agricultural price instability a survey of competing explanations and remedies there are two explanations for agricultural price dynamics one follows cobweb logic and models fluctuations driven by expectation errors but emphasises that these expectations create complex dynamics and possibly chaos the other stems from the rational expectations tradition of dynamics driven by real shocks the empirical evidence tends to support the latter but is not conclusive the rational expectations model generates an optimal dynamic path from which no improvement can be expected from public intervention however if we take account of all the potential market failures in agricultural markets and especially in developing countries this conclusion might require some qualifications although an appropriate policy design for stability has still to be achieved this paper surveys the positive and normative literature on agricultural prices highlighting empirical evidence and identifying remaining unresolved issues

credit market constraints consumption smoothing and the accumulation of durable production assets in low income countries investments in bullocks in india in this paper we formulate and estimate a finite horizon structural dynamic model of agricultural investment behavior that incorporates the major features of low income agricultural environments income uncertainty constraints on borrowing and rental markets and the use of investment assets to generate income and smooth consumption the model is fit to longitudinal indian household data on farm profits bullock stocks and pump sets the estimated structural parameters are used to assess the effects on the life cycle accumulation of bullocks agricultural profits and welfare associated with complete markets and bullock liquidity and with second best policies that provide assured sources of income to farmers and weather insurance

competition wages and teacher sorting lessons learned from a voucher reform this paper studies how local school competition affects teacher wages at markets where wages are set via individual wage bargaining using regional variation in private school entry generated by a swedish reform which allowed private schools to enter freely and a comprehensive matched employer employee data covering all high school teachers in sweden over 16 years i analyze the effects of competition on wages as well as labor flows the results suggest that competition translates into higher wages also for teachers in public schools while the average increases are modest new teachers gain 2 percent and high ability teachers in math and science receive 4 percent higher wages in the most competitive areas compared to areas without any competition from private schools several robustness checks support a causal interpretation of the results which together highlight the potential gains from school competition through a more differentiated wage setting of teachers

commodity price volatility and world market integration since 1700 abstract poor countries are more volatile than rich countries and this volatility impedes their growth furthermore commodity prices are a key source of that volatility this paper explores price volatility since 1700 to offer three stylized facts commodity price volatility has not increased over time commodities have always shown greater price volatility than manufactures and world market integration breeds less commodity price volatility thus economic isolation is associated with much greater commodity price volatility while world market integration is associated with less

effects of free choice among public schools in this paper i investigate the impact of a programme in tel aviv israel that terminated an existing inter district busing integration programme and allowed students free choice among public schools the identification is based on difference in differences and regression discontinuity designs that yield various alternative comparison groups drawn from untreated tangent neighbourhoods and adjacent cities across identification methods and comparison groups the results consistently suggest that choice significantly reduces the drop out rate and increases the cognitive achievements of high school students it also improves behavioural outcomes such as teacher student relationships and students social acclimation and satisfaction at school and reduces the level of violence and classroom disruption

long term effects of class size this article evaluates the long term effects of class size in primary school we use rich data from sweden and exploit variation in class size created by a maximum class size rule smaller classes in the last three years of primary school age 10 to 13 are beneficial for cognitive and noncognitive ability at age 13 and improve achievement at age 16 most important we find that smaller classes have positive effects on completed education wages and earnings at age 27 to 42 the estimated wage effect is large enough to pass a cost benefit test

global oil prices and local food prices evidence from east africa it is widely believed that oil prices impact food prices in developing countries yet rigorous evidence on this relationship is scarce using maize and petrol price data from east africa we show that global oil prices do affect food prices but primarily through transport costs rather than through biofuel or production cost channels we find that global oil prices transmit much more rapidly to the pump and then to local maize prices than do global maize prices suggesting that the immediate effects of correlated commodity price shocks on local food prices are driven more by transport costs than by the prices of the grains themselves furthermore we present suggestive evidence that for markets furthest inland changes in world oil prices have larger effects on local maize prices than do changes in world maize prices

