challenges of conducting contingent valuation studies in developing countries we review the experiences and challenges that researchers can face when conducting contingent valuation studies in developing countries we discuss these challenges based on our own experiences of conducting field contingent valuation studies about genetically modified rice in five developing countries that represent different regions of the world and diverse cultures we also base our discussion on results from a survey we conducted of agricultural and applied economists regarding their own experiences the issues covered include the selection and training of local personnel the recruitment of participants sampling challenges participants compensation survey methods and implementation elicitation methods the literacy rate of the population and security safety issues in developing countries we also discuss the implications of our findings to other well established stated preference methods such as choice experiments

optimal interest rate rules asset prices and credit frictions we study optimal taylor type interest rate rules in an economy with credit market imperfections our analysis builds on the agency cost framework of carlstrom and fuerst 1997 agency costs net worth and business fluctuations a computable general equilibrium analysis american economic review 87 893 910 which we extend in two directions first we embed monopolistic competition and sticky prices second we modify the stochastic structure of the model in order to generate a countercyclical premium on external finance this is achieved by linking the mean distribution of investment opportunities faced by entrepreneurs to aggregate total factor productivity we model monetary policy in terms of simple welfare maximizing interest rate rules we find that monetary policy should respond to increases in asset prices by lowering interest rates however when monetary policy responds strongly to inflation the marginal welfare gain of responding to asset prices vanishes within the class of linear interest rate rules that we analyze a strong anti inflationary stance always attains the highest level of welfare

contracting contingencies and single family house prices this paper investigates the relationship between single family house prices and contingent terms in contracts since contingencies create uncertainty the market should exact a price premium the results indicate that the contracting for property rights affects house prices in the predicted ways

decriminalization and marijuana smoking prevalence evidence from australia this article uses the 2001 national drug strategy household survey to assess the impact of marijuana decriminalization policy on marijuana smoking prevalence in australia both parametric and nonparametric methods are used the parametric approach includes endogenous probit switching two part sample selection and standard dummy variable models while the nonparametric approach uses propensity score stratification matching specification analyses are also conducted a nonparametric kernel based test is constructed to select between parametric and nonparametric models and the likelihood ratio test is used to choose among parametric models our analyses favor the endogenous switching model where decriminalization increases the probability of smoking by 16 2

opening the black box of agglomeration economies for measuring cities competitiveness through international firm networks the ability of cities to operate in global networks is usually measured according to their central position within multinational firm linkages these measures are often used at the interurban level and neglect the intraurban processes of multiplier effects the present study demonstrates that this affects the measurement of city centrality in business networks intraurban capabilities of interaction are considered in the measurement of interurban indices the study is based on hypothetical networks at a micro level between long range links and it mobilises processes as agglomeration economies social capital developments and transaction costs these processes at the intraurban level strengthen the efficiency of interurban linkages it is suggested that the indices used to measure city centrality should include these local effects applied to a small sample of six firm networks the methodology shows advantages for emerging large metropolises but insufficient local effects for specialised clusters the mu

optimal monetary policy rules financial amplification and uncertain business cycles abstract this paper studies optimal monetary policy in the presence of uncertainty time variation in cross sectional dispersion of firms productive performance using a model with financial market imperfections the results suggest that i optimal policy is to dampen the strength of financial amplification by responding to uncertainty at the expense of creating mild degree of fluctuations in inflation ii higher uncertainty makes the welfare maximizing planner more willing to relax financial constraints iii credit spreads are a good proxy for uncertainty hence a non negligible response to credit spreads together with a strong anti inflationary policy stance achieves the highest aggregate welfare possible

a model of intraurban employment location an application to bogota colombia this report which examines the location behaviour of manufacturing firms in urban areas is part of a world bank urban study project a theoretical model of employment location is formulated and extended to an empirical specification in the multinomial logit framework a bid rent function is derived from the profit function and captures the firms locational equilibrium situations survey data from bogota colombia provides information on i attributes of the establishment such as plant space and ii attributes of the plant site such as access to markets the estimated model is capable of predicting the location choices of different types of firms separate regression results using the same data set indicate a strong relationship between the intensity of input use and land price supporting the hypothesis that the firms respond to the substitutability of land with respect to other inputs over space the patterns of employment location in bogota are by no means random they are quite similar to those observed for large cities in the united states

