development fertility and childbearing age a unified growth theory during the last two centuries fertility has exhibited in industrialized economies two distinct trends the cohort total fertility rate follows a decreasing pattern while the cohort average age at motherhood exhibits a u shaped pattern this paper proposes a unified growth theory aimed at rationalizing those two demographic stylized facts we develop a three period olg model with two periods of fertility and show how a traditional economy where individuals do not invest in higher education and where income rises push towards advancing births can progressively converge towards a modern economy where individuals invest in higher education and where income rises encourage postponing births our findings are illustrated numerically by replicating the dynamics of the quantum and the tempo of births for swedish cohorts born between 1876 and 1966

do better schools matter parental valuation of elementary education the evaluation of numerous school reforms requires an understanding of the value of better schools given the difficulty of calculating the relationship between school quality and student outcomes i turn to another method and use house prices to infer the value parents place on school quality i look within school districts at houses located on attendance district boundaries houses then differ only by the elementary school the child attends i thereby effectively remove the variation in neighborhoods taxes and school spending i find that parents are willing to pay 2 5 percent more for a 5 percent increase in test scores this finding is robust to a number of sensitivity checks

prospects for enhanced exchange rate cooperation in east asia some preliminary findings from generalized ppp theory the asian financial crisis increased economic disparities in the east asian ea region thus making monetary integration more difficult but rekindled political interest in asian monetary and exchange rate cooperation this article applies the theory of generalized purchasing power parity g ppp which looks at the behaviour of long run real exchange rates to assess the potential for an optimum currency area oca among a subset of ea countries based on five of the more advanced members of the association of southeast asian nations asean5 our findings suggest little support for an oca for asean5 as a bloc prior to the asian financial crisis and mixed results in the post crisis period in particular asymmetries in the way countries adjust to shocks and low or insignificant speeds of adjustment were found thus although the application of single oca criteria is notoriously demanding and our tests apply to only one of the many criteria for the successful formation of an oca we cannot find persuasive

estimating electricity demand the cost of linearising the budget constraint this paper derives elasticity estimates for the electricity demand of a cross section of residential customers in medellin colombia where prices follow a rising block scheme it contrasts methods following jerry hausman 1979 1985 with those based on harvey rosen 1976 to resolve the difference between the results produced by the two methods it uses a generalized selectivity bias corrections method due to frank vella 1990 copyright 1992 by mit press

are ghettos good or bad spatial separation of racial and ethnic groups may theoretically have positive or negative effects on the economic performance of those groups we examine the effects of segregation on outcomes for blacks in schooling employment and single parenthood we find that blacks in more segregated areas have significantly worse outcomes than blacks in less segregated areas we control for the endogeneity of location choice using instruments based on political factors topographical features and residence before adulthood a one standard deviation decrease in segregation would eliminate one third of the black white differences in most of our outcomes

infrastructure quality and the subsidy trap abstract electricity and water are often subsidized in developing countries to increase their affordability for low income households ideally such subsidies would create sufficient demand in poor neighborhoods to encourage private investment in their infrastructure instead many regions receiving large subsidies have precarious distribution networks supplying users who never pay using a structural model of household electricity demand in colombia i predict the change in consumption and profits from upgrading low quality electricity connections i show that the existing subsidies which provide greater transfers to areas with unreliable supply deter investment to modernize infrastructure finally i analyze alternative programs with stronger investment incentives jel h23 h54 l94 l98 o12 o13

peer effects on a fertility decision an application for medellin colombia abstract the paper provides historical perspectives on spatial economic inequalities in brazil making use of a database on brazilian municipalities from 1872 to 2000 a suit of maps and graphs describe the geographic factors shaping the historical development of the brazilian economy highlighting the role of transport costs and its consequences for the spatial dynamics of income per capita and labor productivity the remaining of the paper estimates econometric models of growth convergence for municipal income per capita and labor productivity from 1920 onwards analyses are refined firstly by disaggregating the models for urban and rural activities secondly by assuming spatial correlation among variables of the model and thirdly by enlarging the model to take account of the long run determinants of spatial growth convergence empirical results endorse the historical preeminence of geographic factors in particular accessibility and transport conditions as opposed to institutional conditions the conclusion summarizes the results and proposes research extensions