school choice and segregation evidence from an admission reform we evaluate the effects of school choice on segregation using data from an admission reform in the stockholm upper secondary schools before 2000 the students were assigned to their nearest school but from the fall of 2000 the students can apply to any school within stockholm and admission decisions are solely based on grades as expected the new admission policy increased segregation by ability however segregation by family background and especially segregation between immigrants and natives also increased significantly the increase in segregation by family background can be explained by ability sorting but the increase in ethnic segregation can not

the impact of terms of trade and real exchange rate volatility on investment and growth in sub saharan africa abstract specialization in primary product exports reduces growth but why adverse trends in and the high variance of primary product prices are possible explanations the impact on investment and growth of the level and volatility of the terms of trade and the real effective exchange rate is estimated for a panel of 14 sub saharan african countries over 1980 1995 growth is negatively affected by terms of trade instability and investment by real exchange rate instability both growth and investment increase when the terms of trade improve and real exchange rate overvaluation is eliminated

terms of trade uncertainty and economic growth abstract this paper examines a stochastic endogenous growth model in which terms of trade uncertainty affects savings and growth the model explains the well known positive link between growth and the mean rate of change of terms of trade and predicts also that terms of trade variability affects growth increased terms of trade variability results in faster or slower growth depending on the degree of risk aversion but in either case it reduces social welfare these growth effects imply that welfare costs of macroeconomic uncertainty are much larger than first thought cross country panel regressions provide strong support for the model s key predictions

trade shocks and macroeconomic fluctuations in africa this paper examines the role of external shocks in explaining macroeconomic fluctuations in african countries we construct a quantitative stochastic dynamic multi sector equilibrium model of a small open economy calibrated to represent a typical african economy in our framework external shocks consist of trade shocks modeled as fluctuations in the prices of exported primary commodities imported capital goods and intermediate inputs and a financial shock modeled as fluctuations in the world real interest rate our results indicate that while trade shocks account for roughly 45 percent of economic fluctuations in aggregate output financial shocks play only a minor role we also find that adverse trade shocks induce prolonged recessions

the performance and competitive effects of school autonomy this paper studies a recent british reform that allowed public high schools to opt out of local authority control and become autonomous schools funded directly by the central government schools seeking autonomy had only to propose and win a majority vote among current parents almost one in three high schools voted on autonomy between 1988 and 1997 and using a version of the regression discontinuity design i find large achievement gains at schools in which the vote barely won compared to schools in which it barely lost despite other reforms that ensured that the british education system was by international standards highly competitive a comparison of schools in the geographic neighborhoods of narrow vote winners and narrow vote losers suggests that these gains did not spill over

rising food prices food price volatility and social unrest can food prices cause social unrest throughout history riots have frequently broken out ostensibly as a consequence of high food prices using monthly data at the international level this article studies the impact of food prices food price levels as well as food price volatility on social unrest because food prices and social unrest are jointly determined data on natural disasters are used to identify the causal relationship flowing from food price levels to social unrest results indicate that for the period 1990 2011 food price increases have led to increases in social unrest whereas food price volatility has not been associated with increases in social unrest these results are robust to alternative definitions of social unrest to using real or nominal prices to using commodity specific price indices instead of aggregated price indices to alternative definitions of the instrumental variable to alternative definitions of volatility and to controlling for non food related social unrest

does school choice lead to sorting evidence from tiebout variation a question commonly raised about school choice is whether it would result in sorting or stratification previous research has asked this with respect to inter district or tiebout choice but has generated no consensus in part because areas district concentrations may be endogenous this paper addresses this by exploiting the fact that some metropolitan areas mas have different numbers of districts operating at the primary and the secondary level the resulting within ma between educational level variation in district concentration suggests that increases in district availability do affect children s district and school level peer groups and that they lower private enrollment jel h1 h7 i2

choice competition and pupil achievement choice and competition in education have recently found growing support from both policy makers and academics yet evidence on the actual benefits of market orientated reforms is at best mixed moreover although the economic rationale for choice and competition is clear in existing work there is rarely an attempt to distinguish between the two concepts in this paper we study whether pupils in primary schools in england with a wider range of school choices achieve better academic outcomes than those whose choice is more limited and whether primary schools facing more competition perform better than those in a more monopolistic situation in simple least squares regression models we find little evidence of a link between choice and achievement but uncover a small positive association between competition and school performance yet this could be related to endogenous school location or pupil sorting in fact an instrumental variable strategy based on discontinuities generated by admissions district boundaries suggests that the performance gains from greater school competition are limited only when we restrict our attention to voluntary aided schools which have more freedom in managing their governance and admission practices do we find some evidence of a positive causal link between competition and pupil achievement jel i20 h70 r5

