balancing terrorism and natural disasters defensive strategy with endogenous attacker effort in this paper we apply game theory to identify equilibrium strategies for both attacker and defender in a fully endogenous model of resource allocation for countering terrorism and natural disasters the key features of our model include balancing protection from terrorism and natural disasters and describing the attacker choice by a continuous level of effort rather than a discrete choice i e attack or not interestingly in a sequential game increased defensive investment can lead an attacker to either increase his level of effort to help compensate for the reduced probability of damage from an attack or decrease his level of effort because attacking has become less profitable this can either reduce or increase the effectiveness of investments in protection from intentional attack and can therefore affect the relative desirability of investing in protection from natural disasters

socio economic characteristics and the effect of taxation as a health policy instrument abstract this paper analyses the quantitative effects of using economic instruments in health policy on the basis of price elasticities calculated from estimated demand systems the nutritional effects of various taxation schemes are compared for households in different age groups and social classes focusing on the consumption of saturated fats fibre and sugar it is generally found that the impact of price instruments is stronger for lower social classes than in other groups of the population with regard to age groups it is mostly the youngest that decrease their demand for saturated fat in response to price changes while it is mostly the middle aged who exhibit price responsiveness in their demand for sugar these groups are however not considered as key target groups for dietary regulation thus tax instruments may be effective in improving diets on average but the design of the instruments and the targeting of vulnerable groups with special needs should be done with care it should be noted that a tax on a single nutrient or food may have undesired effects on the demand for other food components though this may be avoided by introducing taxes subsidies on several food products simultaneously

taxing food and beverages theory evidence and policy we developed a theoretical framework to examine the effect of a change in sales or excise tax on food and beverage demand after considering that consumers may have imperfect tax knowledge are sometimes inattentive to sales tax may not be informed of a sales tax change and pay no sales tax on eligible food or beverages if using food stamps we conducted simulations to assess how much the sales tax elasticity of demand should be adjusted downward from the price elasticity of demand and quantified the advantage of using an excise tax as an anti obesity policy copyright 2013 oxford university press

demand elasticities for food products in brazil a two stage budgeting system the object of this article is to estimate demand elasticities for a basket of staple food important for providing the caloric needs of brazilian households these elasticities are useful in the measurement of the impact of structural reforms on poverty a two stage demand system was constructed based on data from household expenditure surveys pof produced by ibge the brazilian bureau of statistics in 1987 88 and 1995 96 we have used panel data to estimate the model and have calculated income own price and cross price elasticities for eight groups of goods and services and in the second stage for 11 sub groups of staple food products we estimated those elasticities for the whole sample of consumers and for two income groups

to bargain or not to bargain that is the question we use economic analysis in a simple game theory framework to ascertain under what circumstances a government would want to precommit itself to a no negotiation strategy from the government viewpoint we examine both the choice of deterrence expenditure i e expense meant to reduce terrorist logistical success during incidents and whether to negotiate or not this abstract was borrowed from another version of this item

modelling the joint determination of household labour supplies and commodity demands in addition to choosing the allocation of total expenditure between commodities households may also be able to make decisions over the allocation of their time between market work and leisure in both theoretical and empirical work it has often been the case that these decisions have been analysed separately in this paper we stress the theoretical attractions of considering the joint determination of the allocation of time between work and leisure and the allocation of total expenditure between commodities in a utility maximising framework using a sample of individual households we attempt to evaluate the empirical importance of the joint determination model over the separate determination of labour supplies and commodity demands our approach follows that of abbott and ashenfelter i976 phlips i978 barnett i979 deaton and muellbauer i980 and atkinson and stern i980 here we pay particular attention to the following four important aspects of household decision making over commodity demand and labour supply the first concerns the commonly assumed restriction on the household s preferences of weak separability between goods and leisure this assumption allows the estimation of commodity demand systems and engel curves that exclude wage rate variables in cross section household budget data with large variation in wage rates across the sample the invalidity of this assumption would involve a serious mis specification any correlation between the excluded wage variable and the included price income and demographic variables would lead to biased parameter estimates and hence biased estimated elasticities similarly this assumption allows the estimation of labour supply curves that exclude relative price variables and its invalidity could produce biased labour supply elasticities a second aspect of household decision making which we wish to highlight arises from the suspicion commonly alluded to in labour economics texts that primary male workers may not be free to choose their hours of work thus we estimate a matched pair of rationed and unrationed systems following the work of neary and roberts i 980 and deaton and muellbauer i 979 the separability restriction is not unrelated to this point since without it we will see that the rationed hours of work enter demand systems in a complex fashion in effect

semiparametric estimation and consumer demand this paper considers the implementation of semiparametric methods in the empirical analysis of consumer demand the application is to the estimation of the engel curve relationship and uses the british family expenditure survey household composition is modelled using an extended partially linear framework this is shown to provide a useful method for pooling non parametric engel curves across households of different demographic composition c 1998 john wiley sons ltd