human capital and growth abstract this paper describes a growth model with the property that human capital accumulation can account for all observed growth the model is shown to be consistent with evidence on individual productivities as measured by census earnings data the central hypothesis is that we learn more when we interact with more productive people

do fiscal variables affect fiscal expectations experiments with real world and lab data we generate observable expectations about fiscal variables through laboratory experiments using real world data from several european countries as stimuli we compare a var model of expectations for data which is presented in a fiscal frame with one for neutrally presented data we measure the degree to which participants use fiscal data for their forecasts agents expectations are found neither to be consistent with rational nor with purely adaptive expectations but instead follow an augmented adaptive scheme methodological implications of the present approach for experiments in macroeconomics are also discussed

motherhood delay and the human capital of the next generation this paper uses biological fertility shocks as instrumental variables to estimate the causal effect of motherhood delay on the cognitive ability of first children maternal age at first birth represents a potential determinant of early human capital formation that reflects choices that respond to financial incentives cultural norms and policy environment the key measures of cognitive ability are peabody individual achievement test piat scores test scores have long been predictors of individual educational attainment and earn ings and their importance has only increased richard murnane john willet and frank levy 1995 at the national level test perfor mance in mathematics and science is strongly related to economic growth and may matter more than years of completed schooling eric hanushek and dennis kimko 2000 using data on first born children age 5 to 14 in the national longitudinal survey of youth 1979 nlsy79 children survey this paper finds delayed moth erhood leads to significant increases in piat test scores the relationship is robust to the inclusion of various controls for observable ele

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

the displacement effect in the growth of governments we analyze the displacement effect within a multivariaterevenue expenditure model of government growth based on along historical dataset for italy our long run analysisshows a permanent influence of domestic product on the growthof governments supporting wagner s law the short rundynamics are more complex and provide some evidence for thedisplacement effect in terms of a lower resistance againsttax financing of government spending in the post war inaddition government spending adjusts faster when deviationsfrom its equilibrium get larger

searching for non linear effects of fiscal policy evidence from industrial and developing countries several recent studies suggest that the response of national saving to scal policy may be non linear in this paper we use two data sets to search for the circumstances in which such non linear response may arise a sample of oecd countries already used in previous studies and a sample of developing countries using more recent world bank data we nd that in both samples non linear e ects tend to be associated with large and persistent scal impulses in the oecd sample the non linearity of the response is stronger for scal contractions than for expansions an increase in net taxes has no e ect on national saving during large scal contractions while it has a positive e ect in less pronounced contractions high or rapidly growing public debt does not appear to be a good predictor of non linear e ects in the world bank sample of developing countries non linearities in the response national saving to scal policy are not limited to large scal contractions and also tend to occur in periods in which debt is accumulating rapidly regardless of its initial level 2000 elsevier science b v all rights reserved jel classixcation e21 e62 h31

stratification and public utility services in colombia subsidies to households or distortion of housing prices domiciliary public utility services in colombia have a cross subsidy system which charges subsidized rates to the households who live in houses located in strata associated to low wealth levels and taxed rates to the better off we assesses the hypothesis that the flow of subsidies that potentially come from a particular house are discounted by housing market agents so that most of them are transferred to the prices of the houses that generate the subsidies by estimating a hedonic prices model applying a regression discontinuity approach we find that the increment in house value estimated because of subsidies is similar in magnitude to the present value of the flow of subsidies likely effects are found on the rent amount we conclude that subsidies to the poor population through public spending in domiciliary public utility services in colombia is being achieved if anything in a very limited way most of the financial effort on this subject ends up distorting housing relative prices according to socioeconomic strata with an annual cost of up to 0 7 of gdp in supposed gross subsidies to domiciliary public utility services