agricultural trade distortions during the global financial crisis the authors are grateful for financial support from the australian research council rural industries research and development corporation and world bank

macroeconomic volatility and welfare in developing countries macroeconomic volatility and welfare in developing countries an introduction norman v loayza romain ranciere luis serven and jaume ventura macroeconomic volatility both a source and a reflection of underdevelopment is a fundamental concern for developing countries this article provides a brief overview of the recent literature on macroeconomic volatility in developing countries highlighting its causes consequences and possible remedies to reduce domestic policy induced macroeconomic volatility by controlling the level and variability of fiscal expenditures by keeping inflation low and stable and by avoiding price rigidity including that of the exchange rate which eventually leads to drastic adjustments the ability to conduct countercyclical fiscal policies is crucial and it depends largely on the ability of the authorities to reduce public indebtedness to internationally acceptable levels establish a record of saving in good times to provide for bad times and develop credibility tha

winners and losers in the commodity lottery the impact of terms of trade growth and volatility in the periphery 1870 1939 abstract most countries in the periphery specialized in the export of just a handful of primary products for most of their history some of these commodities have been more price volatile than others and those with more volatility have grown much more slowly relative to the industrial leaders and to other primary product exporters this fact helps explain the growth puzzle noted by easterly kremer pritchett and summers more than a decade ago that the contending fundamental determinants of growth institutions geography and culture exhibit far more persistence than do the growth rates they are supposed to explain using a new panel database for 35 countries this paper estimates the impact of terms of trade volatility and secular change on country performance between 1870 and 1939 volatility was much more important for growth than was secular change and accounts for a substantial degree of the divergence in incomes within the sample of small commodity dependent periphery nations as well as under performance of the periphery as a whole relative to such nations as the us and western europe or core one channel of impact seems to be the adverse effect of volatility on foreign investment it appears that the terms of trade effects were asymmetric between core and periphery

export price shocks and rural labor markets the role of labor market distortions abstract to what extent can workers in developing countries seize gains from trade to answer this question we resort to a unique exogenous labor demand shock triggered by a surge in the world market price of cotton in 2010 11 by capitalizing on tajikistan s geographic variation in the suitability for cotton production we identify the effect of the export price hike on wages of rural workers the shock induces agricultural firms to shift towards labor intensive cotton production the subsequent greater labor demand doubles wages for female cotton pickers on small entrepreneurial private farms but does not affect their wages on large parastatal farms we present evidence that parastatal farms recruit workers for low wages based on monopsony power and expand employment based on labor coercion of children and public sector workers our results highlight the importance of accounting for competitive structures in local labor markets when assessing the wage pass through of world market prices to workers in developing countries

school vouchers in practice competition will not hurt you abstract since the introduction of school vouchers in 1992 independent and public schools in sweden operate on equal terms we analyze the effects of competition on the public schools using data on the results of 28 000 ninth graders because the decision on which school to attend is a choice variable sample selection models are used to account for the potential endogeneity of the share of students attending independent schools we use instrumental variable estimation we also estimate panel data models on 288 swedish municipalities our findings support the hypothesis that school results in public schools improve due to competition

commodity price excess co movement from a historical perspective 1900 2010 abstract pindyck and rotemberg 1990 s excess co movement hypothesis states that commodity prices move together beyond what fundamentals can explain reflecting possibly traders herding or liquidity constraints we test for price excess co movement in 12 commodities 11 non energy ones and oil spanning over a hundred years 1900 2010 to this end we approximate commodity demand supply factors by their apparent consumption we carry out several tests and find some evidence in favor of excess co movement but its nature appears to be time dependent in particular we conclude that excess co movement with oil is generally present particularly in the industrial metal class we also explore the interdependence between portfolio investment decisions and excess co movement for three unrelated assets cotton copper and petroleum based on conditional value at risk cvar optimization we found some correlations between the two when short sales are excluded during 1971 1999 2004 and 2008