weak separability and the estimation of elasticities in multistage demand systems the necessary conditions for multistage budgeting to be at least approximately justified are reviewed and the plausibility of these assumptions i e weak separability and low variability of price indices with utility level are discussed using no further assumptions simple relationships between expenditure and price elasticities in different budgeting levels are derived these results are applied to a three stage model for swedish food consumption and it is shown that the assumptions are not inappropriate restricting the analysis to the last stage of a multistage budgeting process is also shown to lead to considerable errors which could well have policy consequences

terrorism in a bargaining framework a lthough hostage seizures are a small percentage of terrorist incidents they represent some of the most spectacular and influential events 2 the takeover of the american embassy in tehran on november 14 1979 the seizure of eleven dpec oil ministers on december 21 1975 and the capture and killing of nine israeli athletes on september 5 1972 are incidents not easily forgotten from 1968 through 1982 of the approximately 8 000 reported terrorist events 540 7 percent were transna

tricks with hicks the easi demand system we invent implicit marshallian demands which combine desirable features of hicksian and marshallian demands we propose and estimate the exact affine stone index easi implicit marshallian demand system like the almost ideal demand aid system easi budget shares are linear in parameters given real expenditures however unlike the aid easi demands can have any rank and its engel curves can have any shape over real expenditures easi error terms equal random utility parameters to account for unobserved preference heterogeneity easi demand functions can be estimated using gmm or three stage least squares and like aid an approximate easi model can be estimated by linear regression

preference heterogeneity and the rank of demand systems this article examines the effect of preference heterogeneity on nonparametric and parametric tests of the rank of demand systems using samples of households drawn from the u k family expenditure survey we find that preference heterogeneity increases the rank of demand systems when the effects of household characteristics on demand are removed by semiparametric techniques a rank 3 demand system appears to be an adequate empirical specification for all samples

intertemporal equilibria and exhaustible resources an overlapping generations approach abstract this paper presents a general equilibrium model of an abstract intertemporal economy with overlapping generations production possibilities and capital investment under the constraint of a nonreproducible natural resource the model provides for institutionally mandated asset transfers between successive generations under the assumption that each generation has perfect foresight concerning future prices and economic conditions competitive exchange supports a multiplicity of pareto efficient equilibria that correspond to particular asset transfer regimes the achievement of a desirable distribution of welfare between present and future generations requires that the asset transfer regime be chosen according to a social welfare function or explicit distributional criterion economic efficiency per se is insufficient to ensure social optimality these results have important implications for resource planning in the real world where policy makers and the public at large are often highly concerned over the potential impacts of current resource utilization on the welfare of future generations

voracious transformation of a common natural resource into productive capital i analyze a power struggle where competing factions have private financial assets and deplete a common stock of natural resources with no private property rights i obtain a feedback nash equilibrium to the dynamic common pool problem and obtain political variants of the hotelling depletion rule and the hartwick saving rule resource prices and depletion occur too fast so substitution away from resources to capital occurs too fast and the saving rate is too high the power struggle boosts output but depresses sustainable consumption genuine saving is nevertheless zero in a fractionalized society world bank estimates may be too optimistic

the investment problem in terrorism evidence from early terrorist groups reveals a structural equivalence between extortion and terrorism this allows us to draw conclusions from the theory of extortion that can be applied to a theory of terrorism concerning the role of repeated play in the viability of extortion it also enables us to analyse the role of commitment in destroying the extortionary organization

estimating the value and distributional effects of free state schooling the effects of free of charge state education on income distribution are often studied by allocating government education outlays to households assuming that these outlays equal the benefit which households attach to state schooling this paper proposes a demand analysis approach to estimating the true value of state education as perceived by consumers and uses the results to assess the inefficiency of public provision empirical analysis based on data from cyprus suggests that state schooling costs twice the amount households are willing to pay for the implications of this finding for the equality and anti poverty effects of state education are illustrated

studying optimal paternalism illustrated by a model of sin taxes the classical economic approach to policy analysis assumes that people always respond optimally to the costs and benefits of their available choices a great deal of evidence suggests however that in some contexts people make errors that lead them not to behave in their own best interests economic policy prescriptions might change once we recognize that humans are humanly rational rather than superhumanly rational and in particular it may be fruitful for economists to study the possible advantages of paternalistic policies that help people make better choices we propose an approach for studying optimal paternalism that follows naturally from standard assumptions and methods of economic theory write down assumptions about the distribution of rational and irrational types of agents about the available policy instruments and about the government s information about agents and then investigate which policies achieve the most efficient outcomes in other words economists ought to treat the analysis of optimal paternalism as a mechanism design problem when some agents might be boundedly rational this approach has many advantages first and foremost by explicitly addressing when and how people do and don t pursue their own best interests economists will be better able to contribute to policy debates to contribute to debates over regulating private financial decisions we must study whether financial decisions are based on fallacious statistical reasoning and whether self control problems lead people to borrow too heavily to contribute to debates over teenage smoking we must study whether teenagers become smokers against their long run best interest economists will and should be ignored if we continue to insist that it is axiomatic that constantly trading stocks or accumulating consumer debt or becoming a heroin addict must be optimal for the people doing these things merely because they have chosen to do it a second advantage of our approach is that it forces us to look for the best feasible policy our