children and their parents a review of fertility and causality childbearing decisions are not made in isolation they are taken in concert with decisions regarding work marriage health investments and stocks as well as many other observable and non observable considerations drawing causal inferences regarding the effect of additional children on family outcomes is complicated by these endogenous factors this paper lays out the issues involved in estimating the effect of additional child births on family outcomes and the assumptions underlying the range of estimators and methodologies proposed in the economic literature the common pitfalls of these estimators are discussed as well as their potential to bias our interpretation of the effect additional births have on children and parents both in the existing literature and in future work in the face of changing patterns of childbearing and child rearing

non linear budgetary policies evidence from 150 years of italian public finance we investigate the sustainability of italy s public nances from 1862 to 2012 adopting a non linear perspective speci cally we employ the smooth transition regression approach to explore the scope for non linear scal adjustments of primary surpluses in response to the accumulation of debt the empirical results show the occurrence of a signi cantly positive reaction of primary surpluses to debt when the debt gdp ratio exceeded the trigger value of 110 percent the afterthreshold positive response implies that the path of italy s scal policy is su ciently consistent with the intertemporal budget constraint

how much does sorting increase inequality some commentators argue that increased sorting into internally homogeneous neighborhoods schools and marriages is radically polarizing society calibration of a formal model however suggests that the steady state standard deviation of education would increase only 1 7 percent if the correlation between neighbors education doubled and would fall only 1 6 percent if educational sorting by neighborhood disappeared the steady state standard deviation of education would grow 1 percent if the correlation between spouses education increased from 0 6 to 0 8 in fact marital and neighborhood sorting have been stable or even decreasing historically sorting has somewhat more significant effects on intergenerational mobility than on inequality

debt ceiling and fiscal sustainability in brazil a quantile autoregression approach abstract in this paper we investigate fiscal sustainability by using a quantile autoregression qar model we propose a novel methodology to separate periods of nonstationarity from stationary ones allowing us to identify various trajectories of public debt that are compatible with fiscal sustainability we use such trajectories to construct a debt ceiling that is the largest value of public debt that does not jeopardize long run fiscal sustainability we make an out of sample forecast of such a ceiling and show how it could be used by policy makers interested in keeping the public debt on a sustainable path we illustrate the applicability of our results using brazilian data

the more the merrier the effect of family size and birth order on children s education there is an extensive theoretical literature that postulates a tradeoff between child quantity and quality within a family however there is little causal evidence that speaks to this theory using a rich dataset on the entire population of norway over an extended period of time we examine the effects of family size and birth order on the educational attainment of children while we find a negative correlation between family size and children s education when we include indicators for birth order and or use twin births as an instrument family size effects become negligible in addition birth order has a significant and large negative effect on children s education we also study adult earnings employment and teenage childbearing and find strong evidence for birth order effects with these outcomes particularly among women these findings suggest the need to revisit economic models of fertility and child production focusing not only on differences across families but differences within families as well

estimating the effect of financial aid offers on college enrollment a regression discontinuity approach an important problem faced by colleges and universities that of evaluating the effect of their financial aid offers on student enrollment decisions is complicated by the likely endogeneity of the aid offer variable in a student enrollment equation this article shows how discontinuities in an east coast college s aid assignment rule can be exploited to obtain credible estimates of the aid effect without having to rely on arbitrary exclusion restrictions and functional form assumptions semiparametric estimates based on a regression discontinuity rd approach affirm the importance of financial aid as an effective instrument in competing with other colleges for students

bounding causal effects using data from a contaminated natural experiment analysing the effects of teenage childbearing in this paper we consider what can be learned about causal effects when one uses a contaminated instrumental variable in particular we consider what inferences can be made about the causal effect of teenage childbearing on a teen mother s subsequent outcomes when we use the natural experiment of miscarriages to form an instrumental variable for teen births miscarriages might not meet all of the conditions required for an instrumental variable to identify such causal effects for all of the observations in our sample however it is an appropriate instrumental variable for some women namely those pregnant women who experience a random miscarriage although information from typical data sources does not allow one to identify these women we show that one can adapt results from horowitz and manski 1995 on identification with data from contaminated samples to construct informative bounds on the causal effect of teenage childbearing we use these bounds to re examine the effects of early chilbearing on the teen mother s subsequent educational and labour market attainment as considered in hotz mcelroy and sanders 1995a 1995b consistent with their study these bounds indicate that women who have births as teens have higher labour market earnings and hours worked compared to what they would have attained if their childbearing had been delayed