can increasing private school participation and monetary loss in a voucher program affect public school performance evidence from milwaukee abstract the milwaukee voucher program as implemented in 1990 allowed only non sectarian private schools to participate in the program following a wisconsin supreme court ruling the program saw a major shift and entered into its second phase when religious private schools were allowed to participate for the first time in 1998 this led to more than a three fold increase in the number of private schools and almost a four fold increase in the number of choice students moreover due to some changes in funding provisions the revenue loss per student from vouchers increased in the second phase of the program this paper analyzes the impacts of increase in competition brought about by these changes on public school performance in milwaukee using data from 1987 to 2002 and a difference in differences estimation strategy in trends the paper finds that these changes have led to an improvement of the public schools in the second phase of the program as compared to the first phase the results are robust to alternative samples and specifications and survive several sensitivity checks including correcting for mean reversion the findings imply that voucher design matters and choice of parameters in a voucher program is crucial as far as impacts on public school incentives and performance are concerned

feeding africa s cities the case of the supply chain of teff to addis ababa abstracturbanization is quickly increasing in africa raising important questions on how food value chains to cities function and what the implications of urban growth are for the local food trade and farm sector we study the rural urban value chain of teff in ethiopia by value its most important staple value chain relying on unique large scale surveys at different levels in this value chain we find in contrast to conventional wisdom that value chains are relatively short and that average farmers obtain a high share about 80 of the final consumer price in the major terminal market addis ababa we further find that producer prices decline in line with transportation costs the farther farmers live from the city that seasonal price movements are rather small and that average stock release by farmers is smooth over the year

macroeconomic volatility and welfare in developing countries an introduction macroeconomic volatility both a source and a reflection of underdevelopment is a fundamental concern for developing countries their high aggregate instability results from a combination of large external shocks volatile macroeconomic policies microeconomic rigidities and weak institutions volatility entails a direct welfare cost for risk averse individuals as well as an indirect one through its adverse effect on income growth and development this article provides a brief overview of the recent literature on macroeconomic volatility in developing countries highlighting its causes consequences and possible remedies it then introduces the contributions of a recent conference on the subject sponsored by the world bank and pompeu fabra university barcelona

a roller coaster ride an empirical investigation of the main drivers of the international wheat price over the last decade commodity prices have registered substantial booms and busts marked by extreme volatility wheat in particular one of the main nonoil commodities has registered a roller coaster in price levels which seems to be inconsistent with supply and demand fundamentals to acutely investigate the drivers of wheat prices and quantify their impact a vector error correction model vecm has been used the exogenous variables have been distinguished into four groups market specific factors broad macroeconomic determinants speculative components and weather variables the quadriangulation of the determinants will enable us to better understand the movements in wheat price and identify the specific role of each component the results show that a mix of factors are contributing to wheat price movements including speculation global demand and real effective exchange rate

institutional causes macroeconomic symptoms volatility crises and growth countries that have pursued distortionary macroeconomic policies including high inflation large budget deficits and misaligned exchange rates appear to have suffered more macroeconomic volatility and also grown more slowly during the postwar period does this reflect the causal effect of these macroeconomic policies on economic outcomes one reason to suspect that the answer may be no is that countries pursuing poor macroeconomic policies also have weak institutions including political institutions that do not constrain politicians and political elites ineffective enforcement of property rights for investors widespread corruption and a high degree of political instability this paper documents that countries that inherited more extractive institutions from their colonial past were more likely to experience high volatility and economic crises during the postwar period more specifically societies where european colonists faced high mortality rates more than 100 years ago are much more volatile and prone to crises based on our previous work we interpret this relationship as due to the causal effect of institutions on economic outcomes europeans did not settle and were more likely to set up extractive institutions in areas where they faced high mortality once we control for the effect of institutions macroeconomic policies appear to have only a minor impact on volatility and crises this suggests that distortionary macroeconomic policies are more likely to be symptoms of underlying institutional problems rather than the main causes of economic

