efficient and durable decision rules with incomplete information we compare six concepts of efficiency for economies with incomplete information depending on the stage at which individuals welfare is evaluated and on whether incentive constraints are recognized an example is shown in which an incentive efficient decision rule may be unanimously rejected by the individuals in the economy we define durable decision rules which can resist such unanimous rejection and show that efficient durable decision rules exist

food preferences and nutrition in rural bangladesh t he dietary choice of households near subsistence levels of nutrient intake is one of obvious policy importance in many countries such as bangladesh national goals are set in terms of nutritional intake and there is heavy intervention in the markets for foods however little is known about the manner in which food preferences vary with food expenditure and nutrient intake the design of efficient programs to aid nutritionally deficient households in attaining minimal levels of nutrient intake requires information on all ownand cross price elasticities for both target and non target groups the net effect of a food price subsidy on the consumption of food nutrients cannot be predicted without knowledge of the complete elasticity matrix results presented below demonstrate that substitution effects can be so strong that the subsidization of certain foods quite often reduces nutrient consumption in this study demand equations for nine foods which allow for extremely flexible consumer price response are estimated from the individual budgets of 5 750 rural bangladeshi households estimation at the household level is preferred because it more readily permits the incorporation of household composition variables into the demand analysis such as household size occupation and employment status that are typically lost in aggregation there is also a greater range and variation in expenditure levels than found in grouped data this is of particular importance in the study of nutritional well being as it is the poorest households which are of special interest moreover the household sample provides sufficient degrees of freedom to estimate a simple varying parameter model which requires the estimation of 270 parameters previous econometric analysis of income class specific dietary choice has been limited and not altogether satisfactory pinstrup anderson de londono and hoover 1976 estimated complete sets of price elasticities for different income strata using frisch s scheme in order to study the impact of changes in relative prices on nutrient consumption their results are suspect because of the assumption of want independence necessary for this methodology to be valid alderman and timmer 1980 who were also concerned with studying the relationship between food price policy and nutrient intake by income classes econometrically estimated separate price coefficients for each income group by including slope dummy variables in their demand equations for rice and cassava in indonesia the inclusion of these dummy variables revealed surprisingly large differences in compensated price response across income groups although their results support the notion that poorer households respond differently to prices than the rich the limitations of their data constrained them to consider only two foods and to specify changes in price response which are discontinuous with respect to income i the formulation and estimation of the food demand equations is discussed in section ii below section iii presents the results of the estimation and discusses the nutritional implications of movements in relative food prices and other exogenous variables section iv summarizes our findings

debt deleveraging and the liquidity trap a fisher minsky koo approach in this paper we present a simple new keynesian style model of debt driven slumps that is situations in which an overhang of debt on the part of some agents who are forced into rapid deleveraging is depressing aggregate demand making some agents debt constrained is a surprisingly powerful assumption fisherian debt deflation the possibility of a liquidity trap the paradox of thrift a keynesiantype multiplier and a rationale for expansionary fiscal policy all emerge naturally from the model we argue that this approach sheds considerable light both on current economic difficulties and on historical episodes including japan s lost decade now in its 18th year and the great depression itself

environmental policy government and the market environmental policy is made in a context of both market failure and government failure on the one hand leaving environmental protection to the free market relying on notions of corporate social responsibility and altruistic consumer and shareholder preferences will not deliver optimal results on the other hand nationalizing the delivery of environmental protection is likely to fail because nation states rarely have the depth and quality of information required to instruct all the relevant agents to make appropriate decisions thus as for many areas of policy appropriate models of environmental intervention will lie between these two extremes while it is impossible to specify general rules concerning the precise form of intervention in part because the type of intervention depends upon value judgements this paper sets out some of the considerations that are particular to environmental policy and explores several principles for policy design including information coordination and principal agent problems with a particular focus on the international context

hearts and spades paradigms of household economics abstract this paper explains why the feminist critique of inequalities within the family poses a serious challenge to conventional economic theories of the household but it also discusses those aspects of both neoclassical and marxian theory that are useful to an analysis of conflict within the family arguing that the bargaining power models being developed by some neoclassical theorist are complementary to marxist influenced structural accounts

welfare analysis of tax reforms using household data abstract this paper discusses a methodology for calculating the distribution of gains and losses from a policy change using data for a large sample of households estimates are based on the equivalent income function which is money metric utility defined over observable variables this enables calculations to be standardised and a computer program to compute the statistics presented in the paper is available for a general demand system equivalent income is related to measures of deadweight loss and standard errors are computed for each of the welfare measures an application to u k data for 5 895 households is given which simulates a reform that involves eliminating housing subsidies

optimal domestic regulation under asymmetric information and international trade a simple general equilibrium approach we investigate the design of domestic incentive regulations in a small economy opened to trade and its implications for international specialization and for trade openness to remain welfare improving more specifically we append to an otherwise standard 2 2 heckscher ohlin model of a small open economy a continuum of intermediate sectors producing nontradable goods used in tradable sectors those goods are produced by privately informed regulated firms asymmetric information induces distortions with general equilibrium impacts the small economy becomes relatively richer in the informationally sensitive factor so that asymmetric information might reverse trade patterns free trade is pareto dominated by autarky when it exacerbates agency distortions

