the transition to market economies in an endogenous growth model with altruistic agents this paper considers an endogenous transition from a self sufficient traditional economy to a market economy and its consequences on fertility and growth the transition can occur if private intergenerational transfers are unable to secure old age consumption as adequately as savings on capital markets otherwise individuals stay in the traditional economy unless the mass production technology in the market economy is sufficiently more advanced than individually accessible technologies markets emerge only if per capita output exceeds a certain level given a fixed cost of forming markets the transition reduces fertility and promotes growth under plausible restrictions jel classification e20 j13 o10

collusion and cyclic pricing by managers in markets with fluctuating demand abstract we analyze the cyclicity of pricing by managers with stock based or with profit based compensation in a market with stochastic autocorrelated demand development since managers with stock based compensation have a higher incentive to collude the cyclicity of prices is lower in this case

the optimal level of social security benefits the optimal level of social security benefits depends on balancing the protection that these benefits offer to those who lack the foresight to provide for their own old age against the welfare costs of distorting economic behavior the primary such cost is the distortion in private saving the present paper derives the level of social security benefits that is optimal in three basic cases in the first section the paper derives the optimal level of benefits for an economy in which all individuals do not anticipate retirement at all and therefore do no saving the second and third sections then derive optimal benefits for two different definitions of incomplete myopia

international trade and developing countries an empirical investigation of the linder hypothesis this paper presents empirical evidence in support of the linder hypothesis for ve of the six east african developing countries studied here ethiopia kenya rwanda sudan and uganda this nding implies that these countries trade more intensively with others who have similar per capita income levels as predicted by linder the contributions of this research are three fold first new information is provided on the linder hypothesis by focusing on developing countries second this is one of very few analyses to capture both time series and cross section elements of the trade relationship by employing a panel data set third the empirical methodology used in the analysis corrects a major shortcoming in the existing literature by using a censored dependent variable in estimation

socially optimal social security and education subsidization in a dynastic model with human capital externalities fertility and endogenous growth abstract this paper considers socially optimal government policies in a dynastic family model with physical capital human capital endogenous fertility and positive spillovers from average human capital such spillovers reduce human capital investment but raise fertility from their social optimum we first characterize the social optimum with a non convex feasible set due to the quantity quality tradeoff concerning children we then show that social security and education subsidization together financed by labor income taxes can fully eliminate the efficiency losses of the spillovers and achieve the social optimum under plausible conditions however none of the policies can do so alone

the effects of social security on population and output growth in this paper we have considered two unfunded social security programs under the conventional system benefits are related to aggregate fertility under the hypothetical fertility related system benefits are directly linked to individual fertility the effects on fertility and per capita growth rates of the two social security systems are examined in the context of endogenous growth the relative merits of the two systems for developing and developed countries are considered the authors conclude that the conventional social security system existing in many developed nations may be desirable to developing countries in reducing population and promoting economic growth on the other hand the hypothetical fertility related system may be useful to developed countries as far as increasing fertility is concerned

source country characteristics and the inflow of foreign direct investment into saudi arabia the paper examines the impact of source country characteristics on the inflow of fdi into saudi arabia using a gravity type model including economic distance and socio political variables a unique database listing all new investments involving foreign ownership is used to construct a panel of 33 countries in the period 1980 2005 to account for many country year observations with zero fdi the negative binomial regression the tobit regression and the heckman selection procedure are used the conclusions drawn from the analysis employing panel based techniques differ from the results obtained from pooled regression models also the determinants of fdi differ depending on whether foreign investment is measured in terms of investment expenditure or the number of individual foreign projects the heckman selection results reveal that there are a large number of factors affecting the decision to invest in saudi arabia compared with relatively few determinants of the actual size of investment traditional size and distance characteristics hold to a great extent but the relationship between fdi and bilateral trade is unclear and there is some evidence that the countries that export to saudi arabia do not invest there in terms of scope for possible spillovers there is mixed evidence on whether the investment comes from more technologically advanced economies but volume wise important investments originate from countries characterised by high income per capita