growth and risk methodology and micro evidence how exposure to risk affects economic growth is a key issue in development this article quantifies both the ex ante and ex post effects of risk using long running panel data for rural households in zimbabwe it proposes a simulation based econometric methodology to estimate the structural form of a micro model of household investment decisions under risk the key finding is that risk substantially reduces growth in this particular setting the mean capital stock in the sample is in expectation 46 percent lower than in the absence of risk about two thirds of the impact of risk is due to the ex ante effect that is the behavioral response to risk which is usually not taken into account in policy design these results suggest that policy interventions that reduce exposure to shocks or that help households manage risk could be much more effective than is commonly thought

dynamic persistence of primary commodity prices this article examines the persistence of shocks to international commodity prices from 1900 to 2008 using the updated grilli yang index the main innovation of this study is that it determines whether commodity prices are characterized by multiple changes in persistence specifically bootstrap methods are used to estimate persistence and the associated half life shocks are calculated we find that the persistence of shocks can vary widely depending on the individual commodity and the time period the results suggest that policy makers need to exercise caution when introducing measures to cushion the effect of shocks to world commodity prices

investment in education do economic volatility and credit constraints matter abstract recent research has focused on the effects of economic volatility on the investment in physical capital this paper shows that economic volatility and the lack of financial markets have a negative effect also on the accumulation of human capital our evidence drawn from cross country and panel regressions is that average secondary enrollment in the period 1970 1972 is negatively affected by the lack of financial markets income or employment volatility and income inequality our results are robust to different specifications of volatility the inclusion of public expenditure in education country specific effects and different sets of regressors

long term educational consequences of secondary school vouchers evidence from administrative records in colombia colombia s paces program provided over 125 000 poor children with vouchers that covered the cost of private secondary school the vouchers were renewable annually conditional on adequate academic progress since many vouchers were assigned by lottery program effects can reliably be assessed by comparing lottery winners and losers estimates using administrative records suggest the paces program increases secondary school completion rates by 15 to 20 percent correcting for the greater percentage of lottery winners taking college admissions tests the program increased test scores by two tenths of a standard deviation in the distribution of potential test scores jel i21 j12 i28

the dynamic causality between commodity prices inflation and output in china a bootstrap rolling window approach in this article we empirically study the time varying bilateral causality between commodity prices inflation and output in china we first perform a series of parameter stability tests and find s

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

independent schools and long run educational outcomes evidence from sweden s large scale voucher reform this paper evaluates average educational performance effects of an expanding independentschool sector at the compulsory level by assessing a radical voucher reform that was implemented in sweden in 1992 starting from a situation where all public schools were essentially local monopolists the degree of independent schools has developed very differently across municipalities over time as a result of this reform we regress the change in educational performance outcomes on the increase in the share of independent school students between swedish municipalities we find that an increase in the share of independent school students improves average performance at the end of compulsory school as well as long run educational outcomes we show that these effects are very robust with respect to a number of potential issues such as grade inflation and pre reform trends however for most outcomes we do not detect positive and statistically significant effects until approximately a decade after the reform this is notable but not surprising given that it took time for independent schools to become more than a marginal phenomenon in sweden we do not find positive effects on school expenditures hence the educational performance effects are interpretable as positive effects on school productivity we further find that the average effects primarily are due to external effects e g school competition and not that independent school students gain significantly more than public school students

risk financial markets and human capital in a developing country this paper explores the link between financial market incompleteness and human capital accumulation we examine how child school attendance responds to seasonal fluctuations in the income of agrarian households using panel data from rural india to pinpoint market imperfections we study responses to aggregate and idiosyncratic as well as to anticipated and unanticipated income shocks our main finding is that seasonal fluctuations in school attendance are a form of self insurance but one which does not result in a substantial loss of human capital on average

accountability and flexibility in public schools evidence from boston s charters and pilots charter schools are publicly funded but operate outside the regulatory framework and collective bargaining agreements characteristic of traditional public schools in return for this freedom charter schools are subject to heightened accountability this paper estimates the impact of charter school attendance on student achievement using data from boston where charter schools enroll a growing share of students we also evaluate an alternative to the charter model boston s pilot schools these schools have some of the independence of charter schools but operate within the school district face little risk of closure and are covered by many of same collective bargaining provisions as traditional public schools estimates using student assignment lotteries show large and significant test score gains for charter lottery winners in middle and high school in contrast lottery based estimates for pilot schools are small and mostly insignificant the large positive lottery based estimates for charter schools are similar to estimates constructed using statistical controls in the same sample but larger than those using statistical controls in a wider sample of schools the latter are still substantial however the estimates for pilot schools are smaller and more variable than those for charters with some significant negative effects

