optimal management of renewable resources with growing demand and stock externalities abstract in an equilibrium framework optimal management of renewable resources in the presence of growing demand or externalities leads to steady states that differ from those characterized by rate of interest equals rate of change in growth plus rate of change in prices measures to reach an optimum with externalities other than direct controls are found to be critically mediated by the costs of harvesting

the impact of rural electric access on deforestation rates summary overpopulation and economic industrialization are two common explanations for deforestation political ecology however highlights that good governance and effective land management at the local level can offset the impact of population growth and development on environmental degradation in this paper we provide an innovative argument derived from political ecology to explain deforestation but rather than pursing a bottom up approach to governance we take a top down approach we argue that the state can ease deforestation rates by weaning rural populations off of the consumption of biomass for their energy needs by expanding rural electrification access using a panel analysis of 158 countries for the years 1990 2000 and 2010 we find that not only does rural electrification cause deforestation rates to decrease but also that it is more robust in explaining deforestation than population growth or development our study provides two innovations to political ecology it highlights that the state can help rather than hinder local populations with managing their local environments in a more sustainable way by providing them with public goods based energy alternatives and it supplements political ecology s qualitative focus on environmental degradation with a generalized quantitative analysis of state based initiatives on deforestation our results suggest that current global initiatives addressing deforestation specifically the reduction of emissions from deforestation and forest degradation redd agenda of the united nations framework convention on climate change should not only assist local land managers but also work with the state to ensure universal access to electricity

financial returns under uncertainty for conventional and reduced impact logging in permanent production forests of the brazilian amazon abstract reduced impact logging ril techniques are designed to improve the efficiency of timber harvesting while mitigating its adverse effects on the forest ecosystem research on ril in select tropical forest regions has demonstrated clear ecological benefits relative to conventional logging cl practices while the financial competitiveness of ril is less conclusive we conduct a comparative analysis of financial returns to one and two cutting cycle logging entries for representative ril and cl operations of the eastern amazon observed variability in harvest efficiency and uncertainties of forest productivity are introduced in a stochastic simulation of future biological and financial returns to the alternative logging systems despite the perceived investment risks ril harvesting operations generate competitive or superior returns relative to cl for a wide range of discount rates due to gains in harvest efficiency and forest conservation

does private management of water supply services really increase prices an empirical analysis in spain this paper attempts to explain differences in the average price of domestic water supply services in spain paying special attention to the effects of privatisation of the service on price levels the empirical analysis is based on the application of a treatment effects model on a sample of 53 major urban municipalities this model accounts for the fact that municipalities do not randomly distribute themselves between a group using strictly public ownership and management and a group where all or part of the service has been delegated to a private firm it is found that once this endogeneity is taken into account there seems to be a positive and significant effect of privatisation on water price levels

a composite leading indicator of the inflation cycle for the euro area we evaluate the performance of composite leading indicators of turning points of inflation in the euro area constructed by combining the techniques of fourier analysis and kalman filters with the national bureau of economic research methodology in addition the study compares the empirical performance of euro simple sum and divisia monetary aggregates and provides a tentative answer to the issue of whether or not the uk should join the euro area our findings suggest that first the cyclical pattern of the different composite leading indicators very closely reflect that of the inflation cycle for the euro area second the empirical performance of the euro divisia is better than its simple sum counterpart and third the uk is better out of the euro area 2005 taylor francis group ltd

the changing empirical definition of money some estimates from a model of the demand for money substitutes interest bearing checkable deposits are examined to test whether they should be included in measures of the u s money stock both divisia and traditional simple sum aggregates are constructed on the basis of tests for weak separability in a model of the demand for financial assets using nonparametric demand analysis we find that several groups of assets are compatible with aggregation theory we find empirical support for a narrow measure consisting of the components of current mia in tests based on a st louis equation and in terms of controllability a divisia aggregate performs better than the simple sum mia measure

the tree cutting problem in a stochastic environment the case of age dependent growth abstract harvest policies are derived for growing biological assets e g forests livestock subject to stochastic age dependent growth and price uncertainty the task posed is analyzed as a continuous time optimal stopping problem for diffusion processes both single and ongoing rotation problems are considered qualitative comparative static and numerical results are provided

optimal forest rotation under monopoly and competition abstract the two main propositions of the paper establish sufficient conditions for the optimal rotation to be invariant to market structure whether monopolistic competitive or maximizing the temporal sum of consumer s surpluses a corollary to the second proposition yields sufficient conditions for the monopolistic rotation to be actually longer than the competitive one