rewarding the profligate and punishing the prudent and poor some recent proposals for debt relief at a conference organized in june 1986 by the overseas development council on the future of the world bank former west german chancellor helmut schmidt investment banker felix rohatyn and the chairman of the federal reserve board paul volcker all suggested that the massive 60 billion trade surplus of japan be mobilized to solve what they termed as the debt problem of the third world mr barber conable the new president of the world bank is quoted by the new york times 3 july 1986 as saying clearly there is the expectation that japan in view of the light defense burden it carries will participate fully in solving collective debt problems of the world he characterized the japanese surpluses as a considerable world asset and suggested that establishing a special facility such as the one established by the imf in the 1970s to tap saudi arabia s surplus petro dollars to recycle them would be one way of dealing with it nearly a year ago in october 1985 at the annual meetings of the world bank and imf at seoul us treasury secretary james baker signaled a shift in the us approach to the debt crisis the baker plan aimed to help highly indebted middle income countries 15 were mentioned by baker 10 of them in latin america resume growth and achieve adjustment towards a sustainable debt position through the adoption of the following course of action by lenders debtors and multilateral agencies within the context of the then prevailing imf supervised case bycase approach commercial banks the world bank and other multilateral development banks were to increase lending to these countries baker suggested that the commercial banks commit a total of 20 billion in net new lending over 198688 and the multilateral development banks an additional 9 billion during the same period this increased net lending was to be in support of the adoption of market oriented policies by indebted nations growth was to be promoted inflation reduced and external balance restored by expanding the role of the private sector and of markets both domestically and internationally the first offspring of the baker plan is the recent growth oriented adjustment plan for mexico which was foisted upon a reluctant imf perhaps the world s last unreconstructed bastion of adjustment through austerity by the combined pressure of the us treasury and federal reserve board and the mexican threat of repudiation the imf s reservations concerned the budgetary features of the package not the novel real growth and oil price contingency clauses which it supported the 18 month standby arrangement with the imf provides mexico with sdr 1 4 billion about 1 7 billion in support of what is described as a comprehensive program of adjustment and structural reform the total financing package amounts to 12 billion of which 6 billion is to come from the commercial banks mexico s economic problems had of course been intensified dramatically as a result of the drop in the price of oil policies aimed at bringing mexico s real gdp growth to 3 5 by 1987 from recent negative growth rates of 4 or 5 involve a variety of growth oriented market friendly adjustment measures increased public investment current expenditure cuts tax reform measures marketbased adjustments in tariffs and prices charged by public sector enterprises liberalizing trade measures mexico is about to join the ga7t and only very mild by traditional imf standards budgetary restraint a reduction in the deficit gdp ratio by three percentage points over 1986 87 the aspect of the mexican program of most interest for this discussion is the actions taken

awarding monopoly franchises the authors analyze how to award a monopoly franchise when the objective is to maximize expected consumers surplus net of transfer payments to the producer potential producers initially possess independent private information about uncertain production costs only the chosen producer subsequently observes realized production costs after awarding the franchise to the producer with the lowest expected costs prices are optimally set above realized marginal cost these ex post distortions foster more competitive bidding ex ante the distortions for any bid cost pair are invariant to the number of bidders n though expected distortions and profits decline with n copyright 1987 by american economic association

the origins of structuralism abstract starting out from i m d little s recent categorization of development economics as neo classical versus structuralist this article makes three points first it traces the origins of structuralism in this broad sense in the emergence of the doctrine of market failure in england during the 1930s and 1940s secondly it indicates the links between this line of thought and the latin american structuralist theory of inflation finally it takes up w a lewis s suggestion that the severity of the inflation problem in chile was due not so much to structural factors which it had in common with much less inflation prone ldcs but rather to the strength of organized interest groups making competing income claims

fiscal policy and development in korea abstract this paper assesses korea s tax and expenditure policies during the period 1962 1985 with special attention to their implications for the future in its examination of korean fiscal policy the paper is concerned with whether korea s fiscal system has contributed to the mobilization of domestic resources and whether it possesses a significant capacity for income distribution in so doing the paper examines the major deficiencies of the existing fiscal system in order to clarify what problems merit high priority in future tax reforms also an attempt is made to analyze growth and shifts in the composition of tax revenues and expenditures

risk bearing and entrepreneurship abstract in the knightian theory of entrepreneurship entrepreneurs provide insurance to workers by paying fixed wages and bear all the risk of production this paper endogenizes entrepreneurial risk by allowing for optimal insurance contracts as well as occupational self selection moral hazard prevents full insurance increases in an agent s wealth then entail increases in risk borne thus even under decreasing risk aversion there are robust instances in which workers are wealthier than entrepreneurs this empirically implausible result suggests that risk based explanations for entrepreneurship are inadequate

statistical tragedy in africa evaluating the data base for african economic development measurement is increasingly at the centre of debates in african economic development some remarkable upward revisions of gdp which are signs of statistical systems improving caused the declaration of a statistical tragedy in africa this special issue evaluates the database for african economic development with articles on the quality of the data on gdp health and education poverty labour agriculture and income distribution

house prices borrowing constraints and monetary policy in the business cycle i develop a general equilibrium model with sticky prices credit constraints nominal loans and asset prices changes in asset prices modify agents borrowing capacity through collateral value changes in nominal prices affect real repayments through debt deflation monetary policy shocks move asset and nominal prices in the same direction and are amplified and propagated over time the financial accelerator is not constant across shocks nominal debt stabilises supply shocks making the economy less volatile when the central bank controls the interest rate i discuss the role of equity debt indexation and household and firm leverage in the propagation mechanism finally i find that monetary policy should not target asset prices as a means of reducing output and inflation volatility

the agency cost of internal collusion and schumpeterian growth this paper analyzes the link between the internal organization of rms and the whole process of macroeconomic growth we present a schumpeterian growth model in which monopolies face dynamic agency costs due to the formation of vertical collusions between agents of the organization these agency costs aect incentives to invest and the rate of innovation however when collusion is a self enforcing implicit relationship a higher growth rate shortens the time horizon of colluding agents and makes thus collusion more dicult to enforce we analyze this two ways mechanisms between the growth process and agency problems within the rm and show how the transaction costs of side contracting within the rm and the growth rate of the economy are simultaneously derived

multimarket analysis of agricultural price policies in an operational context the case of cyprus this article presents a method of analysis of agricultural price policies its basic features are i the incorporation of important supply and demand substitution possibilities ii a flexible structure which can account for institutional features of the agricultural sector and its relationships with the rest of the economy and iii a focused policy oriented approach an application to cyprus is presented which highlights the differences between this approach and analyses of single markets the method incorporates supporting software on personal computers with the longer term objective of developing this type of approach as a standard tool in pricing policy analysis

aid the public sector and the market in less developed countries a reply the article in this journal by mosley et al i987 concludes its analysis of aid effectiveness as demonstrating inability of development aid over more than twenty years to provide a net increment to overall growth in the third world p 636 this note purports to show that this conclusion which is ostensibly distressing as the authors claim is not warranted the section of the study which is the basis of the conclusion cited and the subject of this note is a cross section regression analysis full details of which are shown in mosley et al table 3 the note is concerned with the relation between the dependent variable specified as the growth rate of real gdp per cent per annum hereafter gdp and aid specified as a percentage of gdp hereafter aid the aid results with only two significant positive coefficients in one subsample certainly give no basis for claiming aid effectiveness in terms of gdp growth the intention in this note is to interpret the results which are assumed to be valid this is made possible by the fact that the authors have helpfully provided the full input set of mean values derived from the raw data from this it is possible to calculate the gdp aid relationship for each country for the second and third period the procedure for deriving these relationships is as follows for each country the mean values of the time series of gdp and aid are extracted from the data for i 960 70 and for i 970 80 using i 960 70 as the base the signs of the change in the levels of the gdp and aid mean values between periods are recorded this is repeated for i980 4 with i970 80 mean values as the base the relationship between the two signs is an indication of the effect of aid on gdp in the period in which the change in levels is effected thus in the case of an increase in aid being combined with a decrease in gdp the latter must have fallen relatively to the former and aid effectiveness is negative mutatis mutandis for the other three sign combinations thus generating the appropriate gdp aid relationship for each country in each period a frequency distribution of the four sign combinations relating to the full sample is presented in table i since the signs of the changes in the levels of gdp and aid are derived by making explicit the arithmetic relationship implicit in the data they form a valid base from which to draw conclusions without requiring any test of