testing the infrequent purchases model using direct measurement of hidden consumption from food stocks survey reports of zero expenditure result from either genuine non consumption or purchases undertaken too infrequently to observe during a survey with hidden consumption from stocks infrequent purchase models rely on untested hypotheses to distinguish these types of zeros we test such models with data from an unusual survey where food stocks are measured at the start and end of the survey reference period parameter estimates using these direct measures of hidden consumption out of stocks are compared with estimates from infrequent purchase models that attempt to recover this hidden consumption the results suggest considerable bias when using the infrequent purchase models copyright 2012 oxford university press

carbon tax simulations using a household demand model abstract the main objective of this paper is to analyse consumer response and welfare effects due to changes in energy or environmental policy to achieve this objective we formulate and estimate an econometric model for non durable consumer demand in sweden that utilises micro and macro data in the simulations we consider two revenue neutral scenarios that both imply a doubling of the co2 tax one that returns the revenues in the form of a lower vat and one that subsidise public transport one conclusion from the simulations is that the co2 tax has regional distribution effects in the sense that household living in sparsely populated areas carry a larger share of the tax burden

the danish tax on saturated fat short run effects on consumption substitution patterns and consumer prices of fats abstract denmark introduced a tax on saturated fat in food products with effect from october 2011 the objective of this paper is to make an effect assessment of this tax for some of the product categories most significantly affected by the new tax namely fats such as butter butter blends margarine and oils this assessment is done by conducting an econometric analysis on weekly food purchase data from a large household panel dataset gfk panel services denmark spanning the period from january 2008 until july 2012 the econometric analysis suggest that the introduction of the tax on saturated fat in food products has had some effects on the market for the considered products in that the level of consumption of fats dropped by 10 15 furthermore the analysis points at shifts in demand from high price supermarkets towards low price discount stores at least for some types of oils and fats a shift that seems to have been utilised by discount chains to raise the prices of butter and margarine by more than the pure tax increase due to the relatively short data period with the tax being active interpretation of these findings from a long run perspective should be done with considerable care it is thus recommended to repeat and broaden the analysis at a later stage when data are available for a longer period after the introduction of the fat tax

immigration policy and counterterrorism abstract in a developing country terrorists recruit and allocate their capital skilled labor and unskilled labor between domestic and foreign targets domestic targets require less skilled labor than foreign targets under various strategic scenarios we show how countermeasures against the different terrorist inputs alter the amount and mix of targets as well as how skilled and unskilled immigration quotas by a targeted foreign country affect this mix of attacks we find that increases in skilled labor quotas generally reduce terrorist attacks in the foreign country especially when the terrorists reside in a skill scarce country a number of different strategic scenarios including leader follower are investigated

effects of an environmental tax on meat and dairy consumption in sweden this study evaluated the environmental impacts of introducing an environmental tax on meat and dairy consumption in sweden three meat products beef pork and chicken four dairy products milk fermented products cream and cheese and four pollutants generating environmental damage greenhouse gases ghg nitrogen ammonia and phosphorus were included in the analysis the unit tax applied corresponded to between 8 9 and 33 3 of the respective price per kg product in 2009 consumer response to the tax was calculated by econometric estimates of the almost ideal demand system aids for meat and dairy products using per capita consumption data and prices the results indicated relatively inelastic own price elasticities and high income elasticities for all meat products and slightly lower for dairy products simultaneous introduction of a tax on all seven products decreased emissions of ghg nitrogen ammonia and phosphorus from the livestock sector by up to 12

new estimates of the elasticity of marginal utility for the uk this paper provides novel empirical evidence on the value of the elasticity of marginal utility eta for the united kingdom eta is a crucial component of the social discount rate sdr which determines the inter temporal trade offs that are acceptable to society using contemporaneous and historical data new estimates are obtained using four revealed preference techniques the equal sacrifice income tax approach the euler equation approach the frisch additive preferences approach and risk aversion in insurance markets a meta analysis indicates parameter homogeneity across approaches and a central estimate of 1 5 for eta the confidence interval excludes unity the value used in official guidance by the uk government the term structure of the sdr is then estimated the result is a short run sdr of 4 5 declining to 4 2 in the very long run this is higher and flatter than the uk official guidance the difference stems from incorrect calibration of social welfare and estimation of the diffusion of growth other things equal the results suggest that current uk guidance might need to be updated

intimidation linking negotiation and conflict challenger demands a resource from defender in each period challenger chooses whether to attack if attacked defender chooses whether to concede the resource forever each player might be committed to ghting until victory before con ict begins defender can make nitely many offers con ict begins if challenger rejects all offers in equilibrium all offers except the last are unacceptable negotiation cannot eliminate con ict because a larger offer makes con ict increasingly attractive for challenger if negotiation fails prolonged con ict can happen in equilibrium even when uncertainty is vanishingly small we provide comparative statics regarding the probability and length of con ict

