirely in terms of its consumption possibilities second they indicate that to calculate real income deflation is best carried out using a price index of consumption this is a substantial divergence from current national accounting practice third because we have assumed constant returns there is a trivial aggregation result that aggregate income is equal to the sum of the incomes from the individual sectors

liquidity constraints and the substitutability between private and government consumption the role of military and non military spending i introduction using data for a number of economies we investigate i the relationship between private consumption and two types of government spending military and non military and ii the severity of liquidity constraints because of their importance for macroeconomic modeling in theory and practice 1 both issues have been the subjects of considerable theoretical and empirical investigation on the issue of liquidity constraints the most influential research has relied on hall s 1978 euler equation approach to the permanent income hypothesis in an attempt to reconcile hall s and flavin s 1981 methodologies hayashi 1982 modified hall s martingale result to allow for the possibility that a subset of consumers are liquidity constrained and showed that liquidity constraints can result in consumption s excess sensitivity to current income campbell and mankiw 1989 1990 1991 and jappelli and pagano 1989 have applied hayashi s methodology using data from the u s and several other oecd countries on the substitutability issue aschauer 1985 has modified hall s euler equation to allow for substitutability between government spending and private consumption and found that the two are substitutes for the u s karras 1994 however using a similar approach and data for 30 countries concludes that private and government consumption are better described as complementary or unrelated liquidity constraints and substitutability have been combined in studies by graham and himarios 1991 cushing 1992 and graham 1993 using u s data and by evans and karras 1996 for a number of countries a crucial limitation of most of these studies is the use of aggregate government consumption data which counterintuitively imposes a common substitutability parameter on all components of government spending 2 using recently available time series data for a large number of countries the present paper relaxes this restriction by decomposing government consumption into military and non military components enabling us to separately identify their relationship to private consumption the allocation of government consumption between military and non military functions has varied greatly across countries the appendix reports the average size of military and non military government shares in gdp as well as the military non military ratio by country over the 1970 1989 period average military expenditure as a fraction of gdp for example has ranged in our sample from 0 11 in mexico to 12 30 in jordan similarly the fraction of government consumption absorbed by military expenditure has ranged from 1 09 in mauritius to 66 82 in poland this sizable variability is promising in terms of cross sectional identification power but it also suggests that the estimated parameters must not be assumed to be common across countries the estimated model is derived in section ii which combines liquidity constraints and substitutability by nesting the approaches of hayashi 1982 and aschauer 1985 in the same section we discuss data sources and the estimation strategy which permits the estimated parameters to vary by country in a way that helps determine how they are influenced by country specific factors section iii estimates the model for a panel of the 66 countries for which annual data on all series are available for the 1970 1989 period the paper s main conclusions are given in section iv ii methodology and data we assume that consumers in economy i at time t derive utility from effective consumption c sup which we define as 1 mathematical expression omitted where c is private consumption g sup m and g sup nm are the military and non military components of government consumption the parameters theta sup m and theta sup nm measure the degree of substitutability between c and g sup m and c and g sup nm respectively

juvenile crime and punishment evidence from japan over the last decade juvenile crime has become a serious social problem in japan the juvenile law was revised in 2001 to impose harsher punishment on juvenile offenders this revision makes it possible to impose criminal punishment on 14 and 15 year old criminal offenders while those offenders aged 16 19 have always faced criminal punishment both before and after the revision using this revision as a natural experiment this study conducts a difference in differences estimation to examine the effect of punishment on juvenile crime the analysis provides evidence that punishment can deter juvenile crime in addition this research examines the criminal behaviour of 13 year olds who face no change in punishment but who soon will in the near future the results suggest that the revision also had a negative impact on the criminal behaviour of these younger offenders

understanding the persistence properties of international macroeconomic aggregates in this paper the ability of a two country model of growth and cycles is evaluated to explain the persistence properties of output and consumption across countries simulated output and consumption levels replicate the observed appearance of noncointegration across countries simulated output growth rates however do not explain the observed positive serial correlation of output growth rates the reallocation of resources in response to technology shocks generates a negative serial correlation for output growth rates