will developing country nutrition improve with income a case study for rural south india aggregate estimates of food expenditure are consistent with such a possibility implying income expenditure elasticities close to one however the high degree of aggregation at which such estimates are made means that the considerable increase in price per nutrient as income increases is ignored and the nutrient elasticities are therefore overstated estimates for a rural south indian sample indicate that this bias is considerable and that the true nutrient elasticities with respect to income may be close to zero

expected poverty under risk induced welfare variability two of the most widely accepted stylised facts about agriculture in south asia sub saharan africa and elsewhere are that income is highly uncertain from one year to another and that deep and widespread poverty exists and yet there has been very little analysis of the joint problems of poverty and risk this paper offers a methodological approach to the issue of how risk affects poverty and applies it to household level data for dry areas of rural india the following questions are addressed under what conditions can one expect an increase in the riskiness of an income or consumption stream to increase poverty how should one measure the contribution of risk to poverty and what long term benefits in terms of reduced poverty can be expected from policies aimed at stabilising incomes of the poor such policies have been widely discussed in the indian subcontinent of late and their effect on rural

a comment on economic growth and social development abstract it has recently been claimed that economic growth depends on social development but not vice versa this paper reconsiders the nature of such links it is argued that those claims find only weak support in the data and that the theoretical framework is too fragile to justify a satisfactory economic interpretation of the estimates

optimal taxes and the structure of preferences if optimal tax theory is to be the basis for calculating tax rates a close understanding is required of the relationship between the structure of preferences and the configuration of optimal tax rates otherwise hypotheses chosen by the econometrician for practical convenience may completely determine the results independently of measurement this paper explores the relationship between various types of separability particularly weak and implicit separability and optimal tax rates in the various models discussed in the literature the use of distance functions and the antonelli matrix provides a significant unification of previously disparate results in the final analysis optimal tax theory should be the basis for actual calculation of tax rates although recently there have been great advances in theoretical results and in our understanding of their meaning we are still some way from a working knowledge of whether uniform commodity taxes are in practice optimal or if not which commodities should be discriminated against present theoretical formulae do not yield clear cut results except in special cases and it has recently become clear that optimal rates depend crucially on the detailed structure of consumer preferences for example atkinson and stiglitz 3 show that with an optimal nonlinear income tax discriminatory commodity taxes are only necessary to the extent that individual commodities are not weakly separable from leisure more recently deaton 6 has shown that a similar result holds for what is perhaps the most interesting of the standard models that where there are many consumers and only a linear income tax and proportional commodity taxes are allowed in this case separability between goods and leisure together with linear engel curves for goods removes the need for differential commodity taxation in consequence nothing can be learned about commodity taxes from consumer demand studies in which commodity demands are explained conditionally on total expenditure and commodity prices and which assume linear engel curves all such studies require separability from leisure as a maintained hypothesis and so are consistent with uniform commodity taxation these results suggest that the prospects for meaningful empirical calculations of tax rates are bleak econometricians estimating commodity demand and labor supply equations make generous use of separability assumptions to enable estimation at all in consequence it is likely that empirically calculated tax rates based on econometric estimates of parameters will be determined in structure not by the measurements actually made but by arbitrary untested and even unconscious hypotheses chosen by the econometrician for practical convenience to remedy this situation and as a prelude to fruitful empirical work it is necessary to have a more explicit understanding of how preference structure affects optimal tax rates such is the object of this paper three different

rice prices and income distribution in thailand a non parametric analysis rice is a staple crop in thailand significantly entering both household production and consumption this paper examines the effect of rice prices on the distribution of real income across households taking into account household characteristics and geographical location the data set is a large scale survey of 11 893 households simple nonparametric techniques for regression and density estimation are used these methods depend on few assumptions and generate flexible graphical results that are directly informative about the problem at hand the main results are that higher rice prices should benefit all rural households but the largest benefits accrue to rural households in the middle of the income distribution copyright 1989 by royal economic society

risk and trade regimes another exploration an analysis of a small sample of countries shows that the higher the level of termsof trade risk that a nation faces in international markets the more likely it is to increase barriers the analysis also shows that the greater the availability of social insurance programs mounted by a nation s government the less likely it is to block free trade in comparison with the small open economies of western europe therefore developing countries may remain protectionist because they lack the resources to mount internal programs of transfer payments as a means of coping with risk from international markets

self selection and pareto efficient taxation abstract this paper analyses the set of pareto efficient tax structures the formulation of the problem as one of self selection not only shows more clearly the similarity between this problem and a number of other problems such as the optimal pricing of a monopolist which have recently been the subject of extensive research but also allows the derivation of a number of new results we establish i under fairly weak conditions randomization of tax structures is desirable ii if different individuals are not perfect substitutes for one another in production then the general equilibrium effects until now largely ignored in the literature of changes in the tax structure may be dominant in determining the optimal tax structure in particular if the relative wage of high ability and low ability individuals depends on the relative supplies of labor the optimal tax structure entails a negative marginal tax rate on the high ability individuals and a positive marginal tax rate on the low ability individuals the marnitude of which depends on the elasticity of substitution iii if individuals differ in their preferences pareto efficient taxation may entail negative marginal tax rates for high incomes while iv if wage income is stochastic the marginal tax rate at the upper end may be 100 our analysis thus makes clear that the main qualitative properties of the optimal tax structure to which earlier studies called attention are not robust to these attempts to make the theory more realistic

north south trade export led growth with abundant labour abstract a north south model is developed in which the south is represented as a neo classical dual economy conditions are imposed which make temporary equilibrium unique and walrasian stable and long run balanced growth paths globally asymptotically stable in the short run an expansion of northern demand for southern products always improves the terms of trade in the long run however an increase in the growth rate of northern demand can turn the terms of trade against the south reduce real wages and lower living standards