five a day a price to pay an evaluation of the uk program impact accounting for market forces we provide an ex post assessment of the uk 5 a day information campaign where the positive effects of information are disentangled from potentially conflicting price dynamics using 4 years of data from the expenditure and food survey between 2002 and 2006 we estimate that the 5 a day program has lifted fruit and vegetable consumption by 0 3 portions on average we also provide quantitative evidence of a differentiated impact by income group ranging from 0 2 to 0 7 portions all impacts are larger than those observed by simply comparing pre policy and post policy intakes

on the intergenerational allocation of natural resources it is known hartwick and others that under standard assumptions a society that invests in reproducible capital the competitive rents on its current extraction of exhaustible resources will enjoy a consumption stream constant in time it is shown here that this result can be interpreted as saying that an appropriately defined stock of capital including the initial endowment of resources is being maintained intact and that consumption can be interpreted as the interest on that patrimony this seems like a useful rule of thumb for policy

a life cycle consistent empirical model of family labour supply using cross section data this paper estimates a utility maximising model of the joint determination of male and female labour supplies using a sample of married couples from the u k family expenditure survey the emphasis is on the estimation of within period preferences that are consistent with intertemporal two stage budgeting under uncertainty however the approach we adopt provides an alternative method of estimating certain aspects of life cycle behaviour to the fixed effects constant approach of heckman and macurdy 1980 macurdy 1981 and browning deaton and irish 1985 moreover it relaxes some of the underlying restrictions that are implicit in these constant models under uncertainty

neoclassical natural capital theory and weak indicators for sustainability we appraise neoclassical theory of growth with natural capital for the estimation of indicators for sustainability relationships between four theoretically distinct measures are clarified hicksian change in capital stock value the hartwick net savings which excludes capital gains sustainable national income sni and environmentally adjusted net national product gnnp an overlapping generations olg general equilibrium model with depletable natural capital demonstrates the significance of model parameters determining technical feasibility and intertemporal distribution of consumption irremediable uncertainties in model specification and empirical measurement mean that the neoclassical theory is not robust for defining or estimating indicators for sustainability

best nonparametric bounds on demand responses this paper uses revealed preference inequalities to provide the tightest possible best nonparametric bounds on predicted consumer responses to price changes using consumer level data over a finite set of relative price changes these responses are allowed to vary nonparametrically across the income distribution this is achieved by combining the theory of revealed preference with the semiparametric estimation of consumer expansion paths engel curves we label these expansion path based bounds on demand responses as e bounds deviations from revealed preference restrictions are measured by preference perturbations which are shown to usefully characterize taste change and to provide a stochastic environment within which violations of revealed preference inequalities can be assessed

intertemporal equity and efficient allocation of resources abstract competitive paths which are efficient are shown to satisfy a terminal cost minimization condition thereby providing a continuous time counterpart to the discrete time result due to malinvaud using this result competitive paths which are equitable and efficient are shown to satisfy hartwick s investment rule which states that the value of net investment is zero at each date our result indicates that hartwick s rule can help to signal inefficiency of competitive equitable paths journal of economic literature classification numbers c61 d90 o41

how serious is the aggregation problem an empirical illustration heterogeneity in consumer behaviour may create problems with aggregation across consumers if so we may not be able to make correct inferences about behaviour based on aggregated data however using micro estimates to predict aggregate demand responses to policy changes may also create a bias if not aggregated properly this may sound like a catch 22 situation but it is not as it is possible to calculate both micro and aggregate demand responses based on microdata the size of the aggregation bias is an empirical question in this article we show how to calculate theoretically consistent aggregate demand responses we use both micro and macro data for norwegian household electricity consumption to illustrate the magnitude and direction of different aggregation biases we find considerable aggregation biases in particular when estimating with macro data

economic evaluation of nutrition policy abstract the good news from prevention research is that it appears possible to dramatically improve health in the us by changing identified risk factors the goal of this paper is to discuss how to evaluate the economic consequences of improvements in nutrition and exercise related health cost benefit analysis and the related tools of cost effectiveness analysis and cost utility analysis are proposed as preferred methods the decision rule is simply if the sum of the potential gains to all those affected by a policy intervention exceed the sum of costs there is a potential gain in societal welfare by this standard preventive interventions can be worthwhile even when they do not reduce lifetime medical expenditures or increase lifetime earnings that is even when the intervention is not a free lunch the distinction between the internal costs for an individual patient versus the external costs an individual s illness imposes on others is an important conceptual issue practical issues include determining whether a poor health habit causes the costs and other results being attributed to it and the completeness of the analysis in principle the analysis should examine all of the effects and resource costs of the intervention including changes in morbidity mortality the quality of life allocations of patient time and caregiving by others as well as traditional health sector costs and changes in productivity improvements in nutrition and exercise related health may also have important implications for public sector finances of programs including medicare and social security

estimating a demand system with nonnegativity constraints mexican meat demand a new information based approach for estimating systems of many equations with nonnegativity constraints is presented this approach called generalized maximum entropy gme is more practical and