social security in a non altruistic model with uncertainty and endogenous fertility abstract the effect of social security on fertility and saving is analyzed within a nonaltruistic model of intergenerational transfers both in the absence and in the presence of a perfect capital market fertility is reduced by a budget balanced increase in social security if the individuals have a high degree of risk aversion savings are unambiguously increased by an expansion of social security while the effect of a deficit financed expansion of the social security system on saving and fertility depends on the characteristics of the policy package considered

the problem of population and growth a review of the literature from malthus to contemporary models of endogenous population and endogenous growth abstract this paper deals with the evolution of the literature on the problem of population and growth from the classical period to the recent literature on endogenous growth and development the problem concerns two distinct issues 1 how to explain the observed covariation of the levels and rates of growth of per capita income and population size over time and space and 2 how to improve the human condition represented by these variables through an accommodating social policy the evolution of the literature we survey is reflected by the progressive treatment of key variables as endogenous rather than exogenous to the growth process it is also reflected by a shift from the historical concern about population explosion and its implications for growth to the more recent concern about the association between growth and population implosion in many developed countries

stock related compensation and product market competition this dissertation consists of four self contained essays primarily concerned with incorporating the objectives of real world top managers as revealed by the available empirical evidence in supergame theoretic analyses of long term competition between oligopolistic firms the first essay ownership control and collusion considers how the separation between ownership and control affects firms competitive attitudes when top managers have the preference for smooth profit streams revealed by the evidence on income smoothing and when managerial compensation has the low pay performance sensitivity found in many empirical studies in a similar fashion the second essay stock related compensation and product market competition deals with the effects of the apparently more aggressive managerial incentives linked to stock price e g stock options which have become increasingly common in the u s on long term oligopolistic competition in the third paper debt as a credible collusive device shareholders commitments to reduce conflicts with debtholders by choosing a top manager with a highly valuable reputation or with conservative incentives are considered these forms of commitment have been shown to reduce the agency cost of debt finance this paper characterizes their effects on the relation between firms capital structure and product market competition the fourth paper multimarket contact concavity and collusion addresses the relation between multimarket contact and firms ability to sustain collusive behavior in repeated oligopolies it explores how this relation is affected by the strict concavity of firms objective function induced by managerial objectives and by other features of reality discusses the effects of conglomeration and horizontal mergers and extends the results to non oligopolistic supergames

long run implications of social security taxation for growth and fertility this paper compares long run implications for growth and fertility of four types of taxation for social security with positive bequests a tax rise under lump sum taxation enhances growth but lowers fertility while other types of taxation do so under additional restrictions a tax rise under consumption taxation is less likely to stimulate growth and to reduce fertility than under payroll taxation arise in an interest income tax raises fertility reduces both savings and human capital investment and hence is harmful for growth the case with zero bequests is also discussed

social security the family and economic growth we show that a defined benefits payg social security system distorts key family based choices that affect economic growth we identify human capital as the engine of growth and the motivating forces linking the family s overlapping generations as mutually productive intergenerational transfers and or altruism the payg system is shown to affect adversely at least one of three determinants of the economy s growth path fertility savings and investment in human capital the specific effects may vary over different stages of economic development the growth rate is expected to fall in advanced economies our analysis indicates that the effect may be sizeable jel 915 111 850

jointly determined saving and fertility behaviour theory and estimates for germany italy uk and usa abstract the comparative statics predictions of models of the joint determination of household saving and fertility are derived under various hypotheses self interest altruism of parents towards children altruism of children towards parents etc and compared with those of models which determine saving under the assumption of exogenous fertility country specific saving and fertility equations are then estimated using time series data for germany italy uk and usa for each of the countries considered the estimates are consistent with the hypothesis that saving and fertility are jointly determined by self interested parents and reject the alternative hypotheses the data also show that a self financing expansion of social security discourages fertility and generally raises household saving