the use and abuse of meta analysis in environmental and natural resource economics an assessment motivated by the 2006 report of a work group appointed by the environmental protection agency epa this paper examines the present state of meta analysis in environmental economics and offers recommendations for its future use to this end we summarize and assess 140 meta analyses from 125 published and unpublished studies covering 17 topical categories in environmental and resource economics first we provide several generic meta analysis models as reference points and discuss major estimation issues five econometric issues are identified as part of a complete analysis 1 sample selection criteria 2 basic data summary 3 primary data heterogeneity 4 heteroskedasticity and 5 non independence of multiple observations from primary studies second a tabular summary is presented for the 140 meta analyses with respect to estimation methods third a narrative summary is presented for 19 meta analyses including the three value of statistical life studies examined by the epa work group and one analysis from each of 16 other categories fourth we offer a set of best practice guidelines for future meta analyses in this and other areas of economics last the paper comments on the use of meta analytic methods for benefit transfers of environmental values

optimal monetary policy responses to relative price changes abstract an optimizing model with a flexible price sector and a sticky price sector is presented to analyze the effects of relative price changes on inflation fluctuations the relative price of the flexible price good represents a shift parameter of the new keynesian phillips curve the optimal monetary policy is to target sticky price inflation rather than a broad inflation measure although stabilizing the relative price around its efficient value is one of the appropriate goals of the central bank stabilizing sticky price inflation is sufficient for achieving this goal an optimal monetary policy for a small open economy is also discussed

new keynesian models durable goods and collateral constraints abstract econometric evidence suggests that in response to monetary policy shocks durable and non durable spending co move positively and durable spending exhibits a much larger sensitivity to the shocks a standard two sector new keynesian model with perfect financial markets is at odds with these facts the introduction of a borrowing constraint where durables play the role of collateral assets helps in reconciling the model with the empirical evidence

transport costs and urban property values in the 1970s in this paper we use data on property values published annually for the 56 local government areas in the melbourne metropolitan area to investigate the response of the property market to the oil price rises of the seventies we show that property values appeared to have responded rapidly to the australian petrol price increase of 1978 more accessible properties gaining in value relative to less accessible the 1973 increase was not passed on to australian consumers but the depression in manufacturing industry which started after it also had an impact on the property market as values in areas where manufacturing workers lived fell in value relative to others

testing for the existence of office sub markets a comparison of evidence from two cities most conceptual and applied economic models of the structure of urban office markets have been developed from traditional location theory in their basic form these models tend to posit a trade of

housing finance and monetary policy we document three facts concerning how the structure of housing finance affects the monetary transmission mechanism first the characteristics of residential mortgage markets differ markedly across industrialized countries second the impact of monetary policy shocks to residential investment and house prices is significantly stronger in those countries with larger flexibility development of mortgage markets third the transmission to consumption is stronger only in those countries where mortgage equity release is common and mortgage contracts are predominantly of the variable rate type we then build a two sector dsge model with financial constraints to rationalize those facts

industrial location behaviour and regional restructuring within the fifth tiger economy evidence from the thai electronics industry the paper investigates the location behaviour of firms in the electronics industry in thailand our approach is to use a logit model in order to analyse how the characteristics of the firms and the regions are related to the location decisions of firms in these sectors the logit results throw some light on the question of the nature of agglomeration behaviour in a developing economy in which the national spatial industrial structure is dominated by a single primal city our conclusions provide tentative support for a product cycle argument of industrial concentration and dispersion

optimal monetary policy in a currency area abstract this paper investigates how monetary policy should be conducted in a two region general equilibrium model with monopolistic competition and price stickiness this framework delivers a simple welfare criterion based on the utility of the consumers that can be used to evaluate monetary policy in a currency area if the two regions share the same degree of nominal rigidity the terms of trade are completely insulated from monetary policy and the optimal outcome is obtained by targeting a weighted average of the regional inflation rates these weights coincide with the economic sizes of the region if the degrees of rigidity are different the optimal plan implies a high degree of inertia in the inflation rate but an inflation targeting policy in which higher weight is given to the inflation in the region with higher degree of nominal rigidity is nearly optimal