the malleability of undiscounted utilitarianism as a criterion of intergenerational justice discounting future utilities is often justified by the ethically motivated objective of protecting earlier generations from the excessive saving that seems to be implied by undiscounted utilitarianism in productive economies we question this justification of discounting by showing that undiscounted utilitarianism has sufficient malleability within important classes of technologies any efficient and non decreasing allocation can be the unique optimum according to an undiscounted utilitarian criterion for some choice of utility function

price and income elasticities of residential and industrial electricity demand in the european union this study examines the short and long run price and income elasticities of residential and industrial electricity demand in the european union between 1996 and 2016 instrumental variable models using the between estimator as well as dynamic panel models are employed to present robust estimates and to assess the impact of different methodologies on the reported elasticities the long run price elasticity of residential electricity consumption is estimated between 0 53 and 0 56 these elasticities are more inelastic than that of industrial electricity use which is reported between 0 75 and 1 01 the choice of different econometric methodologies has only moderate impact on the estimates while long run residential income elasticity estimates are moderately inelastic and estimated around 0 61 industrial electricity use tends to be closely tied to income with elasticities between 0 76 and 1 08 electricity demand in all sectors is highly price and income inelastic in the short run additionally population density temperatures and policy measures also influence sectoral electricity use the above estimates can aid the design of european energy and environmental policy

the impact of tax reforms designed to encourage healthier grain consumption in this paper we simulate the effects of tax reforms aimed at encouraging healthier grain consumption we use a rich data set on household grain consumption in 2003 from the market research institute gfk sweden combined with information on the nutritional content of the consumption we estimate behavioral parameters which are used to simulate the impact on the average household of tax reforms entailing either a subsidy on commodities particularly rich in fiber or a subsidy of the fiber density in grain products our results suggest that to direct the fiber intake towards nutritional recommendations reforms with a substantial impact on consumer prices are required regardless of the type of subsidy implemented the increase in the intake of fiber is accompanied by unwanted increases in nutrients that are often overconsumed fat salt and sugar funding the subsidies by taxing these nutrients or less healthy commodities helps to counteract such developments

rawlsian intergenerational justice as a markov perfect equilibrium in a resource technology the rawlsian maximin criterion is combined with nonpaternalistic altruistic preferences in a nonrenewable resource technology the maximin programme is shown to be time inconsistent for a subset of initial conditions a solution to this intergenerational conflict is found under a given assumption as a generically unique subgame perfect equilibrium

welfare comparison under exact aggregation new econometric model of aggregate consumer behavior in the united states and to apply this model to the analysis of impacts of alternative economic policies on the welfare of individual consuming units the model incorporates time series data on quantities consumed prices the level and distribution of income and demographic characteristics of the population it also incorporates cross section data on the allocation of consumer expenditures for households with different demographic characteristics our econometric model is based on the theory of exact aggregation developed by lau 1977a c this theory makes it possible to dispense with the notion of a representative consumer in constructing models of aggregate consumer behavior one of the most remarkable implications of lau s theory of exact aggregation is that systems of demand functions for individuals with common demographic characteristics can be recovered uniquely from the system of aggregate demand functions using the individual demand functions we can analyze the impact of economic policy on consumer welfare

the contributions of angus deaton angus deaton was awarded the 2015 sveriges riksbank prize in economic sciences in memory of alfred nobel for his analysis of consumption poverty and welfare this article reviews his contributions to economics

genuine savings and sustainability genuine savings gs has emerged as the leading economic indicator of sustainable economic development at the country level it derives from the literatures on weak sustainability wealth accounting and national income accounting we discuss the theoretical underpinnings of gs focusing on the relationship between changes in a nation s extended capital stock and the future path of consumption the indicator has entered widespread use propelled by the world bank s publications despite its varying performance as a predictor for future consumption notwithstanding the extensive body of literature reviewed promising future research avenues are identified

intergenerational competitive equilibria under technological uncertainty and an exhaustible resource constraint abstract this paper presents a model of competitive intertemporal equilibrium in a finite horizon overlapping generations economy facing technological uncertainty and an exhaustible resource constraint individuals form rational expectations regarding future prices and economic conditions and income is redistributed from one generation to the next through government mandated lump sum transfers under uncertainty the relationship between resource price appreciation and the interest rate is mediated by consumers risk aversion with respect to consumption in alternative states of nature the intuitively appealing proposition that the expected resource price rises at the expected rate of interest holds only as a special case if future generations are taken to be state contingent in the sense that their composition depends on the states of nature prevailing when they are born then equilibria are generally pareto efficient but if future generations are state independent so that the set of individuals born at a given date is independent of the prevailing state of nature then equilibria may be inefficient because markets do not exist where successive generations may equilibrate their marginal rates of substitution across consumption in alternative contingent states such inefficiencies may be remedied through the implementation of appropriate intergenerational transfers an optimal intergenerational welfare distribution may be supported as a competitive equilibrium if the income transfer regime is properly selected and enforced the social optima that result for a simple version of the model under the maximin welfare criterion indicate that greater sacrifices are required on the part of the present generation when future generations are taken to be state contingent than when they are regarded as state independent this finding provides a possible explanation for the extreme risk aversion of conservationists with respect to the welfare of future generations