how useful is the pse in determining agricultural support the support of the agricultural sector in developed countries plays a major role in the international policy agenda the producer support estimate pse is one of the best known measures which has been developed by oecd and is used all over the globe in the pse all types of support are aggregated and one of the main components 70 at oecd level is the market price support mps here we show by means of characteristic examples that the mps has no clear relation to basic economic measures determining support for producers as a consequence of policy intervention the mps overestimates the consequences of tariffs and export subsidies and underestimates the consequences of quota systems in determining producer support misperception of the size and directions of support may affect policy decision making wrongly the paper indicates that weighted average producer prices corrected for quantity restrictions may be more useful than the reference prices and quantities used by oecd

producer subsidy equivalents and evaluation of support to russian agricultural producers since many of the conditions taken for granted in mature market economies cannot be assumed for transition economies such as russia the validity of producer subsidy equivalents pse measures is questionable the authors calculate pses for russia being careful in the selection of appropriate farm prices and reference prices and conduct a sensitivity analysis to indicate how the results could be influenced by changes in key assumptions they also provide appropriate interpretations of pse estimations for major agricultural commodities

transitional dynamics in two sector models of endogenous growth the steady state and transitional dynamics of two sector models of endogenous growth are analyzed in this paper we describe necessary conditions for endogenous growth the conditions allow us to reduce the dynamics of the solution to a system with one state like and two control like variables we analyze the determinants of the long run growth rate we use the time elimination method to analyze the transitional dynamics of the models we find that there are transitions in real time if the point in time production possibility frontier is strictly concave which occurs for example if the two production functions are different or if there are decreasing point in time returns in any of the sectors we also show that if the models have a transition in real time the models are globally saddle path stable we find that the wealth or consumption smoothing effect tends to dominate the substitution or real wage effect so that the transition from relatively low levels of physical capital is carried over through high work effort rather than high savings we develop some empirical implications we show that the models predict conditional convergence in that in a cross section the growth rate is predicted to be negatively related to initial income but only after some measure of human capital is held constant thus the models are consistent with existing empirical cross country evidence authors

an economic analysis of the age crime profile abstract the age crime profile is one of the most established and prominent empirical regularities in social science this paper formulates an economic dynamic model of illegal behavior to explain the age crime profile the model offers a new interpretation of the age crime profile that is entirely different from the prevailing one in the literature the implications of the model are testable and are consistent with the empirical evidence examined in the paper the analysis shows that intertemporal criminal decisions can be modeled as a dynamic consumption investment problem

prison s dilemma do education and jobs programmes affect recidivism this paper employs a hazard model to analyse the impact of education and two types of prison employment programmes on recidivism over a ten year period for 4515 prisoners released from ohio prisons in 1992 estimations with a weibull mixture model and propensity score approach provide two means for investigating self selection bias selection bias is detected for participation in the most common prison job programme but has little effect on estimated marginal savings impacts of prison industry and education programmes estimates of the cost savings from postponing return to prison due to programme participation are provided the potential for cost savings through decreasing or delaying return to prison is an important finding given the substantial and increasing cost of incarceration

estimating the economic model of crime employment versus punishment effects ann dryden witte 1980 has recently argued in this journal that new support is found for the deterrent hypothesis or the economic model of crime when individual data are employed to estimate the determinants of rearrest rates witte estimates a conventional economic model of crime using a rich and carefully constructed microdata set of released prisoners in north carolina her principal findings are that 1 increases in the certainty and severity of punishment tend to reduce participation in crime measured by number of arrests or convictions per month free and 2 higher legal wages have an extremely weak deterrent effect on crime in this comment i describe two separate data sets within which i find just the opposite results using a sample of offenders released from federal prisons in 1972 i find that increases in the severity of punishment are weakly related to participation in crime while increases in the certainty of punishment are positively related to participation in crime in addition using a sample of male repeat property offenders released from maryland prisons i find that higher wages have a strong and consistent deterrent effect on crime the conclusion is reached at least from these data sets that improving legitimate employment opportunities may be as effective if not more effective in reducing crime as is an increase in punishment