an admissible monetary aggregate for the united kingdom this paper evaluates the performance of a monetary aggregate that is constructed from principles of economic and index number theory results from tests for weak separability indicate that wholesale deposits should not be aggregated with other u k financial assets they currently are included however in broad monetary aggregates published by the bank of england financial asset groupings passing the weak separability tests then were aggregated using both simple sum and divisia weights in each case the divisia aggregates were more closely related to the growth of nominal gdp and had stable demand for money functions copyright 1991 by mit press

spatial interactions in multiple use forestry and substitution and wealth effects for the single stand abstract forestry models often ignore spatial relationships between forest stands this paper isolates the effects of stand interactions in multiple use forestry through a straightforward extension of the single stand model effects of stand interactions decompose into wealth and substitution effects and may cause time varying patterns of resource use for a forest stand simulations illustrate that a stand s role even in steady state may alternate an emphasis on timber with an emphasis on nontimber optimal management plans differ substantially depending on whether the manager values nonmarket goods from neighboring stands the model offers insights for improving heuristic forest level optimization models in current usage

busting the boom bust pattern of development in the brazilian amazon global ecosystem services are clearly threatened by deforestation associated with human occupation and economic development of the brazilian amazon however the prognosis for the socioeconomic wellbeing of inhabitants remains unclear in an empirical regularity that has been termed the boom bust pattern or the resource curse the exploitation of natural resources is associated with short run gains in welfare that dissipate over time this coupling hypothesis asserts that deforestation and development are correlated such that deforestation leads to only short term advances in economic welfare that are not sustained once natural forests along with their mature timber and soil inputs are exhausted in contrast the decoupling hypothesis asserts that deforestation and development need not be correlated over time in this context growth that is initially based on deforestation may be sustained and translated into prolonged welfare gains even once the forest is exhausted using census and deforestation data from 1991 2000 and 2010 for municipalities i e counties in the amazon region we confirm that this boom bust pattern appears in cross sectional data however using panel data we show that socioeconomic welfare has become decoupled from environmental factors and is converging to rising national averages our findings contradict the conventional wisdom that the exploitation of tropical forests is required to promote amazonian development

converting forests to farms the economic benefits of clearing forests in agricultural settlements in the amazon agricultural expansion into tropical forests is believed to bring local economic benefits at the expense of global environmental costs the resulting tension is reflected in brazilian government policy the national agrarian reform program has settled farm families in the amazon region since the 1970s with the expectation that they will clear forests in order to farm the land on the other hand recent brazilian policy initiatives seek to reduce deforestation to mitigate climate change we contribute to the policy debate that surrounds these dual goals for the amazon by estimating the marginal effects of new agricultural land on the full income and assets of farm settlers over a 13 year period from 1996 to 2009 using micro panel data from agrarian settlements where forest was being rapidly cleared and controlling for factors that would otherwise confound the relationship we estimate the effect of converting forest to agriculture on total household income to estimate the opportunity cost of conserving forest our measure of income reflects any re allocation of resources by utility maximizing households and any productivity effects due to loss of forest ecosystem services the estimated effect of new agricultural land on income is positive but small relative to the income per hectare of previously cleared land however we show that income increases investment in physical assets which raises households income generating capacity and future accumulation of assets thus while there is only a small immediate income gain from clearing more forest the long term effects on wealth are still substantial this demonstrates that given the right conditions conversion of forest to agricultural land can be an impetus for asset accumulation by smallholders it also highlights the importance of considering the indirect and long term welfare benefits of new agricultural land when assessing the opportunity costs of forest conservation

the monetary multiplier when money is measured as a divisia quantity index abstract the traditional algebraic derivation of the monetary multiplier for conventional simple sum monetary aggregates is extended to cover the case of money defined as a divisia monetary quantity index thus the procedures developed by johannes and rasche for assessing the controllability of money can be applied to the issue of controllability of the divisia aggregates

on the condition for export led growth in this paper the author explores the conditions under which favorable export shocks produce export led growth in a three sector three factor general equilibrium model that allows for endogenous capital accumulation the export shock takes the form of either a resource discovery or an increase in the world market price of the export good while surprisingly simple conditions define the outcome in many cases there is no general presumption that an export boom will act as an engine of growth much depends on the precise structural characteristics of the economy

on measuring the relative size of the unregulated to the regulated money market over time abstract this paper develops a method based on the recent theories of index number monetary aggregation and money supply by which changes can be measured in the size of the unregulated money market umm relative to that of the regulated money market in developing countries while the method requires some knowledge of the initial umm assets and the growth rate of the monetary multiplier it is virtually parameter free in measuring the effects of asset substitution on the relative size of the umm for illustrative purpose it is applied to korea which appears to provide satisfactory results indicating the usefulness of the method