a strategic analysis of the war against transnational terrorism abstract we study a two stage game in which a transnational terrorist organization interacts with an arbitrary number of countries that may differ in their political or economic power their military effectiveness the benefit from cooperating against terrorism and the value they assign to damage only a subset of countries that emerges endogenously takes proactive measures to fight the terrorist while all countries incur defensive expenditures to protect their soil we characterize analytically the pure strategy subgame perfect equilibrium of the game and show how the equilibrium strategies depend on the key model parameters we provide an algorithm to find the endogenous set of cooperating countries based on their benefit from cooperation and their political economic power

static and intertemporal household decisions we discuss the most popular static and dynamic models of household behavior our main objective is to explain which aspects of household decisions different models can account for using this insight we describe testable implications identification results and estimation findings obtained in the literature particular attention is given to the ability of different models to answer various types of policy questions

sustainable development the hartwick rule and optimal growth defining sustainable development as non declining utility the consistency of this concept with the hartwick rule and optimal growth is explored when resources are exhaustible a simple proof that a generalized hartwick rule is necessary and sufficient for constant consumption is derived the existence of a maximal constant consumption path is shown to depend critically on the elasticity of substitution if this is less than 1 consumption declines if it is greater than 1 then consumption is not maximal if it is equal to 1 the cobb douglas case then existence is proved consumption can increase along an optimal path if the pure rate of time preference is 0 if it is non zero then consumption declines

simple tests of distributional effects on macroeconomic equations the presence of distributional effects in macroeconomic equations is shown to coincide with nonlinearity in micro behavioral relationships parameters estimated with aggregate data as in representative agent models contain distributional biases that are not measurable using aggregate data alone tests for distributional effects and other measures of the extent of aggregation problems are derived using distributional data observed over time significant distributional effects are noted for a model of annual aggregate u s commodity expenditure data a static model that accommodates individual heterogeneity is found to be statistically equivalent to a simply dynamic model that accommodates first order autocorrelation

how revealing is revealed preference this lecture address the following two key criticisms of the empirical application of revealed preference theory when the rp conditions do not reject they do not provide precise predictions and when they do reject they do not help characterize the nature of irrationality or the degree direction of changing tastes recent developments in the application of rp theory are shown to have rendered these criticisms unfounded a powerful test of rationality is available that also provides a natural characterization of changing tastes tight bounds on demand responses and on the welfare costs of relative price and tax changes are also available and are shown to work well in practice

towards an ecological economics of sustainability abstract persistent disagreement both as to the interpretation to be given to sustainability and as to the relation between ecological and economic sustainability has hindered the development of an ecological economics of sustainable resource use this paper identifies the main concepts of sustainability deriving from the two disciplines in order to explore the difference implied by an ecological approach to the problem it is argued that present economic and ecological approaches are largely disjoint and that they address basically different phenomena by combining the efficiency requirements of what is usually thought of as economic sustainability with the stability requirements of an ecological approach it is shown that an intertemporally efficient allocation of resources that satisfies the conditions for constant levels of consumption is not necessary to assure ecological sustainability ecological sustainability requires that the allocation of economic resources should not result in the instability of the economy environment system as a whole

optimal sin taxes abstract we investigate sin taxes on unhealthy items such as fatty foods that people may by their own reckoning consume too much of we employ a standard optimal taxation framework but replace the standard assumption that all consumers have 100 self control with an assumption that some consumers may have some degree of self control problems we show that imposing taxes on unhealthy items and returning the proceeds to consumers can generally improve total social surplus because such taxes counteract over consumption by consumers with self control problems while at the same time they naturally redistribute income to consumers with no self control problems who consume less such taxes can even create pareto improvements finally we demonstrate with some simple numerical examples that even if the population exhibits relatively few self control problems optimal taxes can still be large

terrorism key assets and critical infrastructures to protect or to rebuild that is the question both the choice between stick and carrot and the tension between control and preservation of civil liberties characterize the policy debate over counterterrorism arguing for the carrot and preservation of civil liberties viewpoint frey and rohner def peace econ 18 3 245 252 2007 propose strategic reconstruction as an alternative to protection our paper provides a comparative analysis of these two policies first we study the rationality of the public s expectations and we show that credible strategic reconstruction may deter terrorist attacks next we derive conditions under which strategic reconstruction is more efficient than protection finally we show that strategic reconstruction may reinforce the efficiency of protection

can targeted food taxes and subsidies improve the diet distributional effects among income groups this paper analyses distributional effects of revenue neutral tax reforms aimed at improving dietary quality and encouraging healthier grain consumption using data on household grain purchases we analyse both the impact on dietary quality and the tax incidence among income groups of vat reforms and excise duty reforms the vat reforms include subsidies of healthy products products labelled with the swedish national food administration s healthy symbol funded by increased vat on less healthy products the excise duty reforms contain a subsidy of fibre content funded by excise duties on either added sugar or saturated fat our results suggest that the vat reforms have a similar impact on dietary quality across all income groups with increases in fibre intake but also unwanted increases in the intake of nutrients frequently overconsumed fat salt and sugar the impact on dietary quality of the vat reforms is therefore difficult to evaluate with the exception of the lowest income group the excise duty reforms seem to have a positive health effect across all other income groups with increases in the intake of fibre and reductions in the intake of saturated fat sugar and added sugar for the lowest income group we find the highest increase in the intake of fibre but generally an increase in the intake of the other nutrients too the excise duty reforms also result in a more energy dense grain diet with increases in the intake of calories for all income groups both the vat reforms and the excise duty reforms appear to be progressive the lowest income group pays less food taxes and generally faces a lower overall post reform price level the income group that increases its tax payments most is the one with the highest income this is also the income group that faces the largest increase in the overall post reform price level