the old age security hypothesis revisited abstract children s altruism toward parents is allowed in a two overlapping generations model with endogenous fertility parents raise children because when retired they expect gifts from their children who are essentially a capital good individuals behavior between generations is examined by analyzing a nash equilibrium which is then compared with a social planner s optimal allocation the pay as you go public pension program is viewed as the optimal gifts from the optimal allocation when the latter is implemented the effect on fertility of the introduction of a capital market is also analyzed the validity of the old age security hypothesis is shown to depend on the parameters of utility and cost functions

bilateral trade flows the linder hypothesis and exchange risk bilateral trade flows are used to examine the linder hypothesis and the effect of exchange rate variability in a gra vity type trade model derived from an underlying demand and supply mo del a behavioral model is used to justify examining these issues joi ntly the model performs well empirically using a sample of seventeen countries for the period 1974 82 the authors find overwhelming supp ort for the linder hypothesis and this version of the gravity model moreover they find strong support for the hypothesis that increased exchange rate variability affects bilateral trade flows copyright 1987 by mit press

optimal intergenerational redistribution in a two country model with endogenous fertility we analyze a model with two countries that are linked by anintegrated capital market fertility and thus population growth isendogenously determined by households our analysis proceeds inthree steps first we characterize an optimal intertemporal andinterregional allocation in a model with endogenous fertility andtwo countries second we look for an institution supporting theoptimal allocation it turns out that in general a decentralizedequilibrium is inefficient national public pension systems withbenefits that are related to the number of children implements theoptimal allocation this provides a justification for governmentinterventions beyond its role as a night watchman third weanalyze whether national governments have the right incentives toimplement the optimal system it turns out that every nationalgovernment has an incentive to deviate from the optimal structureand to shift part of the burden to the other country policyimplications for the institutional arrangements within the europeanunion are discussed

endogenous fertility and the old age security hypothesis a note abstract many of the results in nishimura and zhang 1992 and in zhang and nishimura 1993 are incorrect since the authors assume interior solutions to many of the utility maximization problems when corner solutions yield higher utility this note proves inter alia that fertility and saving cannot both be positive in the optimal steady state

social security and endogenous growth abstract this paper examines the effects of social security on the steady state growth of per capita income in an endogenous growth model in which agents care about their own consumption the number of children and the welfare of each child it shows that an unfunded program may simulate growth by reducing fertility and increasing the ratio of human capital investment per child to per family income when bequests are positive also it may cause faster growth than funded programs especially when receipts from funded programs are independent of contributions when voluntary saving is positive funded social security is neutral if receipts are linked to contributions and most likely depresses growth if receipts are independent of contributions

pay as you go public pensions with endogenous fertility abstract veall s 1986 model of public pensions is generalized to allow for endogenous fertility we show that gifts to the old which can be viewed as social security contributions are always positive in the steady state an optimal stationary allocation is sustainable if savings are zero and fertility is exogenous however the optimal allocation is in general not sustainable in particular if a government enforces a social security plan setting the pension level at the optimal gifts and individuals optimize under the pension constraint the resulting sustainable outcome is in general different from either the optimal or nash outcome

public pensions as optimal social contracts abstract a simple overlapping generations model is modified to allow for an externality experienced by the young from consumption by the elderly this sets up a game between generations in which one generation s strategy may be to save too little and rely on gifts from the young e g public assistance for retirement income social security can therefore be viewed as a pareto optimal contract to restore efficient intertemporal allocation a funded public pension plan corresponds to forced saving but is vulnerable in that the next young generation may stop contributing rely on its children for retirement assistance and meanwhile reap the consumption externality from the current elderly s social security benefits this suggests a forced giving or pay as you go type of compulsory pension plan such as exists in most nations which also has the advantage of aiding the initial old generation and therefore generating an immediate consumption externality for the initial young the approach can also be used to explain other aspects of existing social security