inequality and endogenous trade policy outcomes abstract an enduring puzzle in international economics is why trade interventions are biased in favor of import competing rather than export sectors and therefore restrict trade in this paper we show that if the government s objective reflects a concern for inequality then trade policy generally exhibits an anti trade bias importantly under neutral assumptions the mechanism that we analyze generates the anti trade bias independently of whether factors are specific or mobile across sectors the mechanism also generates an anti trade bias between large countries even after they sign reciprocal trade agreements that eliminate any terms of trade motivation for the use of trade protection

everyone may benefit from subsidising entry to risky occupations this paper shows that in the presence of costly state verification directly or indirectly subsidising entry to risky occupations may benefit everyone the result holds even in the presence of private insurance indeed it may be desirable to prohibit private insurance in favour of subsidies to hazardous activities these findings do not depend on the government having an advantage over the private sector in observing outcomes the explanation is that through its influence on equilibrium price feasible fiscal policy can shift the return distribution so as to create collective insurance more cheaply than is possible through private contracting with its requirement of costly auditing amongst applications is a case for a loss making state bank offering high interest rate loans

internal migration and urban employment in the third world for more than a decade michael todaros model has provided a widely accepted theoretical framework for explaining the massive flows of rural urban migration that are observed in many third world countries this paper however presents data amassed from a wide range of countries to highlight a crucial shortcoming of that model it will be shown that far from being general in nature the todaro approach is limited to explaining the movement of persons possessed of sufficient human capital to qualify them for modern sector employment the present work utilizes the perspective of the urban subsistence sector to develop a model that serves as a useful complement to that of todaro excerpt

collateral constraints the zero lower bound and the debt deflation mechanism abstract negative cost push shocks lead to lower inflation and higher output in normal times these shocks are instead contractionary when collateral constraints interact with the zero lower bound as the debt deflation mechanism plays a key amplifying role the effects are larger and more persistent when nominal wages cannot be reduced

fixed and variable rate mortgages business cycles and monetary policy the aim of this paper is twofold first i study how the proportion of xed and variable rate mortgages in an economy can aect the way shocks are propagated second i analyze optimal implementable simple monetary policy rules and the welfare implications of this proportion i develop and solve a new keynesian dynamic stochastic general equilibrium model that features a housing market and a group of constrained individuals who need housing collateral to obtain loans a given proportion of constrained households borrows at a variable rate while the rest borrows at a xed rate the model predicts that in an economy with mostly variable rate mortgages an exogenous interest rate shock has larger eects on borrowers than in a xed rate economy aggregate eects are also larger for the variable rate economy for plausible parametrizations dierences are muted by wealth eects on labor supply and by the presence of savers more persistent shocks such as in ation target and technology shocks cause larger aggregate dierences from a normative perspective i nd that in the presence of collateral constraints the optimal taylor rule is less aggressive against in ation than in the standard sticky price model furthermore for given monetary policy a high proportion of xed rate mortgages is welfare enhancing

trade and insurance with imperfectly observed outcomes abstractthe following sections are included introductionthe modelunobserved outcomescostly observationconcluding remarksreferences this abstract was borrowed from another version of this item

testing between competing models of sharecropping the marshallian approach assumes a prohibitively high cost of monitoring the sharecropper s activities while the monitoring approach argues that landlords stipulate and effectively monitor sharecroppers activities i present new evidence using detailed data collected from eight indian villages most tenants own some land of their own this provides a controlled environment in studying the impact of contractual arrangements the differences in input and output intensities on owned minus sharecropped land of the same household are found to be sizable and significant suggesting a rejection of the monitoring approach and supporting the notion of the marshallian productive inefficiency of sharecropping

international credit and welfare a paradoxical theorem and its policy implications abstract this paper considers a developing nation that faces a foreign exchange shortage and hence its demand for foreign goods is limited both by its income and its foreign exchange balance availability of international credit relaxes the second constraint we develop a simple model of strategic interaction between lending institutions and firms and show that the availability of international credit at concessionary rates can leave the borrowing nation worse off than if it had to borrow money at higher market rates this paradox of benevolence is then used to motivate a discussion of policies pertaining to international lending and the southern government s method of rationing out foreign exchange to the importers

investment shocks and business cycles abstract the origins of business cycles are still controversial among macroeconomists this paper contributes to this debate by studying the driving forces of fluctuations in an estimated new neoclassical synthesis model of the u s economy in this model most of the variability of output and hours at business cycle frequencies is due to shocks to the marginal efficiency of investment imperfect competition and to a lesser extent technological frictions are the key to their transmission although labor supply shocks explain a large fraction of the fluctuations in hours at very low frequencies they are irrelevant over the business cycle this finding is important because the microfoundations of these disturbances are widely regarded as unappealing

optimally uniform commodity taxes taste differences and lump sum grants abstract optimal commodity taxes for an economy with many households should be at a uniform proportional rate under certain conditions these include i linear and parallel engel curves with intercepts dependent on household composition ii separability between goods and labour and iii optimal demogrants

the impact of financial development on energy consumption in emerging economies abstract financial development is often cited as a very important driver of economic growth in emerging economies and it is thus likely that financial development affects energy demand this study uses generalized method of moments estimation techniques to examine the impact of financial development on energy consumption in a sample of emerging countries several different measures of financial development are examined using a panel data set on 22 emerging countries covering the period 1990 2006 the empirical results show a positive and statistically significant relationship between financial development and energy consumption when financial development is measured using stock market variables like stock market capitalization to gdp stock market value traded to gdp and stock market turnover the implications of these results for energy policy are discussed

rural credit markets and institutions in developing countries lessons for policy analysis from practice and modern theory this article presents evidence of the failure of government intervention in rural credit markets of ldcs in the past three decades it then shows how lessons for policy analysis can be drawn from modern theory particularly those theories focussing on credit rationing in competitive markets and interlinking of credit contracts with labor and land contracts the article outlines the policy implications of these theories and finds them insufficient to account for the empirical evidence it contends that a more systematic and rigorous analysis of institutions and institutional environments is essential for understanding and implementing effective policy reforms of rural credit markets it presents suggestions for undertaking such an analysis