education in a crisis abstract the year 1998 saw the onset of a major economic and financial crisis in indonesia gdp fell by 12 that year the effect on education of the next generation is examined on average household spending on education declined most dramatically among the poorest households spending reductions were particularly marked in poor households with more young children while there was a tendency to protect education spending in poor households with more older children the evidence on school enrollments mirrors these findings poor households apparently sought to protect investments in the schooling of older children at the expense of the education of younger children

volatility and development why is gdp growth so much more volatile in poor countries than in rich ones we identify four possible reasons i poor countries specialize in more volatile sectors ii poor countries specialize in fewer sectors iii poor countries experience more frequent and more severe aggregate shocks e g from macroeconomic policy and iv poor countries macroeconomic fluctuations are more highly correlated with the shocks of the sectors they specialize in we show how to decompose volatility into these four sources quantify their contribution to aggregate volatility and study how they relate to the stage of development we document the following regularities first as countries develop their productive structure moves from more volatile to less volatile sectors second the level of specialization declines with development at early stages and slowly increases at later stages of development third the volatility of country specific macroeconomic shocks falls with development fourth the covariance between sector specific and country specific shocks does not vary systematically with the level of development we argue that many theories linking volatility and development are not consistent with these findings and suggest new directions for future theoretical work

what can we learn about commodity and credit cycles evidence from african commodity exporting countries abstract this study analyzes the relationship between commodity prices and credit to the private sector in commodity exporting developing countries particularly three nations in sub saharan africa in this regard we extend the findings of non empirical studies dealing with this issue for the case of african countries and complement the literature on the methodological side by investigating this relationship using wavelet analysis this frequency approach is appropriate as it takes into account investor heterogeneity and the time variant characteristic of the studied relationship further it explains the lead lag relationship between the studied series first we observe that credit and commodities are strongly related over long timescales suggesting that the credit market reacts strongly to long term change in commodity markets and thus tends to be sensitive to persistent commodity shocks second for medium and short timescales the interaction is high and significant only during periods of turmoil in terms of the lead lag relationship our results also show that the commodity market causes fluctuations in the credit market

commodity prices and growth in africa a frican economies export primary commodities and most export little else policymakers as well as economists and historians of african economic development have seen these exports as both a hope and a curse the following parable tells the story once upon a time a servant of the ruler discovered a miraculous plant which grew readily in that country and whose seeds could be woven into fine cloth so desirable was this fabric that it became prized all over the world and fetched a high price after two score years the plant accounted for most of the country s trade with the world the ruler ordered the peasants to grow the plant paid them only a fraction of its price and he and his nobles became fabulously wealthy because the ruler wished to be remembered as a great ruler and as the father of his country he used his wealth to build a great army and brought machines from foreign countries to make the fine goods that previously could only be obtained from foreign merchants but the machines often broke down and the goods that they made were of poor quality and after the ruler died they were left to rust under the ruler s successor there was a war in a foreign land where the plant also grew so that there was a great shortage and its price increased threefold in only three seasons the new ruler spent his newfound riches on fantastic extravagance while immense sums were expended on public works after the manner of the east and on productive works carried out in the wrong way or too soon not even the threefold increase in prices could support these expenditures and the country soon found itself deeply in debt when the war ended and the price fell the country could no longer pay the interest on its debt or borrow more money even after it had sold its only useful public work to a foreign power so that power sent a mission to the country the publication of whose report from which the above

policy volatility institutions and economic growth abstract in this paper we present evidence that policy volatility exerts a strong and direct negative impact on growth using data for 93 countries we construct measures of policy volatility based on the standard deviation of the residuals from country specific regressions of government consumption on output undisciplined governments that implement frequent and large changes in government spending unrelated to the state of the business cycle generate lower economic growth we employ both instrumental variables and panel estimation to address concerns of omitted variables and endogeneity a 1 standard deviation increase in policy volatility reduces long term economic growth by about 0 74 in the panel regressions and by more than 1 percentage point in the cross section