fiscal readjustments in the united states a nonlinear time series analysis we analyze the fiscal adjustment process in the united states using a multivariate threshold vector error regression model the shift from single equation to multivariate setting adds value both in terms of our economic understanding of the fiscal adjustment process and the forecasting performance of nonlinear models we find evidence that fiscal authorities intervene to reduce real per capita deficit only when it reaches a certain threshold and that fiscal adjustment takes place primarily by cutting government expenditure the results of out of sample density forecast and probability forecasts suggest that a shift from a univariate autoregressive model to a multivariate model improves forecast performance

the behavior of us public debt a nonlinear perspective abstract this letter provides strong evidence of nonlinear mean reversion in the us debt gdp ratio using data since 1916 and shows that the difficulty to detect mean reversion encountered by a number of researchers may be due to the invalid maintained hypothesis of linearity which is common to the testing procedures employed in this context

threshold effects in the u s budget deficit i introduction there has been an ongoing debate on whether the u s fiscal policy is sustainable in the long run in addressing this issue a number of studies have examined whether the u s public finances are compatible with the government s intertemporal solvency constraint hamilton and flavin 1986 trehan and walsh 1988 hakkio and rush 1991 among others the requirement of budget processes to be sustainable implies effectively that ponzi games are ruled out as a viable option of government finance in other words further new borrowing cannot be used indefinitely as a method of financing interest payments on existing debt therefore the solvency constraint requires that any changes in taxes and government spending are followed by adjustment in future taxation and or spending that equals to the original change in present value this solvency constraint imposes testable restrictions on the time series properties of key fiscal aggregates in this article we present new evidence on this ongoing solvency debate utilizing an empirical framework that allows us to test whether there have been threshold effects in the u s deficit unlike existing empirical studies that focus only on the identification of regime shifts in u s fiscal policy we also offer an explanation and provide evidence as to why these regime shifts might occur specifically we argue that for fiscal authorities to be able to meet the solvency constraint they would intervene through deficit cuts only when the government budget deficit becomes very large therefore we expect a mean reverting dynamic behavior for deficits only when they are above some threshold value we test for this hypothesis using the threshold unit root empirical methodology recently developed by caner and hansen 2001 the article is organized as follows section ii reviews the empirical evidence section iii describes the empirical methodology and section iv presents the empirical results which are analyzed and interpreted section v summarizes and concludes ii intertemporal solvency condition empirical underpinnings one strand of the empirical literature focuses on the stationarity of the stock of public debt uctum and wickens 1997 deal with stochastic interest rates and primary surpluses that are allowed to be either exogenous or endogenous to the stock of public debt they show that a necessary and sufficient condition for the intertemporal solvency condition to hold is a stationary discounted stock of public debt another strand of the empirical literature has concentrated on the dynamics of the undiscounted inclusive of interest deficit or alternatively on the long run relationship between government spending and tax revenues trehan and walsh 1988 show that government spending inclusive of interest payments and government revenues should be cointegrated with a cointegrating vector equal to 1 1 they present evidence that supports this restriction hakkio and rush 1991 point out that a necessary condition for intertemporal solvency is the existence of cointegration between government expenditure inclusive of interest payments and government revenues with a cointegrating vector equal to 1 beta and 0 quintos 1995 expands on hakkio and rush 1991 and shows that cointegration is not necessary for the intertemporal balance condition to hold specifically she distinguishes between a weak and a strong sustainability condition the former implies that the government solvency holds but the undiscounted debt process is exploding at a rate that is less than the growth rate of the economy although this case is consistent with deficit sustainability it is inconsistent with the ability of the government to market its debt in the long run especially if the focus is on the debt to gross national product gnp or on the debt per capita see also hakkio and rush 1991 in contrast strong sustainability implies that the undiscounted public debt is finite in the long run