regional size industrial location and input output expenditure coefficients mccann p and dewhurst j h ll 1998 regional size industrial location and input output expenditure coefficients reg studies 32 435 444 this paper develops some of the themes raised in a recent paper by flegg et al 1995 the question we explore is the relationship between the size of a region and the values of the expenditure coefficients as estimated using location quotients by using hypothetical examples we show that there is no theoretical relationship between regional size and the value of a regional expenditure coefficient the reason is that it depends on the spatial distribution of activity and industrial linkages on the other hand it would also appear that in many cases there does seem to be an empirical relationship and that this observation is worthy of further research mccann p et dewhurst j h ll 1998 taille des regions localisation industrielle et coefficients input output de depense reg studies 32 435 444 cet article developpe certaines des questions soulevees re

do central banks react to house prices we estimate the federal reserve s the bank of england s and the bank of japan s responses to house prices we show that generalized method of moments estimates of a taylor rule augmented with house prices are biased and dispersed we then use full information methods and estimate the policy rule together with a var for the nonpolicy variables these estimates are also biased we propose an alternative approach and estimate a dynamic stochastic general equilibrium model embedded with a monetary rule with a direct response to house prices we find that house prices played a separate role in the reaction functions of these central banks

spurious welfare reversals in international business cycle models several papers have documented spurious welfare reversals incompletemarkets economy produces a higher level of welfare than the completemarkets economy this paper first demonstrates how conventional linearization can generate approximation errors that can result in welfare reversals using a two country production economy we argue that spurious welfare reversals are not only possible but also plausible under reasonable values for model parameters this paper then proposes an approximation method that modifies the conventional linearization by a bias correction this method can be easily implemented and approximates welfare as accurately as a second order perturbation method

demand for beef from cattle administered growth hormones or fed genetically modified corn a comparison of consumers in france germany the united kingdom and the united states we compare consumer valuations of beef ribeye steaks from cattle produced without growth hormones or genetically modified corn in france germany the united kingdom and the united states results suggest that french consumers place a higher value on beef from cattle that have not been administered added growth hormones than u s consumers however valuations of non hormone treated beef are statistically indistinguishable across germany the united kingdom and the united states results also suggest that european consumers place a much higher value on beef from cattle that have not been fed genetically modified corn than u s consumers copyright 2003 oxford university press

effects and value of verifiable information in a controversial market evidence from lab auctions of genetically modified food food products containing genetically modified gm ingredients have entered the market over the past decade the biotech industry and environmental groups have disseminated conflicting private information about gm foods this paper develops a unique methodology for valuing independent third party information in such a setting and applies this method to consumers willingness to pay for food products that might be gm data are collected from real consumers in an auction market setting with randomized information and labeling treatments the average value of third party information per lab participant is small but the public good value across u s consumers is shown to be quite large jel c91 d12 d82

optimal monetary policy with durable consumption goods abstract we document that the durable goods sector is much more interest sensitive than the nondurables sector and then investigate the implications of these sectoral differences for monetary policy we formulate a two sector general equilibrium model that is calibrated both to match the sectoral responses to a monetary shock derived from our empirical var and to imply an empirically realistic degree of sectoral output volatility and comovement while the social welfare function involves sector specific output gaps and inflation rates the performance of the optimal policy rule can be closely approximated by a simple rule that targets a weighted average of aggregate wage and price inflation in contrast a rule that stabilizes a more narrow measure of final goods price inflation performs poorly in terms of social welfare

the rise fall and rise again of industrial location theory m ccann p and sheppard s 2003 the rise fall and rise again of industrial location theory reg studies 37 649 663 in this paper we will argue that new academic fashions new international institutional arrangements new communications technology and new developments in data availability have all renewed the need for a redevelopment of analytical industrial location theory our paper will argue that the microeconomic foundations of industrial location theory must now be reconsidered in particular the methodological basis of traditional industrial location models needs to be reconciled with recent models of clustering the new economic geography literature and also more aggregate systemic levels of analysis we will argue that in order to do this it is necessary first to specify the transactions cost assumptions underlying these various approaches second to adopt broader definitions of spatial transactions costs and third to incorporate environmental characteristics within an orthodox loca