swedish economic performance and swedish economic debate a view from outside the papers by korpi henrekson and agell raise important questions both about the swedish economy and about the way in which evidence on economic growth should be handled in debate on economic policy i want to comment in particular on the fundamental question of whether the international evidence allows us to judge that swedish growth has been below par the papers raise two further questions on the first whether growth is inhibited by high taxation and a large welfare state the hallmarks of the post war swedish economy agell provides as good an assessment of the cross country macroeconomic evidence as we can probably hope to get at the moment unproven on the final vexed question of whether the structure of the economics profession has been inimical to open debate i have only a few comments to make let me start with the criteria and method by which we should attempt to assess relative economic performance this is a methodological minefield there are numerous paths leading to divergent conclusions the least we can do is to be explicit about our choices and subject our provisional conclusions to some checks for robustness what performance measure is relevant we could look at gdp or consumption scaled per head of population or per member of the workforce or per hour worked what deflators do we use we can reduce measures denominated in local currency to a common unit using exchange rates or using fixed international prices or using utility based indexes which derivative of the performance measure do we use we might want to compare levels or rankings or we might choose to assess relative rates of growth or even relative changes in growth rates which time period is relevant in particular comparisons of growth rates are often very sensitive to choice of start and end years when business cycle fluctuations are asynchronous what is the reference pointfor assessing underor overachievement the definition of par might be either the best performance or average performance for some group of countries for some period of time finally what exogenousfactors are to be taken into account we might wish to control for the influence on our preferred performance measure of a wide range of factors which are extraneous to the policy question under examination i will take a brisk jog through this minefield explaining briefly some of the choices which seem most relevant to the problem in hand but without attempting a full exposition of the problems the most usual starting place is to choose real gdp per capita as a measure of aggregate performance this

exchange rate effects on inputs and outputs in canadian agriculture in a seminal piece of work schuh demonstrates using a single market partial equilibrium model that exchange rates have a large impact on the price received for farm products he argued that the overvalued u s dollar reduced export demand and the domestic price of u s grains since then much of the work on estimating the impact of exchange rate changes on agriculture has implicitly assumed that inputs to the agricultural sector come from the nontraded sector we argue this assumption can result in an error in the estimation of the effects of exchange rates in an examination of the passthrough of changes in the us cdn exchange rate we find the data from 1975 to 1989 are consistent with the hypothesis of a complete passthrough of exchange rates for many important variable inputs to canadian agricultural production this analysis indicates that while exchange rates may have had significant impacts on the return to fixed factors and farm income they have had little effect on grain production in the case of livestock feeding in canada exchange rate devaluations may actually reduce production and reduce the return to fixed factors because inputs especially grain are more tradeable than outputs finally we examine the potential welfare impact on nontradeables such as land from changes in the exchange rate theoretical model

exchange rate alignment and producer support estimates pses for india this article examines the effects of exchange rate alignment during 1985 2002 on agricultural producer support estimates pses for india based on several time series techniques the equilibrium exchange rate of the indian rupee and the corresponding misalignment of the actual rate are estimated and applied to recent pse calculations our results show that the exchange rate was substantially misaligned before a financial crisis and macroeconomic reform in the early 1990s with subsequent indirect effects on the pses we find a relatively high pass through of exchange rate movements to domestic agricultural prices so that removal of the exchange rate misalignment would have improved incentives to indian farmers during this period more recently this indirect exchange rate effect is smaller than the direct effect in the pses indicating the dominance of sectoral specific policies over economy wide policies

crime and economic incentives we explore the role that economic incentives particularly changes in wages at the bottom end of the wage distribution play in determining crime rates we use data on the police force areas of england and wales between 1975 and 1996 and find relative falls in the wages of low wage workers lead to increases in crime we carry out a number of experiments with different wage measures including a wage measure that accounts for the effects of changes in the composition of employment these reinforce the picture of a strong association between the low wage labor market and crime the result that incentives play a central role is reinforced further by the strong impact on crime of deterrence measures and of a measure of the returns to crime

consumption permanent income and financial wealth in canada empirical evidence on the intertemporal approach to the current account the intertemporal approach to the current account is rejected as a complete explanation of the canadian current account federal government fiscal policy plays an important role in the determination of the current account a private sector agent that treats its holdings of net liabilities of the federal government as net wealth accumulates the sum of these liabilities and the net liabilities of non residents as part of an intertemporally optimal plan this result indicates both fiscal policy and intertemporal considerations are important determinants of current account behaviour consommation revenu permanent et richesse financiere au canada resultats empiriques d une approche au compte courant mettant l accent sur la dimension intertemporelle cet article montre que l approche mettant l accent sur la dimension intertemporelle ne produit pas une explication complte du comportement du compte courant canadien i1 semble que la politique fiscale du gouvernement federal joue un r6le important dans la conformation du compte courant un agent economique prive composite qui traite son portefeuille de dettes nettes du gouvernement federal comme richesse nette va accumuler la somme de ces dettes et des dettes nettes des non residents dans le cadre de son plan intertemporel optimal les resultats montrent que la politique fiscale et des considerations intertemporelles sont des elements determinants du comportement du compte courant