does the linder effect hold for differentiated agri food and beverage product trade using a generalized gravity equation this study tests for the linder effect in differentiated agri food product trade i e as the demand structures of two countries become more similar their trade intensity increases two proxies of demand structure the balassa index and the absolute value of the difference in per capita gross domestic products gdps of trading partners are used to capture the linder effect in addition two measures of bilateral trade the grubel and lloyd gl index and the value of bilateral trade are used as the dependent variable this study investigates the role of the linder effect in explaining the trade of 37 differentiated agri food and beverage products categorized into eight product groups cereals fresh fish frozen fish vegetables fresh fruit processed fruit tea and coffee and alcoholic beverages the data covers trade across 52 developed and developing countries from 1990 to 2000 the type of proxy used for the linder effect and the way in which bilateral trade

explaining pay as you go financed public pension systems abstract the existence of pay as you go payg financed public pension plans is usually explained by median voter models or by strategic non saving behavior by young generations here it is claimed that both types of models are neither sufficient nor necessary for explaining payg systems

factors affecting wood energy consumption by u s households about 23 of energy derived from woody sources in the u s was consumed by households of which 70 was used by households in rural areas in 2005 we investigated factors affecting household level wood energy consumption in the four continental u s regions using data from the u s residential energy consumption survey to account for a large number of zero observations i e households that do not burn wood left censored tobit models were estimated urban rural location is a key determinant of level of household wood energy consumption wood energy consumption elasticity with respect to non wood energy price changes was 1 55 at the u s level and a much higher 2 30 among rural households while household wood energy consumption was affected primarily by non wood energy price in rural areas it was influenced mainly by household size and level of income in urban areas elasticity of wood energy consumption with respect to income can be positive or negative depending on household urban rural location region and income level newer houses were found to use less wood energy than older ones and greater urbanization was found to have negative effect on wood energy use our findings suggest that policies reducing relative wood energy cost or increasing non wood energy prices in the residential sector will result in greater wood energy consumption in the u s the effect of policies may vary by region and are likely to be more effective in u s rural areas and in the u s midwest in particular

aggregate demand shifts income distribution and the linder hypothesis the intraindustry trade literature emphasizes nonhomothetic preferences and incomes as important determinants of aggregate demand and trade patterns the authors provide evidence for such preferences particularly that the structure of income driven demand shifts is related to indices of linder type product characteristics and that income distribution is a significant factor in determining aggregate expenditures these results imply that as general income levels rise the relative volume of trade in manufactured consumer goods should rise and the total volume of trade should rise independent of changes in the intercountry difference between income levels copyright 1996 by mit press

social security and savings plans in overlapping generations models abstract this paper examines the impact of social security and saving plans on a simple overlapping generations model with no uncertainty the model is related to and provides a reconciliation of the diamond and samuelson gale models of public debt and public capital savings plans and pay as you go social security are seen to have quite different effects depending on the assumptions governing the growth rates of public debt and capital and it is also shown that the social security program proposed by feldstein is infeasible in the steady state he adopts as a starting point

collusion over the business cycle we present a theory of collusive pricing for markets in which demand alternates stochastically between fast growth boom and slow growth recession phases we show that 1 the most collusive prices are weakly procyclical countercyclical when demand growth rates are positively negatively correlated through time and 2 the amplitude of the collusive pricing cycle is larger when the expected duration of boom phases decreases and when the expected duration of recession phases increases we also offer a generalization of rotemberg and saloner s 1986 model interpreting their findings in terms of transitory demand shocks that occur within broader business cycle phases

social security as trade among living generations we model u s social security that is legislated endogeneously by living generations specifically we consider the effects of social security on resource allocation and pareto optimality examining which generations gain from social security and whether some generations lose because saving and transfer decisions are made sequentially in the real world we use an infinite horizon overlapping generations framework in which life cycle saving and transfers to the old are determined by living agents we focus on the case in which agents are altruistic but place sufficiently greater weight on own comsumption than on the consumption of agents in other generations so that starting from a steady state without social security living agents would gain utility if consumption were shifted marginally to them from later generations excerpt