portfolio redistribution impacts within the narrow monetary aggregate a number of important monetary and financial changes occurred in the 1980s a rising question among monetary economists is whether the character of m1 has changed substantially as a result in particular a frequent contention is that interest bearing checkable deposits behave as a savings type asset thus subjecting m1 to portfolio redistribution effects in the modern era this research examines the elasticities of substitution for a variety of financial assets pre and post 1980 results indicate that m1 subcomponents do show significant substitution with savings type assets however the portfolio redistribution impacts are not confined to the interest bearing checkable deposits further results indicate that this behavior is not unique to the 1980s copyright 1992 by ohio state university press

the effect of the asian financial crisis on the relationships among open macroeconomic factors for asian countries this study investigates the effect of asian financial crisis on the relationships among exchange rate volatility export import and productivity for taiwan korea malaysia and indonesia cointegration tests show no change for the long run equilibrium relationship among these variables throughout the crisis granger causality finds that some exogeneity orderings alter from pre to post crisis periods for the countries considered impulse response functions irs for the pre crisis period demonstrate the primary importance of productivity then second importance of export for the post crisis period oscillatory paths around zero of the irs imply an ambiguous finding for the direction of effect and relative exogeneity among variables studied the variance decompositions in export for taiwan korea and malaysia and in productivity for malaysia and indonesia did not change from the pre crisis to the post crisis era however most of the rest of the forecast error variances in variables were decomposed in

resource intensity institutions and development summary we examine the relationship between resource abundance and several indicators of human welfare consistent with the existing literature on the relationship between resource abundance and economic growth we find that given an initial income level resource intensive countries tend to suffer lower levels of human development while we find only weak support for a direct link between resources and welfare there is an indirect link that operates through institutional quality there are also significant differences in the effects that resources have on different measures of institutional quality these results imply that the resource curse is a more encompassing phenomenon than previously considered and that key differences exist between the effects of different resource types on various aspects of governance and human welfare 2005 elsevier ltd all rights reserved

rethinking the economic borders of the state ownership assets and competition the paper sets out a new asset based framework for the economic borders of the state it considers how the economic borders have changed in response to major shocks notably in the 1980s and the economic concepts which lay behind these shifts notably on the microeconomic side the market and government failure framework and on the macroeconomic side the monetarist challenge to the keynesian paradigm the missing elements are the balance sheet and the treatment of assets debt and the interests of future generations particular attention is paid to utility and infrastructure assets as core public goods and to the neglect of natural capital

welfare outcomes and the advance of the deforestation frontier in the brazilian amazon summary frontier expansion in the brazilian amazon is often described as boom bust development we critically assess this characterization by mapping and estimating statistical models of welfare as a function of deforestation at the municipal level after controlling for potential confounding variables and spatial autocorrelation estimation results are consistent with a frontier boom generated by exploitation of natural resources followed by a bust during which forests continue to fall but there is no compensating gain in welfare however average per capita welfare increases again with deforestation at very high levels this second turning point in average welfare along with the strong bivariate correlation between deforestation and municipal gdp km2 may encourage local leaders to equate deforestation with development this confirms the need for international incentive payments for global public goods such as biodiversity and carbon sequestration that are provided by the amazon forest

the total economic value of amazonian deforestation 1978 1993 national income accounting has been criticized because of its failure to encompass the notion of sustainability several studies address this problem through green income accounting i e by adjusting conventionally measured gdp for reduction in a given country s stock of natural resources these studies generally base value on the unit net price of the resource other studies go beyond net price emphasizing a natural resource s total economic value tev that is its non marketable as well as its marketable values this paper combines the green income accounting and tev approaches and applies the new framework to brazil in order to assess the foregone economic benefits resulting from amazonian deforestation the results lend support to calls for greater policy emphasis on conservation of unique and irreplaceable ecosystems 2000 elsevier science b v all rights reserved

growth and exchange rate volatility a panel data analysis the aim of this article is to assess the role of real exchange rate rer volatility on long run economic growth for a set of 82 advanced and emerging economies using a panel data set ranging from 1970 to 2009 with an accurate measure for exchange rate volatility the results for the two step system generalized method of moments gmm panel growth models show that a more less volatile rer has a significant negative positive impact on economic growth the results are also robust for different model specifications

can the reserves approach to monetary control really work on october 6 1979 the board of governors bog of the federal reserve system announced that the federal open market committee fomc was abandoning its historical preoccupation with an interest rate approach to monetary control in favor of a reserve aggregate approach 1 underlying this new approach is the fact that at time t any money stock concept m is the product of a money multiplier m and a reserve aggregate r that is