national account of timber and forest environmental resources in sweden this paper outlines an extension of the national account of income from forest resources in sweden 1987 incorporating changes in timber inventories production of nonmarketed timber and nontimber goods and depletion or improvement in vital environmental stocks such as soil nutrients biodiversity and carbon sinks the total net value added provided by forest resources and forestry labour 1987 is estimated to 22 billions sek this is one third more than the contribution of forestry to ordinary gnp

an operative framework for total hicksian income measurement application to a multiple use forest a methodology for estimating total hicksian income in multiple use forests is presented the approach consistently incorporates commercial as well as non commercial economic values and enables the measurement of national accounting aggregates taking into account variation in man made and natural capital innovative solutions are developed i for the estimation of non market values such as recreation where an attempt to determine exchange values has been made simulating markets ii for timber where standing timber valuation methods have been extended to cover uneven stands and iii for carbon fixation valuation where only permanently fixed carbon after 1990 has been taken into account the methodology is applied to a multiple use pinewood in the guadarrama mountains near madrid spain timber cattle grazing hunting recreation carbon fixation and conservation values are measured and integrated in the accounting system using primary microeconomic data from the case study results indicate the importance of non commercial income which accounts for 51 of the total income and the social relevance of the analysed forest implying that only 31 of the total income generated is appropriated by the forest owner

criminal deterrence revisiting the issue with a birth cohort we estimate the general deterrent effect of criminal justice resources on criminal behavior using panel data for a sample representative of young men in u s urban areas our data which combine individual level information on arrests and personal characteristics with aggregate information on criminal justice resources allow us to obtain deterrence measures that reflect theoretical concepts and are of potential policy relevance we find robust evidence of a general deterrent effect flowing from criminal justice particularly police resources the nature of our data also allows us to conduct extensive exogeneity tests and to explore a number of possible third causes for the deterrent effect we find strong evidence that our deterrence variables are exogenous and no evidence that our deterrence result stems from commonly hypothesized third causes copyright 1994 by mit press

an empirical characterization of the dynamic effects of police spending on violent and property crime the study estimates the dynamic effects of shocks to police expenditures on measures of violent and property crime rates using annual u s state level data for the period 1960 2015 we employ a structural panel var model and achieve identification by imposing the restriction that police spending responds to structural shocks to crime with at least a lag of 1 year results indicate that a shock to police spending leads to a persistent and significant decreases in violent and property crime rates and b significant and persistent negative impacts on crime rates in periods of high crime but little impacts in periods of low crime variance decompositions show that shocks to police spending account for moderate to large proportions of the variability of u s state level crime rates our findings are robust across separate measures of violent and property crime rates as well as to the inclusion of additional variables to the baseline panel var model jel k42

crime scars recessions and the making of career criminals recessions lead to short term job loss lower levels of happiness and decreasing income levels there is growing evidence that workers who first join the labour market during economic downturns suffer from poor job matches that have a sustained detrimental effect on their wages and career progression this paper uses a range of us and uk data to document a more disturbing long run effect of recessions young people who leave school in the midst of recessions are significantly more likely to lead a life of crime than those graduating into a buoyant labour market these effects are long lasting and substantial

a new approach in analyzing the effect of deficit announcements of interest rates using alternative methods the authors find less support than previous authors for significant interest rate responses to deficit announcements the main results are that interest rates respond only 40 percent of the time to deficit announcements and when they do respond the impact is only temporary lasting between one to six days and involving a 0 25 basis point response per percentage change in the deficit copyright 1994 by ohio state university press

market wages and youth crime to study the problem of widespread youth crime i analyze a timeallocation model in which consumers face parametric wages and diminishing marginal returns to crime the theory motivates an econometric model that i estimate using data from the national longitudinal survey of youth my estimates suggest that youth behavior is responsive to price incentives and that falling real wages may have been an important determinant of rising youth crime during the 1970s and 1980s moreover wage differentials explain a substantial component of both the racial differential in criminal participation and the age distribution of crime