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

rethinking the economics of location and agglomeration fundamental problems exist with the classical characterisation of agglomeration economies since such definitions do not reflect the various cost issues on which firms may wish to economise a lack of understanding of the relationship between the notions of market hierarchies and locational behaviour leads to confusion not only in applied economic interpretation but more fundamentally in the construction of theoretical location models in particular neo classical location theory can be shown to be crucially flawed as a basis for spatial analysis this paper therefore attempts to provide an alternative definition of the various types of agglomeration economies such that the various strands of economic theory might be used in a more rigorous manner in the discussion of spatial increasing returns

optimal monetary policy rules and house prices the role of financial frictions we consider the scope for targeting house prices in simple monetary policy rules using a new keynesian dynamic stochastic general equilibrium model of the euro area with a housing sector and financial frictions on the household side if the central bank s main objective is the minimization of inflation and output fluctuations then a systematic response to house prices does not entail any systematic sizeable welfare improvement when the objective of monetary policy is the maximization of aggregate and individual welfare then the optimized rule does feature a systematic reaction to house price variations the sign and size of such reaction crucially depend on the degree of financial frictions in the economy if the economy is characterized by both a large share of constrained agents and a high average loan to value ratio then it is optimal to positively react to house price movements finally we show that uncertainty about the actual degree of financial frictions suggests some caution in the construction of optimal monetary policy rules the welfare costs generated by systematically counteracting house price movements are in general smaller than those implied by a procyclical response

robust monetary policy with competing reference models abstract the existing literature on robust monetary policy rules has largely focused on the case in which the policymaker has a single reference model while the true economy lies within a specified neighborhood of the reference model in this paper we show that such rules may perform very poorly in the more general case in which non nested models represent competing perspectives about controversial issues such as expectations formation and inflation persistence using bayesian and minimax strategies we then consider whether any simple rule can provide robust performance across such divergent representations of the economy we find that a robust outcome is attainable only in cases where the objective function places substantial weight on stabilizing both output and inflation in contrast we are unable to find a robust policy rule when the sole policy objective is to stabilize inflation we analyze these results using a new diagnostic approach namely by quantifying the fault tolerance of each model economy with respect to deviations from optimal policy

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

leaning against boom bust cycles in credit and housing prices this paper studies the potential gains of monetary and macro prudential policies that lean against house price and credit cycles we rely on a model that features borrowers and savers and allows for over borrowing induced by news shock driven cycles we find that policy that responds to changes in financial variables is socially optimal considering the use of a single policy instrument both types of agents are better off when the interest rate optimally responds to credit growth when we allow for the implementation of both interest rate and ltv policies heterogeneity in the welfare implications is key in determining the optimal use of policy instruments the optimal policy for the borrowers is characterized by a ltv ratio that responds countercyclically to credit growth which most effectively stabilizes credit relative to gdp in contrast the optimal policy for the savers features a constant ltv ratio coupled with an interest rate response to credit growth news shock driven cycles account for most of the gains from a policy response to changes in financial variables

optimal simple and implementable monetary and fiscal rules welfare maximizing monetary and fiscal policy rules are studied in a model with sticky prices money and distortionary taxation the ramsey optimal policy is used as a point of comparison the main findings are the size of the inflation coefficient in the interest rate rule plays a minor role for welfare it matters only insofar as it affects the determinacy of equilibrium optimal monetary policy features a muted response to output interest rate rules that feature a positive response to output can lead to significant welfare losses the welfare gains from interest rate smoothing are negligible optimal fiscal policy is passive the optimal monetary and fiscal rule combination attains virtually the same level of welfare as the ramsey optimal policy

should central banks respond to movements in asset prices in recent decades asset booms and busts have been important factors in macroeconomic fluctuations in both industrial and developing countries in light of this experience how if at all should central bankers respond to asset price volatility we have addressed this issue in previous work bernanke and gertler 1999 the context of our earlier study was the relatively new but increasingly popular monetary policy framework known as inflation targeting see e g bernanke and frederic mishkin 1997 in an inflation targeting framework publicly announced medium term inflation targets provide a nominal anchor for monetary policy while allowing the central bank some flexibility to help stabilize the real economy in the short run the inflation targeting approach gives a specific answer to the question of how central bankers should respond to asset prices changes in asset prices should affect monetary policy only to the extent that they affect the central bank s forecast of inflation to a first approximation once the predictive content of asset prices for inflation has been accounted for there should be no additional response of monetary policy to assetprice fluctuations in use now for about a decade inflationtargeting has generally performed well in practice however so far this approach has not often been stress tested by large swings in asset prices our earlier research employed simulations of a small calibrated macroeconomic model to examine how an inflation targeting policy defined as one in which the central bank s instrument interest rate responds primarily to changes in expected inflation might fare in the face of a boom and bust cycle in asset prices we found that an aggressive inflationtargeting policy rule in our simulations one in which the coefficient relating the instrument interest rate to expected inflation is 2 0 substantially stabilizes both output and inflation in scenarios in which a bubble in stock prices develops and then collapses as well as in scenarios in which technology shocks drive stock prices intuitively inflation targeting central banks automatically accommodate productivity gains that lift stock prices while offsetting purely speculative increases or decreases in stock values whose primary effects are through aggregate demand conditional on a strong policy response to expected inflation we found little if any additional gains from allowing an independent response of central bank policy to the level of asset prices in our view there are good reasons outside of our formal model to worry about attempts by central banks to influence asset prices including the fact that as history has shown the effects of such attempts on market psychology are dangerously unpredictable hence we concluded that inflationtargeting central banks need not respond to asset prices except insofar as they affect the inflation forecast in the spirit of recent work on robust control the exercises in our earlier paper analyzed the performance of policy rules in worst case discussants robert shiller yale university glenn rudebusch federal reserve bank of san francisco kenneth rogoff harvard university