non renewability in forest rotations implications for economic and ecosystem sustainability abstract the forest rotations problem has been considered by generations of economists fisher 1930 boulding 1966 samuelson 1976 traditionally the forest resource across all future harvest periods is assumed to grow without memory of past harvest periods this paper integrates economic theory and intertemporal ecological mechanics linking current harvest decisions with future forest growth financial value and ecosystem health results and implications of a non renewable forest resource and the influence of rotation length and number on forest recovery are reported cost estimates of moving from short term economic rotations to long term ecological rotations suggest the level of incentive required for one aspect of ecosystem management a net private cost of maintaining ecosystem health emerges and for public policy purposes can be compared with measures of non timber amenity values and social benefits exhibiting increasing returns to rotation length

the choice among monetary aggregates as targets and guides for monetary policy difficulties in meeting its monetary targets led the federal reserve in october 1979 to adopt a new operating procedure to achieve firmer control over monetary aggregates yet the inflationary environment has fostered financial developments that affect the behavior of the traditional monetary aggregates and that raise questions whether different aggregates may not be better this paper compares the various monetary aggregates for their usefulness as guides for monetary policy in the light of recent financial developments the criterion of usefulness is the ability to influence and predict gnp growth this ability is tested in two ways first by the stability of the velocities of the monetary aggregates and second by the advance information they provide of gnp growth it is presumed that the aggregates with the most stable velocities make the best targets for monetray policy and that those containing the most advance information make the best guides for policy the paper has three main sections the first discusses the criteria for using monetary aggregates as targets and guides the second two sections describe and report tests of the various monetary aggregates as targets and guides a summary of findings is presented as a final section

the demand for divisia money in the united states a dynamic flexible demand system this paper applies the anderson and blundell 1982 approach to the analysis of the demand for money and attempts to establish the nature of the relationship between divisia money defined from narrow to broad and the nested like assets at different levels of aggregation this is achieved by conducting the analysis within a microtheoretical framework utilizing the demand system approach and by estimating a sequence of nested dynamic specifications and performing tests of the nested structures as well as on economic theory to establish the most restrictive dynamic specification acceptable to the data copyright 1991 by ohio state university press

a more general dynamic economic model of the optimal rotation of multiple use forests abstract a deterministic optimal control model is presented for a multiple use forest with specific consideration given to provision and maintenance costs associated with a flow of nontimber values a relatively simple relationship is found which determines the optimal rotation length for such a forest

causality between exports and economic growth abstract this paper utilizes granger causality tests in investigating the relationship between exports and national income from a consistent data set for 47 developing countries in africa new empirical results as well as suggestions for future research are presented

the assessment introducing competition into regulated industries the introduction of competition into utilities is currently being pursued in the many countries including the uk competition can take various forms such as competition for outputs inputs franchises and outright takeovers attention is currently focused on output competition whereby customers are being given a choice of final supplier in many industries we consider the implications of the introduction of such competition including the effects on industrial structure and contracts cross subsidies and distributional concerns and uncertainty and stranded contracts we also analyze the transitional problems encountered as competition is introduced and suggest that the uk regulators and government have in some key respects failed to define a clear and consistent policy

natural resources education and economic development economic growth since 1965 has varied inversely with the share of natural capital in national wealth across countries four main channels of transmission from abundant natural resources to stunted economic development are discussed a the dutch disease b rent seeking c overconfidence and d neglect of education public expenditure on education relative to national income expected years of schooling for girls and gross secondary school enrolment are all shown to be inversely related to the share of natural capital in national wealth across countries natural capital appears to crowd out human capital thereby slowing down the pace of economic development

company sector liquid asset holdings a systems approach liquid asset holdings of the u k company sector are modeled using a money in the utility function theoretical approach symmetry homogeneity and negativity but not homotheticity restrictions are found to hold in a dynamic model using quarterly data the authors examine the usefulness of cointegration techniques in a systems framework the preferred dynamic equations are estimated using the engle granger two step procedure and have coefficients that are satisfactory on a priori grounds and are stable copyright 1992 by ohio state university press

translog flexible functional forms and substitutability of monetary assets this article attempts to establish the nature of the relationship between monetary assets by estimating a sequence of four nested demand systems the generalized translog the basic translog the linear translog and the homothetic translog the principal attraction of the empirical work is that i am able to test separately for both homothetic and quasi homothetic preferences over monetary assets the tests reject both homotheticity and quasi homotheticity and thus consistency of the strotz gorman two stage optimization i also perform tests on economic theory to establish whether the parameter estimates are consistent with the utility maximizing hypothesis underlying the models these tests indicate that the generalized translog is the preferred model

causality between export growth and industrial development empirial evidence from the nics abstract this paper investigates the causal relationship between export growth and industrial development in eight newly industrializing countries nics results of sims causality test show that for most of the nics there is a strong bidirectional causality between the growth of exports and industrial development these findings support the export led growth strategy in that expansion in exports not only promote the growth of national income but also lead to structural transformation of the developing countries