intertemporal equity and hartwick s rule in an exhaustible resource model in a standard exhaustible resource model it is known that if along a competitive path investment in the augmentable capital good equals the rents on the exhaustible resource known as hartwick s rule then the path is equitable in the sense that the consumption level is constant over time in this paper we show the converse of this result if a competitive path is equitable then it must satisfy hartwick s rule

economic assessment of nutritional recommendations abstract the effect of consumers compliance with nutritional recommendations is uncertain because of potentially complex substitutions to lift this uncertainty we adapt a model of consumer behaviour under rationing to the case of linear nutritional constraints dietary adjustments are derived from information on consumer preferences consumption levels and nutritional contents of foods a calibration exercise simulates for different income groups how the french diet would respond to various nutrition recommendations and those behavioural adjustments are translated into health outcomes through the dietron epidemiological model this allows for the ex ante comparison of the efficiency equity and health effects of ten nutritional recommendations although most recommendations impose significant taste costs on consumers they are highly cost effective with the recommendations targeting salt saturated fat and fruits and vegetables f v ranking highest in terms of efficiency most recommendations are also economically progressive with the exception of that targeting f v

terror networks and trade does the neighbor hurt abstract this paper studies how network related terrorism redistributes trade flows across countries including those countries that are not a direct source of terror we first develop a game theoretical framework with imperfect information on the spatial location of transnational terrorism to show how the resulting security measures produce a non monotonic effect on the distribution of trade across countries neighbors adjacent to terror even when they do not source it have trade reduced through enhanced security measures while countries farther away benefit from those security measures second to empirically assess the distortional effects of terrorism on trade we first estimate the structural gravity equation derived from our theory then armed with the estimates of the partial effect of neighbor terror on bilateral trade we perform a counterfactual experiment and confirm the non monotonic general equilibrium effect of neighbor terror on trade

the effects of male and female labor supply on commodity demands we examine the effects of male and female labor supply on household demands and present a simple and robust test for the separability of commodity demands from labor supply using data on individual households from six years of the uk fes we estimate a demand system for seven goods which includes hours and participation dummies as conditioning variables allowance is made for the possible endogeneity of these conditioning labor supply variables we find that separability is rejected furthermore we present evidence that ignoring the effects of labor supply leads to bias in the parameter estimates

the welfare effects of health based food tax policy this paper examines the effects of health oriented food tax reforms on the distribution of tax payments food demand and health outcomes we offer an illustration of how one can take into account the uncertainty related to both demand estimation and health estimates and to produce confidence intervals for the overall health effects instead of only point estimates taxation of sugar could lead to a statistically significant reduction in both the incidence of type 2 diabetes and coronary heart disease the health effects appear to be most pronounced for low income individuals and the reforms may therefore reduce health inequality this effect undermines the traditional regressivity argument against the heavy taxation of unhealthy food

statistical models for zero expenditures in household budgets household budget surveys are an important source of data on consumer s expenditure not just for individual consumers but also for estimating national aggregates however it is a widespread finding that for certain commodities most notably tobacco and alcohol the estimate from the household survey falls short of the known consumption total calculated with some confidence from data on production imports exports and excise duties for example in the british family expenditure survey with which we shall largely be concerned total tobacco expenditure was underestimated in 1976 by 21 percent see kemsley redpath and holmes 1980 p 51 much of this understatement together with that on alcohol is thought to occur because of the design of the survey which excludes many persons amongst whom consumption of such items is thought to be atypically high e g prisoners hoteliers and their residents merchant seamen even so the possibility remains that some of the understatement is due to various types of misreporting by households included in the survey in this paper we consider a model in which the standard tobit specification tobin 1958 is supplemented by the operation of a simple binary censor the tobit model is essentially a linear regression model in which non positive observations of the dependent variable are replaced by zero we take this specification as our starting point but add a second censoring process that randomly replaces a fraction of the observations generated by the tobit model bv zeroes the combined model can serve as a representation of several types of

flexible and semiflexible consumer demands with quadratic engel curves in this paper we introduce three flexible consumer demand systems in which expenditures on goods are quadratic functions of income we view these alternatives as to the demand systems used heretofore in the empirical modeling of rank three demands namely those in which expenditure shares are quadratic functions of the logarithm of income curvature conditions required by theory can be imposed locally during the estimation for each and a semiflexible version can be estimated for illustrative purposes we estimate various forms of two of the systems using canadian data on seven categories of goods for the period 1947 to 1995