preference stability and choice consistency in discrete choice experiments we investigate preference stability and respondents levels of choice consistency within discrete choice experiments these are investigated via a discrete choice experiment featuring four information treatments and a retest survey completed 6 months after the first three information treatments concern a novel stem cell food technology with the fourth information treatment featuring a non novel technology we find stable welfare estimates over the three information treatments the use of emotive keywords does not systematically change wtp to avoid the stem cell food technology we find a significant wtp to avoid the non novel technology we find high levels of intertemporal preference stability and choice consistency the determinants of choice consistency are examined two factors are significant a measure of the choice task s complexity entropy and a novel measure of respondents cognitive capability derived within the survey we find a significant selection issue not previously identified in discrete choice experiment test retest studies with those opting to take the retest exhibiting greater choice consistency in the initial survey this suggests that studies which report high levels of test retest choice consistency without accounting for the selection issue are overstating population choice consistency

conference on housing stability and the macroeconomy international perspectives this article provides an introduction to the jmcb special issue on housing bubbles the global financial crisis and the ensuing recessions in countries that experienced housing busts we focus on five themes that are important for policymakers and researchers alike the domestic and international factors driving housing booms and busts the relevance of the housing sector for the real economy how monetary policy should react to housing booms and busts how housing and mortgage finance reform could affect financial stability and the broad lessons learned for macroeconomics and macroprudential policy

learning about monetary policy rules when the housing market matters abstract in this paper we study a general equilibrium model with a housing market and use stability under adaptive learning as a criterion to evaluate monetary policy rules an important feature of the model is that there exist credit constrained borrowers who use their housing assets as collateral to finance purchases we evaluate both conventional taylor rules and rules that incorporate other targets such as housing prices we find that the effect of responding to housing prices in addition to output and inflation depends critically on the assumed information structure of the economy

effects of cheap talk on consumer willingness to pay for golden rice a large body of literature suggests willingness to pay is overstated in hypothetical valuation questions as compared to when actual payment is required recently cheap talk has been proposed to eliminate the potential bias in hypothetical valuation questions cheap talk refers to process of explaining hypothetical bias to individuals prior to asking a valuation question this study explores the effect of cheap talk in a mass mail survey using a conventional value elicitation technique results indicate that cheap talk was effective at reducing willingness to pay for most survey participants however consistent with previous research cheap talk did not reduce willingness to pay for knowledgeable consumers

perceptions and valuation of gm food a study on the impact and importance of information provision abstract given the scientific uncertainties and differing arguments for and against genetically modified food perceptions and valuation may depend on information about their different and conflicting potential effects in this study we explore generic attitudes towards genetically modified organisms particularly in food and adopt an economic contingent valuation approach to highlight the relevance of information provision the study focuses on young college students who are more scientifically informed than the rest of the population it explores perceptions and economic valuation of genetically modified food and exposes respondents randomly to three information treatments concerning genetically modified organisms impacts negative positive or mixed applying the contingent valuation methodology allows us to expose individuals to a situation where they can express their willingness to accept a genetically modified ingredient in exchange for lower prices we observe that exposing respondents to critical arguments about this kind of food negatively affects their economic valuations whereas positive or mixed information have no impact albeit the conclusions are limited in terms of generalizability to the rest of the population the results suggest there may still be scope for information provision furthermore both policy makers and firms may benefit from a more informed public policy makers can gauge public opinion to legitimize policy options and firms can shape market decisions based on more informed and stable consumer preferences