exports growth and causality in developing countries abstract previous empirical studies have interpreted results in regressions of output variables on export variables as providing support for an export promotion development strategy such an interpretation is questionable since these regressions provide no means of determining the direction of causality this paper performs causality tests between exports and growth for 37 developing countries the results cast considerable doubt on the validity of the export promotion hypothesis

microfoundations and the demand for money the reader should note that i write this piece in a style that aims to be accessible to that much neglected representative agent the woman on the eurostar train hence unlike the man on the clapham omnibus i assume my intrepid traveller has reasonable knowledge of monetary economics and econometrics but not of the details of the demand for money space constraints force me to indulge in a certain amount of poetic licence but i hope this results in poetic justice there have been many wars fought on this particular battlefield some with almost religious zeal on the theoretical side of the debate we sometimes have the equivalent of religious fundamentalists be they muslims jews christians etc who would dismiss almost any evidence unless it were associated with a strong microtheoretic basis as laid down in the koran talmud or bible the empirical side encompasses agnostics atheists as well as born again econometricians pure theorists inhabit the sunlit uplands while applied economists and policymakers flounder in the muddy plain below occasionally gaining solace from their copy of zen and the art of motorcycle maintenance in general in economics we do not have the luxury of controlled experiments as is the case in the natural sciences what distinguishes good microfoundations from bad and how to weight priors and statistical evidence is subject to much dispute leamer i983 hendry et al i990 as in religion sometimes there is the occasional miracle proclaimed after a suitable interval a new saint may be declared and disciples flock to the new shrine later doubts may arise as to whether a miracle really did occur human behaviour is difficult to explain let alone predict so the search for the equivalent of the holy grail ark of the covenant etc is bound to be arduous in scholarly journals we generally read of the success of the demand for money like diplomats who are sent abroad to lie for the good of their country publication may require applied economists to be somewhat economical with the actualite lovell i983 leamer i983 in this article i want to be as honest as possible about our success and failures in this area the prior information an armchair economist would consider when thinking about the demand for money over the past 40 years in western industrialised countries which have experienced moderate inflation might

exports export composition and growth cointegration and causality evidence for malaysia this paper comprehensively tests the export led growth elg hypothesis for malaysia for the period 1955 90 using cointegration and causality testing based on hsiao s synthesis of the granger test and akaike s minimum final prediction error criterion the results provide support for the elg hypothesis aggregate exports granger cause real gdp and non export gdp this relationship is found to be driven by manufactured exports rather than by traditional exports

risk and forest policy issues and recent trends in the u s abstract recent forest policy trends in the united states have implications for the nature timing and incidence of risk to which the public is exposed policy makers face enormous uncertainty both about what forests can do and be and about what people want forest policy that places a premium on shortrun predictability in the flow of commodity outputs is being replaced with policy that allows disturbances such as fire that are consistent with long run naturalness scientists advocate adaptive management the introduction of planned variation in order to enhance learning within the bounds of safety a concept that can only be understood in the context of public feelings and perceptions of risk this paper reviews economic models of choice under uncertainty and discusses issues that are relevant for understanding risk perceptions and preferences the definition of probabilities and the many attributes of risk and it examines the margins on which trade offs in risk are made in new forest policy arguing that because new forest policy shifts from public to private risk and from future to current risk it may enhance the common good finally this paper calls for policy to address uncertainty explicitly in a way that acknowledges public feelings and preferences about risk recognizes risk perceptions of experts and of lay persons and encourages developments in forest policy that allow for flexibility in the face of new knowledge

modelling the monetary multiplier and the controllability of the divisia monetary quantity aggregates fama eugene and richard roll some properties of symmetric stable distributions journal of the american statistical association 63 sept 1968 817 838 parameter estimates for symmetric stable distributions journal of the american statistical association 66 june 1971 331 338 friedman daniel and stoddard vandersteel short run fluctuations in foreign exchange rates evidence from the data 1973 79 journal of international economics 13 aug 1982 171 186 gnedenko b v and a n kolmogorov limit distributions for sums of independent random variables reading ma addison wesley 1968 international monetary fund international monetary fund survev various issues judge george g william e griffiths r carter hill and tsoung chao lee the theory and practice of econometrics new york john wiley and sons 1980 kendall maurice g and alan stuart the advanced theory of statistics 2nd edition vol i london charles griffin and co 1963 kindleberger c p the benefits of international money journal of international economics 2 sept 1972 425 442 mandelbrot benoit the variation of certain speculative prices journal of business 36 oct 1963 394 419 mcfarland james w r richardson pettit and sam k sung the distribution of foreign exchange price changes trading day effects and risk measurement journal of finance 37 june 1982 693 715 moulton westerfield janice an estimation of foreign exchange risk under fixed and floating rate regimes journal of international economics 7 june 1977 181 200 rogalski richard j and joseph d vinso empirical properties of foreign exchange rates journal of international business studies 9 fall 1978 69 79 roll richard the behavior of interest rates new york basic books inc 1970 schmidt peter econometrics new york marcell dekker inc 1976