is free trade passe abstract if there were an economist s creed it would surely contain the affirmations i understand the principle of comparative advantage and i advocate free trade yet the case for free trade is currently more in doubt than at any time since the 1817 publication of ricardo s principles of political economy and this is due to changes that have recently taken place in the theory of international trade while new developments in international trade theory may not yet be familiar to the profession at large they have been substantial and radical in the last ten years the traditional constant returns perfect competition models of international trade have been supplemented and to some extent supplanted by a new breed of models that emphasizes increasing returns and imperfect competition these new models call into doubt the extent to which actual trade can be explained by comparative advantage they also open the possibility that government intervention in trade via import restrictions export subsidies

an idea in good currency and how it grew the informal sector abstract the informal sector is an exceedingly fuzzy concept which has come into wide use because it seemed to address the interests of a number of very diverse groups those interested in growth planning those interested in alleviating poverty marxist structuralists and those interested in economic accounting the use of the concept has been helpful in directing attention to phenomena previously ignored but adopting the term obscures analysis of central issues and is counterproductive we should rather specify critical policy issues and design field research around these

portfolio diversification futures markets and uncertain consumption prices this paper examines the robustness of the keynes hicks backwardation hypothesis for futures markets in a model that admits diversification and inflation protection as speculative motives it presents a criterion in terms of the correlation of futures price with anticipated consumption net of other asset holdings for the keynes hicks proposition to be true the paper finds the effect of changes in net wealth and commodity demand on the risk premium spread open interest and storage

entry deterrence in stackelberg perfect equilibria this paper examines entry deterrence in a duopoly where the postentry game is stackelberg it is argued that in reality firms can use a broader range of precommitments than is allowed for in the literature this paper permits such precommitments and analyzes the perfect equilibria it also allows for the fact that there may be fixed costs associated not only with entry but with beginning production several interesting possibilities are explained including the existence of excess capacity and the holding of inventories even in the absence of any uncertainty copyright 1990 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

incomplete contracts and the product cycle the incomplete nature of contracts governing international transactions limits the extent to which the production process can be fragmented across borders in a dynamic general equilibrium ricardian model of north south trade the incompleteness of international contracts is shown to lead to the emergence of product cycles because of contractual frictions goods are initially manufactured in the north where product development takes place as the good matures and becomes more standardized the manufacturing stage of production is shifted to the south to benefit from lower wages following the property rights approach to the theory of the firm the same force that creates product cycles i e incomplete contracts opens the door to a parallel analysis of the determinants of the mode of organization the model gives rise to a new version of the product cycle in which manufacturing is shifted to the south first within firm boundaries and only at a later stage to independent firms in the south relative to a world with only arm s length transacting allowing for intrafirm production transfer by multinational fi rms is shown to accelerate the shift of production towards the south while having an ambiguous effect on relative wages the model delivers macroeconomic implications that complement the work of krugman 1979 as well as microeconomic implications consistent with the findings of the empirical literature on the product cycle

income distribution effects of the green revolution in india a review of empirical evidence abstract this paper examines the impact of the green revolution on selected dimensions of income distribution in india by reviewing the indian empirical evidence i the indian empirical studies suggest a wide diffusion of modern varieties mvs among farmers over time irrespective of farm size and tenurial status but the pace of diffusion of mvs of a given crop among farms across the regions and over the years has certainly revealed a tendency to be interlinked with the nature and level of their regions development in physical and institutional infrastructure ii through prospects of increased demand for labour the green revolution has undoubtedly exerted a favourable impact on the absolute income status of the landless labourer notwithstanding the fact that the owners of land and capital have gained relatively more than the labourers in the increased production due to mvs iii the impact of mvs on regional income differences has been one of increasing the gap mainly due to an interplay between differentials in levels of physical and infrastructural development of regions and product location specificity characteristics of mvs

globalization and risk sharing we study the effects of globalization on risk sharing and welfare like the previous literature we assume that governments cannot commit to enforce the repayment of debts owed by their citizens unlike the previous literature we assume that governments cannot discriminate between domestic and foreign creditors when enforcing debt payments this creates novel interactions between domestic and international trade in assets i increases in domestic trade raise the benefits of enforcement and facilitate international trade in fact in our set up countries can obtain international risk sharing even in the absence of default penalties ii increases in foreign trade raise the costs of enforcement and hamper domestic trade as a result globalization may worsen domestic risk sharing and lower welfare we show how these effects depend on various characteristics of tradable goods and explore the roles of borrowing limits debt renegotiations and trade policy

foreign investment vertical integration and local equity requirements the paper presents a spatial model in which a foreign firm and local government behave strategically in setting a local equity requirement ler contrary to simple intuition larger equity requirements may increase economic efficiency but this conclusion is highly sensitive to the vertical structure of the foreign firm when the foreign firm has monopoly power in both foreign upstream and domestic downstream markets the optimal equity requirement is zero surprisingly the introduction of domestic competition upstream causes the government to adopt a ler which lowers economic efficiency

how to tax a spatial monopolist abstract this paper models the interaction of a government that maximizes tax revenue and a spatial monopolist that maximizes profit the government has two tax instruments a per unit output tax and a transport tax and the monopolist can strategically alter its location and the mode of transport if allowed only one tax instrument then the government chooses the output tax which generates inefficient strategic choices by the monopolist in order to avoid profit losses since the inefficiency is greater than with the transport tax this isolates a new tradeoff between government tax revenue and economic efficiency

regulation and legislative choice regulation has economic and political dimensions both of which i endogenize in this hierarchical model in which a legislature chooses by majority rule the mandate of an agency that faithfully regulates a firm with private information about its costs sufficient conditions are given for an equilibrium to exist if there is a strong electoral connection between the benefits delivered to constituents and their electoral support the legislature will choose a regulatory mandate that favors consumer over producer interests and results in regulation that does not maximize expected total surplus political interest in delivering benefits to constituents through factor employment results in a regulatory mandate that yields greater expected total surplus

welfare effects of changing commodity tax rates toward uniformity abstract this paper presents a theory of tax reform that is applicable to a many good economy where i the initial tax structure is arbitrarily given ii no lump sum tax exists and iii the initial tax revenue must be maintained after the reform sufficient conditions are established under which tax changes definitely result in increases in welfare they indicate that in a wide class of situations the uniform tax structure can be a useful intermediate target on the way to optimum