decomposing changes in agricultural price gaps an application to russia the article develops a method for decomposing changes in agricultural price gaps defined as the difference between a commodity s domestic producer and border prices we use oecd s procedure for decomposing changes in the market price support part of producer support estimates as the starting point for our decomposition method and our method provides a basis for critiquing oecd s decomposition approach the transmission of changes in border prices world prices and the exchange rate to domestic prices is a key element in the decomposition the method is demonstrated using russian agricultural price gaps the results support the argument that for russian agriculture during the transition period the main cause of changes in price gaps has been incomplete transmission of changes in the exchange rate to domestic prices and where the weak transmission results mainly not from policy intervention but rather from deficient market conditions in particular poor market infrastructure the policy implication is that underdeveloped infrastructure has strongly limited the benefits to the russian economy from agricultural trade liberalization

estimating the economic model of crime with panel data previous attempts at estimating the economic model of crime with aggregate data relied heavily on cross section econometric techniques and therefore do not control for unobserved heterogeneity this is even true of studies that estimated simultaneous equations models using a new panel data set of north carolina counties the authors exploit both single and simultaneous equations panel data estimators to address two sources of endogeneity unobserved heterogeneity and conventional simultaneity their results suggest that both labor market and criminal justice strategies are important in deterring crime but that the effectiveness of law enforcement incentives has been greatly overstated copyright 1994 by mit press

carrots sticks and broken windows abstract this paper investigates the effect of economic conditions carrots and sanctions sticks on murder assault robbery burglary motor vehicle theft grand larceny and rape in new york city using monthly time series data spanning 1974 99 carrots are measured by the unemployment rate and the real minimum wage sticks are measured by the number of felony arrests size of the police force and number of new york city residents in prison in addition the paper tests the validity of the broken windows hypothesis consistent with its implementation by the new york police department we use misdemeanor arrests as a measure of broken windows policing the broken windows hypothesis has validity in the case of robbery motor vehicle theft and grand larceny while both economic and deterrence variables are important in explaining the decline in crime the contribution of deterrence measures is larger than those of economic variables

implications of alternative options for future levels of support for agriculture in central and eastern europe in the process of political economic and social transformation since 1989 agriculture in the central and eastern european countries the ceecs is undergoing dramatic changes privatization and decollectivization of farms not yet completed in all ceecs are creating a completely new structure of the farming industry buckwell replacement of central planning by market forces has uprooted commercial relationships between farms and upstream and downstream industries and has caused problems in input supplies to and marketing opportunities for agriculture brooks et al the persistence of monopoly structures in the food chain has resulted in high marketing margins depriving farms of some of the revenues they could earn in a more competitive economy ivanova et al oecd 1995a a significant decline in domestic food demand and even more pronounced shrinking export demand from other countries in the former council of mutual economic assistance above all the former soviet union have grossly reduced the size of the market to which ceec agriculture can sell jackson and swinnen karp and stefanou in addition to these and other fundamental changes in the economic environment of agriculture in the ceecs agricultural support as provided by domestic and trade policies has kept changing during the transformation process swinnen in the prereform period agriculture was heavily subsidized in most ceecs when the reforms began most ceecs rapidly began to open up their markets liberalize prices and eliminate subsidies as a result support to agriculture declined drastically real producer prices for farm products dwindled and farm incomes decreased at the same time and as a consequence of these changes in the economic environment agricultural output in the ceecs dropped in the process farmers began to lobby for more support and governments in most ceecs responded positively to these political demands they introduced policies such as intervention purchases guaranteed minimum prices higher tariffs variable levies export subsidies and input and credit subsidies as a result agricultural support which had declined sharply during the early stages of the transition process is on the rise again in many ceecs for example the net producer subsidy equivalent pse in poland s agriculture fell from 36 in 1986 to minus 18 in 1990 and rose again to positive 16 in 1993 oecd 1995b when ceec governments began to intervene again in agricultural markets to provide more support to their farmers one of the explanations they gave for this change in policy direction was that they had to prepare for joining ultimately the european union eu and hence that they needed to harmonize their policies with the common agricultural policy cap of the eu swinnen indeed some of the agricultural policy measures introduced in recent years in the ceecs resemble though often only vaguely the policies that have been employed by the cap for a long time no timetable has so far been set for eastern enlargement of the eu nor is it clear in which sequence the individual