the money multiplier simple sum divisia and innovation divisia monetary aggregates cointegration tests for the uk the possibility is investigated of establishing a cointegrating relationship between various competing monetary aggregates and a high powered money base for the uk 1977 1994 the aggregates are constructed from the bank of england s m4 cointegrating equations are found for all aggregates with little to choose between them and divisia being at least as good as its simple sum counterpart the ecm causality results are not as promising though they all suggest that high powered money is weakly exogenous the simple sum provides the best dynamic results closely followed by the divisia adjusted for implicit interest payments on cheque accounts

forest clearing livelihood strategies and welfare evidence from the tsimane in bolivia this study analyzes the relationship between forest households livelihood strategies and forest clearing and the relationship of both to welfare the analysis relies on a rich panel dataset collected on the tsimane communities in bolivia to highlight how forest households combine sales and wage activities forest clearing is associated with all livelihood strategies but the association with welfare differs depending on the strategy pursued households that clear more and that generate their earnings by combining agricultural sales and wage activities are better off judged in terms of assets than those undertaking other strategies by contrast households in a subsistence strategy are not able to accumulate assets in the long run overall households clear only small areas of forest which has a positive effect on welfare and enables accumulation of assets

cointegration causality and export led growth in portugal 1865 1985 abstract this paper considers the relationship between cointegration and causality and uses tests of cointegration as pre tests for granger tests of causality such methods are utilized on portuguese data 1865 1985 where the export led growth hypothesis is rejected in favour of reverse causality

the demand for assets and optimal monetary aggregation this paper uses a highly disaggregated demand system to estimate the degree of substitutability among monetary assets and to address the issue of optimal monetary aggregation in the united states we address the problems of dimensionality and nonlinearity estimating a very detailed monetary asset demand system encompassing the full range of assets based on the locally flexible normalized quadratic expenditure function we treat the concavity property as a maintained hypothesis and provide evidence consistent with neoclassical microeconomic theory statistical tests reject the appropriateness of the aggregation assumptions for all the money measures published by the federal reserve as well as for a large number of groupings suggested by earlier studies this supports and reinforces barnett s 2016 assertion that we should employ the broadest m4 monetary aggregate published by the center for financial stability

choice under uncertainty problems solved and unsolved ffifteen years ago the theory of choice under uncertainty could be considered one of the success stories of economic analysis it rested on solid axiomatic foundations it had seen important breakthroughs in the analytics of risk risk aversion and their applications to economic issues and it stood ready to provide the theoretical underpinnings for the newly emerging information revolution in economics 1 today choice under uncertainty is a field in flux the standard theory is being challenged on several grounds from both within and outside economics the nature of these challenges and of our profession s responses to them is the topic of this paper

divisia aggregation and substitutability among monetary assets in this paper the authors estimate the degree of substitutability among the services of money checkable deposits savings deposits and time deposits in a quasi homothetic translog utility framework for canada the four composites mentioned are formed by aggregating more basic assets such as checkable deposits at banks checkable deposits at trust companies etc traditionally the simple sum aggregation has been used in this context the authors investigate both this alternative and divisia aggregation of the assets they find a low degree of substitution among the services of monetary assets and provide some evidence favoring divisia aggregation over simple sum aggregation copyright 1986 by ohio state university press

scaling the commanding heights of public enterprise economics there is a new orthodoxy in the economics of the public sector that has been promoted by privatization and for which ownership as such is essentially seen as irrelevant as compared to conditions of competition and regulation this is shown to depend upon an illegitimate and static view of the beneficial effects of competition a questionable distinction between natural and artificial monopoly a false history of the motives for and the performance of the nationalized industries a reduction of industrial to competition policy and a failure to examine intersectoral linkages rectifying these deficiencies suggests an alternative analytical and more favorable stance on public ownership copyright 1990 by oxford university press

the marginal cost of species preservation the northern spotted owl abstract because species survival is not certain the decision to save a species is not an all or nothing choice but rather a marginal one the appropriate unit for both benefit and cost functions is the likelihood of survival and the appropriate question is how certain we want to be of species survival the intensity of the species preservation debate is also fired by strong equity concerns we illustrate these points for the case of the northern spotted owl by constructing a marginal cost curve for its survival and by disaggregating welfare loss by region and by market level