economic adjustment and exchange rates in developing countries in spite of the attention paid exchange rates in recent economic debates on developing countries relatively few studies have systematically analyzed in detail the various ramifications of exchange rate policy in these countries in this new volume from the national bureau of economic research leading economists use rigorous models to tackle various exchange rate issues while also illuminating policy implications that emerge from their analyses the volume divided into four main sections addresses the role of exchange rates in stabilization programs and the adjustment process the importance of exchange rate policy during liberalization reform in developing countries exchange rate problems relevant and unique to developing countries illustrated by case studies and the problems defining measuring and identifying determinants of real exchange rates authors of individual papers examine the relation between commercial policies and exchange rates the role of exchange rate policy in stabilization programs the effectiveness of devaluations as a policy tool and the interaction between exchange rate terms of trade an capital flow this research will not only prove crucial to our understanding of the role of exchange rates in developing countries but will clearly set the standard for future work in the field

the economics of poverty in poor countries this paper which examines recently studied links between 1 poverty high fertility and undernourishment and 2 environmental degradation and civic disconnection in developing countries opens by reviewing the limitations of orthodox discussions of economic institutions and property rights and the orthodox dichotomy that has located the cause of poverty in the suppression of markets the introduction also notes that much of the analysis in this paper is based on data from sub saharan africa and india the next section of the paper summarizes evidence on the magnitude and extent of world poverty section 3 exposes the connection between undernourishment and a persons capacity to work as one of the pathways to the poverty trap sections 4 and 5 consider the dependence of impoverished rural populations on common property resources and how the conventional process of economic growth can break down this system and make certain sections of the population especially vulnerable to economic shocks the next two sections explore the possibility that links between poverty high fertility and environmental degradation may constitute another pathway to the poverty trap the eighth section reviews the methodology of using net national product which includes resource depletion and environmental deterioration as an evaluation criterion and argues that mainstream development economists may have neglected environmental and population problems because they have been relying on the wrong economic indices the final section concludes that a number of policies must be used to improve options for people

on the amplification role of collateral constraints abstract this letter explores the role of costly liquidation of the collateralized asset in a stochastic version of the kiyotaki and moore 1997 model we document that the degree of inefficiency in the debt enforcement procedure plays a key role in the endogenous amplification of productivity shocks generated by collateral constraints

primary commodity prices manufactured goods prices and the terms of trade of developing countries what the long run shows the authors revisit in this article the empirical foundation of the alleged secular decline in the prices of primary commodities relative to those of manufactures they use a newly constructed index of commodity prices and two modified indexes of manufactured good prices and find that from 1900 to 1986 the relative prices of all primary commodities fell on trend by 0 5 percent a year and those of nonfuel primary commodities by 0 6 percent a year they thus confirm the sign but not the magnitude of the trend implicit in the work of prebisch but even the more limited secular decline shown by their relative price indexes may be magnified by an incomplete account of quality improvements in manufactures they then show that the evolution of terms of trade of nonfuel primary commodities is not the same as that of the net barter terms of trade of non oil exporting developing countries finally they find that despite the decline that has probably occurred during the current century in the terms of trade of nonfuel primary commodities the purchasing power of total exports of these products has increased considerably similarly the fall that may have occurred after world war ii in the net barter terms of trade of developing countries seems to have been more than compensated for by the steady improvement in their income terms of trade

income distribution and development some stylized facts in recent years the relationship between income distribution and the process of development has come under increasing scrutiny much of the debate has focused on the hypothesis originally advanced by simon kuznets that the secular behavior of inequality follows an inverted u shaped pattern with inequality first increasing and then decreasing with development this hypothesis has become so much a part of the conventional wisdom on this subject that it has generated considerable skepticism about the welfare implications of the development process indeed on some interpretations developing countries face the grim prospect not just of increasing relative inequality but also of declining absolute incomes for the lower income groups

regulating a monopolist with unknown costs we consider the problem of how to regulate a monopolistic firm whose costs are unknown to the regulator the regulator s objective is to maximize a linear social welfare function of the consumers surplus and the firm s profit in the optimal regulatory policy prices and subsidies are designed as functions of the firm s cost report so that expected social welfare is maximized subject to the constraints that the firm has nonnegative profit and has no incentive to misrepresent its costs we explicitly derive the optimal policy and analyze its properties in their classic papers dupuit 2 and hotelling 5 considered pricing policies for a bridge that had a fixed cost of construction and zero marginal cost they demonstrated that the pricing policy that maximizes consumer well being is to set price equal to marginal cost and to provide a subsidy to the supplier equal to the fixed cost so that a firm would be willing to provide the bridge this first best solution is based on a number of informational assumptions first the demand function is assumed to be known to both the regulator and to the firm while the assumption of complete information may be too strong the assumption that information about demand is as available to the regulator as it is to the firm does not seem unnatural a second informational assumption is that the regulator has complete information about the cost of the firm or at least has the same information about cost as does the firm this assumption is unlikely to be met in reality since the firm would be expected to have better information about costs than would the regulator as weitzman has stated an essential feature of the regulatory environment i am trying to describe is uncertainty about the exact specification of each firm s cost function in most cases even the managers and engineers most closely associated with production will be unable to precisely specify beforehand the cheapest way to generate various hypothetical output levels because they are yet removed from the production process the regulators are likely to be vaguer still about a firm s cost function 12 p 684 as this observation suggests it is natural to expect that a firm would have better information regarding its costs than would a regulator the purpose of this paper is to develop an optimal regulatory policy for the case in which the regulator does not know the costs of the firm one strategy that a regulator could use in the absence of full information about costs is to give the firm the title to the total social surplus and to delegate the pricing decision to the firm in pursuing its own interests which would then be to maximize the total social surplus the firm would adopt the same marginal cost pricing strategy that the regulator would have imposed if the regulator had

poverty and progress reflections on housing and urban policies in developing countries 1976 96 the habitat ii conference in june 1996 was more determined by retrospect and prospect than by the discussions during the several days in istanbul the policy outcomes were fashioned by reforms and

tariffs as insurance optimal commercial policy when domestic markets are incomplete free trade is not optimal for a small country that faces uncertain terms of trade if some factors are immobile ex post and markets for contingent claims are incomplete the government can improve social welfare by using commercial policy that serves as a partial substitute for missing insurance markets using a combination of analytical and simulation techniques we demonstrate that optimal policy for this purpose will often have an anti trade bias we also show that the usual preference by economists for factor or product taxes and subsidies over tariffs and export subsidies may not be justified in this context this abstract was borrowed from another version of this item