reasons for the development of islands of innovation evidence from hertfordshire this paper analyses why innovations often cluster in a few metropolitan islands of innovation the reason for this interest is that a growing body of neo schumpeterian economic theory argues that economic recovery after periods of economic recession and depression such as we have seen during the 1980s and early 1990s is driven by innovations these do not spring up all over the country but are spatially concentrated in a small number of metropolitan regions it is therefore important to know why this is so in order to evaluate the effectiveness of various uk and eu public policies whose specific objectives are to stimulate local and regional economic development agglomeration theory is used in order to understand the driving forces behind the spatial clustering of new innovations this leads to four explanatory hypotheses these are that innovation is facilitated by agglomeration in order to reduce distance transaction costs between firms in different spaces or by local factor conditions which provide

spatial proximity and firm survival in a declining industrial district the case of knitwear firms in baden wu rttemberg the literature on small firm networks in industrial districts postulates the importance of territorial proximity for business innovation and regional development but empirical research to test this proposition is sparse while there is some research on the extent of interfirm co operation little is known about the performance outcomes of co operation i develop competing hypotheses from institutional ecological and random action theories concerning the survival chances of firms located in geographic proximity and test them with data on the complete population of knitwear firms in baden wurttemberg germany for the period from 1960 to 1998 proportional hazard estimates show that location in clusters of firms in the same industry increased business failure rates and location in diversified clusters of firms operating in complementary industries reduced failure rates the empirical results are most consistent with the ecological model of localized competition in resource environments la documentation

what measure of inflation should a central bank target this paper assumes that a central bank commits itself to maintaining an inflation target and then asks what measure of the inflation rate the central bank should use if it wants to maximize economic stability the paper first formalizes this problem and examines its microeconomic foundations it then shows how the weight of a sector in the stability price index depends on the sector s characteristics including size cyclical sensitivity sluggishness of price adjustment and magnitude of sectoral shocks when a numerical illustration of the problem is calibrated to u s data one tentative conclusion is that a central bank that wants to achieve maximum stability of economic activity should use a price index that gives

banking competition collateral constraints and optimal monetary policy we analyze optimal monetary policy in a model with two distinct financial frictions monopolistically competitive banks that charge endogenous lending spreads and collateral constraints we show that welfare maximization is equivalent to stabilization of four goals inflation output gap the consumption gap between borrowers and savers and a housing gap that measures the distortion in the distribution of the collateralizable asset between both groups collateral constraints create a trade off between stabilization goals following both productivity and financial shocks and relative to strict inflation targeting the optimal policy implies sharper movements in the policy rate aimed primarily at reducing fluctuations in asset prices and hence in borrowers net worth the policy trade offs become amplified as banking competition increases due to the fall in lending spreads and the resulting increase in borrowers leverage

consumer willingness to pay for genetically modified food in kenya genetically modified gm crops are popular in many regions of the world but their deployment in africa is hindered by safety concerns and regulatory issues although the continent is in dire need of boosting its food production although consumers acceptance of gm food has been analyzed in many continents no such studies have been conducted in africa therefore a survey of 604 consumers was conducted in nairobi kenya in 2003 to gauge consumers awareness of gm crops their willingness to pay wtp for gm food and the factors that influence their wtp consumers knowledge of gm crops was limited and only 38 of the 604 respondents were aware of gm crops people in higher education and income groups were more aware than others regardless people were generally appreciative of the technology and a large majority 68 would be willing to buy gm maize meal at the same price as their favorite brand consumers were however concerned about possible side effects especially on the environment and biodiversity wtp was estimated using a double bounded dichotomous choice model and the mean wtp was found to be 13 8 higher than the average price of non gm maize meal perceptions of health risk and ethical and equity concerns had a negative influence on the likelihood of purchasing gm maize meal whereas trust in government to ensure food quality had a positive influence on wtp people with at least some secondary education and those in the high income category were more likely to purchase gm maize meal at the same price the study concludes that because awareness is still low appropriate communications are needed to involve the consumer in the debate consumers acceptance in this study was high but the research needs to be expanded to rural areas where most consumers live and other survey methods need to be explored

the dispersion and development of consumer preferences for genetically modified food a meta analysis this paper presents a meta analysis of 51 primary studies reporting a total of 114 genetically modified food valuation estimates results indicate that elicitation methods and formats used in the primary studies affect valuation estimates much more than do sample characteristics the analysis of average preferences and dispersion of preferences indicates clear differences between regions furthermore region specific preferences diverge over time