the excess co movement of commodity prices reconsidered this paper provides an empirical reconsideration of evidence for excess co movement of commodity prices within the framework of univariate and multivariate garch 1 1 models alternative formulations of zero excess co movement are provided and corresponding score and likelihood ratio tests are developed monthly time series data for two sample periods 1960 85 and 1974 92 on up to nine commodities are used in contrast to earlier work only weak evidence of excess co movement is found

the condition of the working class in england 1209 2004 i use building workers wages for 1209 2004 and the skill premium to consider the causes and consequences of the industrial revolution real wages were trendless before 1800 as would be predicted for the malthusian era comparing wages with population however suggests that the break from the technological stagnation of the malthusian era came around 1640 long before the classic industrial revolution and even before the arrival of modern democracy in 1689 building wages also conflict with human capital interpretations of the industrial revolution as modeled by gary becker kevin murphy and robert tamura oded galor and david weil and robert lucas human capital accumulation began when the rewards for skills were unchanged and when fertility was increasing

thinking creatively about markets abstract the paper takes a broad view of how economists identify market boundaries three types of definition are distinguished trading markets anti trust markets and strategic markets the first is based on the familiar law of one price while the second follows us dij guidelines and is designed to identify positions of market power neither of these definitions suits the needs of one of the more recent and fastest growing users of economics namely those responsible for corporate strategy decisions inside firms the paper reviews why market definitions are a fundamental part of strategy decisions and identifies several ways that such users might define market boundaries

the effects of generalized school choice on achievement and stratification evidence from chile s voucher program in 1981 chile introduced nationwide school choice by providing vouchers to any student wishing to attend private school as a result more than 1000 private schools entered the market and the private enrollment rate increased by 20 percentage points with greater impacts in larger more urban and wealthier communities we use this differential impact to measure the effects of unrestricted choice on educational outcomes using panel data for about 150 municipalities we find no evidence that choice improved average educational outcomes as measured by test scores repetition rates and years of schooling however we find evidence that the voucher program led to increased sorting as the bbestq public school students left for the private sector d 2005 elsevier b v all rights reserved

cross country evidence on the link between volatility and growth this paper presents empirical evidence against the standard dichotomy in macroeconomics that separates growth from the volatility of economic fluctuations in a sample of ninety two countries as well as a sample of oecd countries the authors find that countries with higher volatility have lower growth the addition of standard control variables strengthens the negative relationship the authors also find that government spending induced volatility is negatively associated with growth even after controlling for both time and country fixed effects copyright 1995 by american economic association

volatility and investment interpreting evidence from developing countries we uncover a significant negative correlation between various volatility measures and private investment in developing countries even when adding the standard control variables no such correlation is uncovered when the investment measure is the sum of private and public investment spending indeed public investment spending is positively correlated with some ineasures of volatility these findings suggest that the detrimental impact of volatility on investment may be easier to detect using disaggregated data we provide several possible interpretations for our findings nonlinearities in preferences or budget constraints can cause volatility to have first order negative effects on private investment

is swedish district heating operating on an integrated market differences in pricing price convergence and marketing strategy between public and private district heating companies abstract the deregulation of the swedish electricity market in 1996 made it possible to operate municipal district heating commercially until that time district heating had been organized mainly as municipal utilities after 1996 district heating is instead expected to function on a market in competitive and integrated markets prices are expected to be equal or converging to find out if district heating operates on an integrated market the differences in price levels price convergence price strategy and business goals among municipal private and state owned district heating companies are investigated price statistics was used along with results from a questionnaire that was answered by representatives for 109 swedish district heating companies the results show that prices among district heating systems do not converge significantly and that variations in prices among municipal systems are larger than among private and state owned systems furthermore despite the fact that district heating is supposed to be commercial a vast majority of district heating companies apply cost based pricing and not market pricing the municipal companies give priority to political goals before financial goals the conclusion is that a swedish integrated market for heat has not yet evolved and some district heating price controlling mechanism is necessary