the effects of taxation price control and government contracts in oligopoly and monopolistic competition abstract many government contracts with or policies towards oligopolistic sectors essentially involve private firms selling a given proportion or quantity of output to the government at a fixed price p r with the remainder being sold on the open market often this is combined with consumer rationing examples include cement and sugar in india and health housing and defence in many countries the paper investigates the effects of these schemes including sales and excise taxation on prices output and household welfare under oligopoly and monopolistic competition less government control reduced may raise prices and tax shifting can be above or below 100 percent

the determinants of growth the growth theories of the 1950s and 1960s emphasized capital accumulation and technical progress as explanations of growth more recently theoretical attention has focused on the understanding of progress in terms of learning human capital in the tradition of k arrow and investment in research following h uzawa these newer developments have made some but only limited progress the experience of developing countries suggests that the agenda should be broadened to include the efficiency of factor use infrastructure broadly interpreted and sectoral allocation these aspects together with the kaldorian concern for dynamic increasing returns provide substantial promise for future research copyright 1991 by royal economic society

international trade policy benevolent dictators and optimizing politicians the claim that sophisticated non operational efficiency based arguments for intervention facilitate obfuscatory policy induced income transfers will meet in some quarters the counterclaim that this is an overly cynical interpretation of politicians policy motives rent seeking can likewise be argued to be an overly cynical conception the theory of rent seeking would impute self interest motives to the offer of payment for a cup of coffee

poverty and public policy the problem of poverty is particularly acute in india with 14 of the world s population we have the misfortune of having almost twice as large a share of the world s poor indeed as i shall presently underline the question of poverty and its amelioration has been at the center of our concerns from the beginning of our planning efforts almost four decades ago little therefore can be said on it that some distinguished indian economist has not already said in some ways therefore to talk on the design of public policy for poverty to an indian audience is to carry coal to newcastle or as the old saying goes to teach your grandmother how to suck eggs nonetheless i hope to provide a fresh perspective by putting the problem into an explicit analytical framework that permits alternative policy designs to be sharply defined and contrasted i also intend to draw on international experience to put our efforts and problems into both historical and comparative perspectives

the economics of development a survey i the subject our definition of the subject will be the use of economic analysis to understand the economies of poor or developing countries this includes in particular how standards of living in the population are determined and how they change over time and further how policy can or should be used in the influence of these processes the definition contains in principle much or most of analytical methods in economics insofar as they can be put to use in the examination of the issues of interest this is as it should be but it poses a problem for a survey in a journal a comprehensive treatment is infeasible so we shall follow a different route the survey will focus on what i take to be the major themes and approaches which characterise the productive aspects of the subject there is therefore no pretence at being exhaustive the purpose is rather to highlight some of the advances many of these have been of real substance there are a number of possible purposes for a survey and it is important to be clear at the outset for whom it is intended what it is and what it is not this survey is addressed to economists and students of economics who know the tools of their trade but not necessarily how they have been applied to and fashioned for the analysis of the economics of developing countries it is a description of the ways in which problems can be productively formulated and approached in terms of examples chosen for their intrinsic importance and interest the vastness of the subject means that we have to be highly selective it does not seek to provide a summary evaluation of the current view of the appropriate response to immediate policy questions it is not a history of thought nor a research manifesto nor an attempt to adjudicate or settle the major debates where they arise naturally from the major purpose some judgements on these subjects will be offered but they do not themselves constitute the primary intent of this survey there are three lines of enquiry or sets of questions which have i suggest been distinctive of the most fruitful work in development economics they will

interaction between theory and observation in development this review covers the empirical research carried out over the past 30 years with respect to the process of development it examines the extent to which economic theories and generalizations derived from the experience of the developed countries are relevant to the developing countries the relationship between the strutural transformation that occurs in the process of development and economic growth is explored the neoclassical growth model is applied to both the more advanced countries whose economic transformation is near completion and to the developing countries still in the process of structural transformation further empirical work should reduce the controversy between neoclassical and structural approaches to development by making possible the formulation of computable models in which the distinction between developing and developed countries can be largely reduced to observable differences in certain statistical parameters initial conditions price and income elasticities and adjustment lags

the theory of taxation for developing countries tax policy has far reaching implications for economic development and public administration this book which presents a modern theory of public finance brings together many of the most distinguished economists who have written on the subject they provide coherent principles for tax design and a systematic framework for the analysis of practical questions of tax reform and pricing policy in developing countries the book is especially timely as countries experience increasing shortages of government revenue and the distortions brought about by poorly designed tax systems it pays particular attention to the special problems of developing countries such as the taxation of agriculture the aim throughout is to develop techniques that can be quantitatively applied given the data available and empirical case studies illustrate the methods in action the authors analyze the links between tax theory social cost benefit analysis and the pricing of publicly supplied goods and services they also explore the empirical and econometric problems of identifying the tradeoffs between equity and efficiency other topics treated include the analysis of labor markets the taxation of foreign private investment and of fuel and the pricing of education although the models used concentrate on developing countries most of the methods and discussion apply as well to the problems of more affluent countries

does financial development increase energy consumption the role of industrialization and urbanization in tunisia this paper assesses the relationship among energy consumption financial development economic growth industrialization and urbanization in tunisia from 1971 to 2008 the autoregressive distributed lag bounds testing approach to cointegration and granger causality tests is employed for the analysis the result confirms the existence of long run relationship among energy consumption economic growth financial development industrialization and urbanization in tunisia long run bidirectional causalities are found between financial development and energy consumption financial development and industrialization and industrialization and energy consumption hence sound and developed financial system that can attract investors boost the stock market and improve the efficiency of economic activities should be encouraged in the country nevertheless promoting industrialization and urbanization can never be left out from the process of development we add light to policy makers with the role of financial development industrialization and urbanization in the process of economic development

terms of trade uncertainty savings and the production structure abstract this paper studies the response of savings and the production structure tradeables non tradeables to an increase in future terms of trade uncertainty holding expected utility constant there is no international trade in risky assets the impact on the production structure is studied by analyzing the markets for domestic equity the paper shows that the response of both non tradeables production and savings is ambiguous cross country evidence indicates that an increase in terms of trade uncertainty leads to a higher fraction of the labor force in the non tradeables sector

markets for risk and openness to trade how are they related if protectionist trade policies aim to insure domestic industries against swings in world market prices the development of financial markets could lead to trade liberalization likewise trade lib

the second theorem of the second best abstract this paper interprets many results from the literature on incentive compatibility and cost benefit analysis as illustrations of a second theorem of the second best the theorem states that if there exists any restriction on transactions required for first best efficiency then there is no presumption that a social welfare maximum entails equal marginal social utilities of income across individuals one reason is that incentive constraints shift with redistributions of wealth so that redistributions have an instrumental role in relaxing constraints that make the economy second best two examples relate such wealth effects to countervailing incentives and hostage taking