unemployment in regional labor markets using structural theories to understand local jobless rates in west virginia the author uses a range of structural labor market models to understand differing regional jobless rates in a state affected by pockets of structural unemployment four theories of regional structural unemployment are presented and their hypotheses are statistically evaluated using west virginia county panel data the author then presents case study evidence to compare these statistical results with the realities of the county labor markets both types of empirical evidence suggest that a segmented non market clearing model in which structural unemployment stems from queuing for above market clearing wages in both a high wage primary sector and a lower wage secondary sector can shed the most light on regional unemployment rates in west virginia

dynamic deterrence theory economic theories of deterrence have primarily been built on static models a common and serious shortcoming of the existing dynamic deterrence models is the assumption of a twoperiod structure that ignores recidivism the aims of this paper are to formulate and solve a general dynamic deterrence model that incorporates recidivistic behaviour to explore its implications and to derive some testable predictions the analysis shows how the value and the intensity of engaging in illegal activity change over time highlights the weaknesses of twoperiod deterrence models and compares the deterrent effectiveness of increasing the likelihood of punishment versus the severity of punishment finally the recidivistic model provides a structural foundation for the widely used stochastic process models of crime in operations research and criminology

do we punish high income criminals too heavily many critics believe that since high income criminals can afford to purchase better legal services they are less severely punished than poor criminals who commit equivalent crimes others are concerned that the penalties imposed on criminals are too small this paper shows that ignoring the effect conviction has on later earnings dramatically underestimates the total monetary penalty paid by those convicted and that the penalty structure is extremely progressive where evidence on the probability of conviction is available it shows that the highest income criminals face the highest expected penalties

new evidence on the importance of gender and asymmetry in the crime unemployment relationship the literature examining the crime unemployment relationship is vast three recent developments in the analysis of this relationship are combined with a novel empirical method to explore the importance of gender effects and asymmetric adjustment when analysing the impact of unemployment upon criminal activity using data for the united states of america a number of interesting results are obtained the key finding concerns the importance of gender with opportunity effects in criminal activity detected when considering female but not male unemployment further examination shows findings to support theories associated with victimization and worsening socio economic conditions rather than those emphasizing latchkey care effects and an absence of guardianship consideration of motivation effects provides further evidence of significant asymmetries in the response of crime to unemployment

cost and income based measures of human capital human capital is increasingly believed to play an important role in the growth process however adequately measuring its stock remains controversial in this paper three general approaches to measurement are identified cost based income based and educational stock based this survey focuses on the first two approaches and provides a critical review of the theories and their applications to data from a range of countries particular emphasis is placed upon the work of jorgenson and fraumeni 1989 1992 and some new results for new zealand based upon their approach are also presented

trade policy and quality leadership in transition economies trade policy and quality leadership in transition economies are analyzed in a duopoly model of trade and vertical product differentiation we first show that the incidence of trade liberalization is sensitive to whether firms in transition economies are producers of low or high quality second we find that neither free trade nor the absence of a domestic subsidy are optimal both a tariff and a subsidy increase price competition and while the former extracts foreign rents the latter results in quality upgrading third there exists a rationale for a government to commit to a socially optimal policy to induce quality leadership by the domestic firm when cost asymmetries are low finally we establish an equivalence result between the effects of long run exchange rate changes and those of trade policy on price competition but not on social welfare

the surge in capital inflows to developing countries an analytical overview after being excluded from world capital markets during the debt crisis many developing countries have experienced large capital inflows during the past five years the challenges that these inflows pose for domestic policy in recipient countries have generated a substantial literature this article presents an overview of that literature describing the characteristics of the new inflows analyzing the policy issues they raise assessing their causes and likely sustainability and evaluating potential policy responses the desirable policy response is tied to characteristics of the flows themselves as well as to the characteristics of the recipient economy

international comparisons of pricing to market behavior this paper measures the degree of price discrimination across export destinations that is associated with exchange rate changes using u s u k german and japanese industry level data given the industries sampled more price discrimination across destinations is observed in the u k german and japanese data for industries that match across source countries however behavior is very similar across source countries furthermore destination specific price adjustment on exports to the united states from germany and japan is similar to price adjustment observed on shipments to other destinations most variation in the data appears to be related to industry copyright 1993 by american economic association