government debt in an overlapping generations model with bequests and gifts in 1974 robert barro argued that if individuals in successive generations were linked by bequests changes in the stock of government debt or in social security programs would have no effect on the steady state capital stock barro assumed that individuals held static expectations and that the size of the population was constant martin feldstein 1974 1977 had concluded that social security would reduce the capital labor ratio in models that did not admit a bequest motive and in his 1976 comment on barro argued that the introduction of government debt or social security into a perfect foresight dynamic growth model with bequests would still reduce the capital labor ratio barro replied that feldstein s criticisms were invalid if the steady state capital labor ratio were smaller than the golden rule level but would be correct if the opposite were true barro did suggest however that the latter possibility with overaccumulation of capital might be ruled out in his model as it was in miguel sidrauski 1967 but he was unable to demonstrate that the required behavior would be consistent with utility maximization by finite lived individuals 1976 p 345 although recent work by willem buiter 1979 jeffrey carmichael 1979 1982 truman bewley 1981 a b and others has helped to elucidate the nature of overlapping generations models with bequests and gifts and the issues in the barro feldstein debate they remain far from clear the purpose of this paper is to shed a little more light on the subject in what follows i contend that some of the authors cited above either have specified the individual s optimization problem in an asymmetric way or have failed to impose necessary conditions for a sensible optimization problem or both there is a natural specification of the barro model 1 that emphasizes the similarity between this model and optimal growth models see for example david cass 1965 peter diamond 1973 here in steady state equilibrium the aftertax interest rate r must equal the rate at which individuals discount the utility of their heirs p r p has become known as the modified golden rule and a meaningful individual optimization problem requires that p exceed n the natural growth rate of the economy my results confirm barro s hunch about his model in a barro model r must exceed n much of the barro feldstein 1976 interchange which assumed that r could have any relation to n is wrong headed barro and feldstein reach different conclusions about the effects of government debt and social security because they assume different individual utility functions also my results contrast sharply with those of buiter and carmichael for example carmichael concluded that with intergenerational transfers from parents to children bequests r must exceed n but with transfers in the opposite direction n must exceed r 1982 pp 205 06 indeed i believe that the buiter carmichael representation of the barro model is logically faulty see section ii in section i i outline an overlapping generations model with gifts and bequests and derive its steady state properties in the next section i discuss the shortand long run effects of introducing government debt into the model and contrast my results with those

trade liberalization and environmental degradation in china being aware that trade liberalization affects the environment by scale technique and composition effects this study uses provincial data from 1993 to 2002 in china to empirically investigate how they affect the environment adopting the methodology provided by antweiler et al 2001 and slightly modifying their model this study examines whether the composition effects arising from increasing trade originate due to differences in capital labour endowment factor endowment hypothesis and or differences in environmental regulations accompanied by income growth pollution haven hypothesis in china the results indicate that the evidence of factor endowment hypothesis is found in most of the pollutants studied in this article whilst there seems no evidence of pollution haven hypothesis combining with all the estimated elasticities of scale and technique effects composition effects and trade intensity on emissions i find that increasing international trade has opposite impacts on the environment due t

social security intergenerational transfers and endogenous growth in this paper the effects of social security in a simple model of endogenous growth with alternative motives of having children are analyzed it shows how the effects of social security depend on the size of the social security tax the motive to have children and the pattern of intergenerational transfers the pattern of intergenerational transfers itself however is shown to change with the social security tax rate when the social security tax is not too high social security increases per capita income growth and tends to enhance welfare

public pensions with endogenous fertility comment on nishimura and zhang abstract the analysis in nishimura and zhang journal of public economics 1992 48 239 258 n z relies on an unstated assumption that either individuals are able to coordinate their fertility decisions or individual pensions are conditional on individual fertility the present note criticizes this assumption and shows what happens if it is dropped introducing a social security system with a rate of tax equal to the socially optimal transfer from the young to the old will have no effect on fertility but will raise lifetime consumption and welfare rather than reduce fertility and raise transfers as n z predict the implications of reversing the direction of altruism from parents to children rather than children to parents as in n z or doing away with altruism altogether are also discussed