nonparametric tests of utility maximization and weak separability for consumption leisure and money some of the most fundamental assumptions of economics are utility maximization and weak separability of the arguments in the represen tative consumer s utility function this paper contains results from nonparametric tests of these assumptions about consumer behavior the authors find that quarterly per capita data on consumption goods le isure and monetary assets are consistent with utility maximization further consumption goods and leisure meet necessary and sufficient conditions for weak separability additionally one grouping of relat ively liquid monetary assets meets the necessary conditions for weak separability they also test and find no evidence of homothetic prefe rences copyright 1987 by mit press

timber harvest adjacency economies hunting species protection and old growth value seeking the dynamic optimum abstract forests have the potential to provide ecosystem services timber mature growth aesthetics and wildlife and endangered species protection forest managers are faced with complex ecosystem management decisions due to competing and complementary social values and differential interactions of these social values with timber production as a result management strategies can have dramatic aggregate and intertemporal welfare implications this paper portrays the trade offs and externalities in choosing or changing the forest management objective and the resulting rankings of management policies in addition the paper analyzes the role of economies of scale in harvest area where larger harvest areas generate average cost savings in harvesting and reseeding thereby promoting more intensive harvesting at the expense of environmental benefits

forests livelihoods and conservation broadening the empirical base summary more than 10 000 years after the agricultural revolution started millions of rural smallholders across the developing world may still derive as much income from foraging forests and wildlands as from cultivating crops these steady environmental income flows come often from public forests and are extracted by men and women alike however inflexible supplies from nature the physical hardship of harvesting and commonly low returns limit their role as safety nets and pathways out of poverty while their harvesting does not preclude the ongoing conversion of wildlands to agriculture privileged access to high quality environmental resources can become a strong local conservation motive

the political resource curse this paper studies the effect of additional government revenues on political corruption and on the quality of politicians both with theory and data the theory is based on a political agency model with career concerns and endogenous entry of candidates the data refer to brazil where federal transfers to municipal governments change exogenously at given population thresholds allowing us to implement a regression discontinuity design the empirical evidence shows that larger transfers increase observed corruption and reduce the average education of candidates for mayor these and other more specific empirical results are in line with the predictions of the theory jel d72 d73 h77 o17 o18

thirty years after water privatization is the english model the envy of the world the paper considers whether water privatization 30 years ago has delivered the promised superior performance to nationalization which remains the dominant model in europe the paper sets out the arguments at privatization in particular in relation to efficiency the managerial incentives the role of private sector balance sheets in facilitating investment and the impacts on the cost of capital alternative explanations of relative performance notably the regulation model adopted are highlighted and the paper concludes by outlining an alternative model of water regulation which better marries up public responsibilities and private incentives

the composition and construction of monetary aggregates an economic monetary aggregate is composed from a set of monetary goods that are at least weakly separable from other goods in the optimizing agent s utility function we construct such an aggregate using a divisia index number we demonstrate that through the middle of the 1980s forecasts of the inflation rate based on our economic monetary aggregate are superior to forecasts based on the simple sum monetary aggregates m1 or m2

are risky assets substitutes for monetary assets i introduction financial innovation over the past couple of decades has enhanced the liquidity of many financial assets particularly noncapital certain risky assets further financial assets previously not regarded as monetary assets such as mutual funds and particularly money market mutual funds now provide monetary services such as liquidity and transactions services l given the increased liquidity of such funds the question arises as to whether risky assets are substitutes for capital certain monetary assets if noncapital certain assets are indeed substitutes for capital certain assets and are also being used for transactions purposes then agents may be treating risky assets as money although this issue has been addressed in the united states in the context of the addition of bond funds to m2 by for example duca 1995 no such research has yet been conducted in the united kingdom including risky assets in the analysis contradicts the work of ando and shell 1975 spencer 1986 appendix i pp 184 93 and spencer 1994 broadly they argue that since some nonrisky assets provide monetary services and probability also liquidity individuals would not hold risky assets for these purposes 2 in contrast hicks 1935 states that falling transaction costs and rising wealth encourages individuals to increase the proportion of risky assets in portfolio holdings most studies generally assume that risky assets fail to provide significant monetary services and for example have been excluded from the asset demand analysis of barr and cuthbertson 1991a drake fleissig and swofford 1997 and money demand studies such as taylor 1987 belongia and chrystal 1991 drake and chrystal 1994 and drake 1996 alternatively barr and cuthbertson 1991b use only risky assets in their asset demand system analysis the degree of substitution between risky assets and capital certain assets is an empirical issue while noncapital certain risky assets mutual funds and other financial assets may well be becoming closer substitutes for what people are using as money they are in no way perfect substitutes for the highly liquid cash assets to evaluate the role of noncapital certain assets we construct a noncapital certain risky divisia aggregate consisting of equities government bonds and unit trusts the divisia index allows for less than perfect substitution between assets and weights component assets according to their differing degrees of moneyness which may vary over time due to many factors for example financial innovation see barnett 1980 this methodology has been widely applied to monetary aggregation and money demand studies in a number of countries as in belongia 1996 drake 1996 drake and chrystal 1997 and anderson jones and nesmith 1997 to determine whether risky assets are substitutes for capital certain assets we use two other divisia aggregates constructed from traditional measures of money the first of these is an aggregate of highly liquid zero yield cash assets given that the component assets all have zero own rates of return however divisia aggregation is equivalent in this case to simple summation the second aggregate is a divisia aggregate of interest bearing capital certain assets including risky assets complicates the analysis because the degree of risk aversion will affect the estimates of substitution between capital certain and noncapital certain assets thus we also analyze how different degrees of risk aversion affect the results the substitution relationship between assets is estimated from an asymptotically ideal model aim the choice of an aim is in line with the recommendation of barnett fisher and serletis 1992 that flexible systems of demand equations should be used that allow for nonlinear optimizing behavior by economic agents furthermore this paper can be seen as an extension of the recent application of this model to u