trade and insurance with moral hazard abstract previous literature on the use of trade policy for insurance has relied implicitly on moral hazard and adverse selection as the reasons for the failure of private markets for risk bearing this paper begins with the observation that such forces should be incorporated explicitly into the models to ensure a fair comparison between markets and governments for the case of moral hazard it is found that market equilibrium given exclusive insurance is an informationally constrained pareto optimum in one case of non exclusive insurance a systematic role for government insurance is found but the scope of trade policy is ambiguous

trade and insurance with adverse selection this paper considers a small open economy with a safe sector and a risky sector the probability of success in the risky activity differs across individuals and is private information it is shown that policies that sustain informationally constrained pareto optima should not include tariffs a laissez faire competitive equilibrium if it exists is pareto optimal these results contrast with previous literature on the role of tariffs as insurance where private risk markets are assumed away in an ad hoc manner

financial shocks comovement and credit frictions in models with frictional financial markets the specification of the borrowing constraint is crucial to generating comovement between macro variables and asset prices after credit shocks the interaction between financial frictions and labor demand is key to the results

inequality as a determinant of malnutrition and unemployment policy this paper explores the policy implications that are obtained once it is recognized that at low nutrition intakes a person s productivity is an increasing function of intake in the context of a fully general equilibrium model it is shown that if aggregate assets in an economy are neither large nor small certain patterns of lorenz improving asset redistributions or nutrition transfers increase aggregate output and reduce the volume of involuntary unemployment and the incidence of undernourishment copyright 1987 by royal economic society

institutional quality and international trade institutions quality of contract enforcement property rights shareholder protection and the like have received a great deal of attention in recent years yet trade theory has not considered the implications of institutional differences beyond treating them simply as different technologies or taxes the purpose of this paper is twofold first we propose a simple model of international trade in which institutional differences are modeled within the framework of incomplete contracts we show that doing so reverses many of the conclusions obtained by equating institutions with productivity institutional differences as a source of comparative advantage imply among other things that the less developed country may not gain from trade and factor prices may actually diverge as a result of trade second we test empirically whether institutions act as a source of trade using data on us imports disaggregated by country and industry the empirical results provide evidence of institutional content of trade institutional differences are an important determinant of trade flows

determinants of food consumption in rural sierra leone abstract this paper reports the application of a quadratic expenditure system with demographic variables to the household consumption leisure choice component of a household firm model a system of seven commodities is estimated including five foods non food and leisure appropriate for such a level of disaggregation a demand system is used the quadratic expenditure system which allows for a flexible relationship between full income and commodity expenditures without sacrificing parsimony in parameters demographic data on households are explicitly incorporated into the model allowing for a richer specification than can be achieved by using per capita variables the data are from a cross section survey of households in rural sierra leone price variation exists by region permitting estimation of a complete demand system engel curves are found to be significantly non linear with marginal expenditure on rice the major staple declining with higher income most foods are found to be reasonably price responsive with sizeable own price substitution effects declining with higher income aggregate labor supply is found to be price inelastic

a model of monopoly with strategic government intervention abstract a formal model of firm government interaction is developed in which the firm chooses the producer price and the government chooses the ad valorem tax rate to maximise revenue collection this game is then embedded as the second stage of a two stage game where in stage 1 the firm gets to choose its technology and therefore its cost function the main results of the paper are i to characterise the nash and stackelberg equilibria of the government firm game ii to demonstrate that strategic inefficiency i e the choice of high cost technologies when lower cost options are available is pervasive in these models whenever the government uses ad valorem taxes and iii to show that if the government s choice between ad valorem tax and specific or per unit tax is endogenised then in a perfect equilibrium the government will in fact choose the ad valorem system

a development friendly prioritisation of doha round proposals agriculture looms large on the wto s agenda it was the first substantive item listed in the work programme of the ministerial declaration launching the doha round and it was arguably at the centre of the failure at cancun developing countries made it clear both before and during the cancun meeting that progress on agriculture was their primary objective negotiations in other areas have received less attention and progressed more slowly this paper considers that prioritisation and suggests that the interests of developing countries in the current round of trade negotiations are much broader than is suggested by the narrow range of agricultural issues that have dominated negotiations a true development round would require a significant reprioritisation of many areas of the wto s current agenda

the theory of food price stabilisation a small and very volatile fraction of total domestic food production many countries aim at food self sufficiency with the consequence that the country may be an exporter in good years but an importer in bad years international and domestic transport and handling costs are a significant fraction of the average price of cereals so the domestic price fluctuations will tend to be an amplified version of international price fluctuations the difference between the domestic price in exporting and importing years will be twice the transport costs if the world price is unchanged it would require a strong negative correlation between domestic and world supply to offset this additional source of instability 1

exports and growth a causality analysis for the pulp and paper industries based on international panel data this study examines the causal relations between exports and domestic production in the pulp and paper industries the issue is whether exports are the engine of growth or whether exports follow growth the data were time series of the 15 main exporting countries between 1961 and 1995 the method was granger causality analysis with error correction based on models estimated in three ways ordinary least squares by country least squares with dummy variables lsdv and seemingly unrelated regression regardless of method the strongest relation was an instantaneous within a year feedback between exports and production the lsdv results implied average multipliers across countries of 1 2 to 1 4 from exports to production and 0 20 to 0 25 from production to exports in both industries experiments with monthly data on the pulp industries of canada and the usa showed that temporal aggregation could affect the granger causality test results

sustainable development differing perspectives of ecologists and economists and relevance to ldcs abstract the claim is now widely that it is desirable to aim for a sustainable society for sustainable economic development and for sustainable productive systems this reflects the outlook of ecologists rather than the majority of economists although a small group of economists does see particular virtue in sustainability the outlook of ecologists is illustrated by conway s criteria for assessing the desirability of agricultural systems this approach is shown to involve several unresolved conceptual issues this leads to a discussion of the policy of a safe minimum standard as proposed by some economists and the critique of expected utility and risk benefit analysis by page and maclean and whether this might provide a bridge between the views of economists and ecologists a basis is established for considering whether sustainability of productive systems is likely to be a more important goal in less developed countries than in developed countries further examples of the stress of ecologists on the production sustainability goal are given and additional policy prescriptions for instance involving nomadism and transhumance are discussed