relative prices in the uk personal sector money demand function nonparametric demand analysis is used in order to establish admissible monetary aggregates and also to establish a potential role for relative prices in the money demand function a conventional money demand specification is then contrasted with a money demand function which contains the relative prices of durables nondurables and services as additional regressors evidence from long run cointegration analysis short run error correction models and nonnested testing all confirm a role for relative prices in the u k personal sector s money demand function copyright 1996 by royal economic society

a new empirically weighted monetary aggregate for the united states i introduction this article uses an approach to long run econometric modeling proposed by pesaran et al 2001 hereafter pss to develop an empirically weighted broad monetary aggregate for the united states and to demonstrate the advantages of this type of aggregate from a monetary policy perspective in particular we examine the ability of this type of approach to deal with periods of significant financial innovation and money demand instability a key requirement for monetary aggregates to provide a useful role in guiding monetary policy is that they should be stably related to the objectives of policy such as inflation or nominal income growth in this context the united states has exhibited periodic evidence of significant money demand instability most notably these have been goldfeld s 1976 case of the missing m1 in 1973 74 and the missing m2 episode of the early 1990s feldstein and stock 1996 in both cases the aggregate in question experienced a significant velocity increase and as a consequence previously established and apparently stable money demand relationships began to seriously overpredict the growth in these aggregates the missing m1 episode in 1973 74 together with subsequent evidence that m2 was more predictable than m1 led many economists to use m2 as an indicator of nominal activity hence during the 1980s m2 became the primary intermediate target of monetary policy furthermore the primacy of m2 appeared to be well supported by the available empirical evidence feldstein and stock 1994 for example established that the rate of change of m2 was a statistically significant predictor of the rate of change of nominal gross domestic product gdp over the period 1959 92 furthermore m2 remained statistically significant when short term interest rates were added to the relationship subsequent research such as miyao 1996 and estrella and mishkin 1997 however cast doubt on the robustness of this result carlson et al 2000 p 34 for example summarize the current situation by arguing that the promising empirical conclusions of feldstein and stock 1994 that established predictive content for m2 in a vector error correction setting do not seem to find support in data that extend through the mid 1990s the key factor behind the breakdown in the m2 relation appears to have been the substitution away from time deposits and into mutual funds particularly stock and bond mutual funds in the low interest rate environment of the early 1990s although the definition of m2 has been expanded by the federal reserve in the past to include money market mutual funds mmmfs and money market deposit accounts mmdas for example a number of analysts duca 1995 darin and hetzel 1994 orphanides et al 1994 have advocated that m2 should be expanded further to include these stock and bond mutual funds m2 significantly these studies typically use the simple sum aggregation approach in which all component assets are given equal and constant weights over time this approach does not seem consistent however with the accumulating evidence of a significant shift in wealth holders preferences sometime in the early 1990s carlson et al 2000 for example add to the empirical evidence that had accumulated during the 1990s by suggesting that the instability was associated with a permanent upward shift in m2 velocity between 1990 and 1994 furthermore they argue that our results support the hypothesis that households permanently reallocated a portion of their wealth from time deposits to mutual funds p 381 clearly simple sum aggregation is not able to take account of these changes in preferences more significantly however simple sum aggregation cannot take account of any changes in the relationship between component assets and nominal income over time although carlson et al 2000 do manage to reestablish a stable money demand relationship for the mzm money at zero maturity and m2m m2 minus small time deposits aggregates through the 1990s this is only possible by specifically accounting for the financial innovation that occurred in the early 1990s