an assessment of the potential consumption impacts of who dietary norms in oecd countries the member countries of the world health organization who have recently endorsed its global strategy on diet physical activity and health the strategy emphasises the need to limit the consumption of saturated fats and trans fatty acids salt and sugars and to increase consumption of fruits and vegetables in order to combat the growing burden of non communicable diseases this paper attempts a broad quantitative assessment of the consumption impacts of these norms in oecd countries using a mathematical programming approach we find that adherence to the who norms would involve a significant decrease in the consumption of vegetable oils 30 dairy products 28 sugar 24 animal fats 30 and meat pig meat 13 5 mutton and goat 14 5 and a significant increase in the human consumption of cereals 31 fruits 25 and vegetables 21

unjust intergenerational allocations abstract an intergenerational allocation is defined to be unjust if there is a feasible allocation with more total consumption and less relative inequality unjust allocations are characterized in technologies satisfying certain regularity conditions after ruling out unjust allocations the consequences of letting generations choose according to a standard form of altruistic preferences are explored in to particular classes of technologies a connection between excluding unjust allocations and maximizing the welfare of the worst off generation is established in these technologies

the microeconometric approach to modelling energy demand some results for uk households the paper is concerned with the empirical modeling of domestic demand for energy at the level of the individual household a model of household energy expenditures and energy using durable ownership is described estimation takes place using a pooled sample of households drawn from the repeated cross sections of the annual family expenditure survey fes price and income elasticities are found to be highly dependent on individual household characteristics type of house tenure energy using durable ownership and outside temperature finally the results are placed in a policy relevant context copyright 1991 by oxford university press

hiding in plain sight using signals to detect terrorists this paper studies the interaction between a governmental security agency as the transportation security agency or the immigration and naturalization service and a terrorist organization like al qaeda the governmental agency wants to stop the terrorists but first must infer whether a visa applicant or an airline passenger is a terrorist on the basis of some observable signal the terrorist organization s objective is to get past security to commit murder and mayhem we derive the equilibrium strategy for this signaling model and evaluate specific anti terrorist policies as the creation of the new homeland security agency and increased airport security screening

justifying social discounting the rank discounted utilitarian approach the popular discounted utilitarian criterion for infinite horizon social choice has been criticized on the ground that it treats successive generations unfairly i propose to evaluate intergenerational welfare with a rank discounted utilitarian rdu criterion instead the criterion amounts to discounted utilitarianism on non decreasing paths but it treats all generations impartially discounting becomes the mere expression of intergenerational inequality aversion i show that more inequality averse rdu societies have higher social discount rates when future generations are better off i apply the rdu approach in two benchmark economic growth models and i prove that it promotes sustainable policies maximizing discounted utility

resource depletion and sustainability in small open economies abstract exogenous price changes affect the amount that a small country exporting natural resource commodities must invest to sustain its consumption level the necessary amount is given by the difference between hotelling rent and the discounted sum of future terms of trade effects capital gains the latter term is found to be large relative to the former in the case of petroleum depletion in indonesia this suggests that resource rich countries will need to invest more than previously expected to sustain their consumption levels if natural resource prices continue their long term historical decline

conservationist government policies and intergenerational equity in an overlapping generations model with renewable resources abstract this paper shows that in overlapping generations models incorporating renewable natural resources competition may lead to perpetually declining living standards in environments in which it is technically feasible to achieve intergenerationally equitable distributions of consumption first and second best conservationist government policies are examined these include forced nationalization of the entire stock of natural capital government open market purchases and sales of natural capital taxation of industrial use of resources and subsidies to private investments in natural capital

determining the impact of food price and income changes on body weight we develop a theoretical model to identify conditions under which price and income changes are most likely to change weight although it is intuitive that raising the price of high calorie food will decrease consumption of such goods it is not clear that such an outcome will actually reduce weight our empirical analysis demonstrates a case where a tax on food away from home a food intake category blamed for much of the rise in obesity could lead to an increase in body weight a finding which emphasizes the need to employ economic modeling when developing public policy to reduce obesity

on sustainability and social welfare abstract this paper proposes to define sustainability in terms of leaving it possible for future generations to sustain certain defined targets it is shown that variants of genuine savings and the ecological footprint can then serve as indicators of sustainability the link between sustainability and intergenerational welfare is examined and it is shown how to incorporate indicators of sustainability into a social welfare measure including risk in the analysis

environmental food taxes and inequalities simulation of a meat tax in sweden abstract this paper investigates the distributional effect of an environmental tax on meat in sweden if such a tax was to be introduced welfare effects are measured as compensation variation cv for multiple price changes where hicksian cross price elasticities household expenditures and price changes are included in the calculations results show that taxes on meat are almost neutral over households when expenditures on meat are used as welfare indicators and regressive if income is used this can be explained by the households similar shares of total expenditures on meat the households with the smallest income levels need to be compensated with 904 sek per person and year equivalent to euro 86 6 per year in the year 2009 exchange rate to feel that utility is not lowered if taxes on meat are introduced and the households with the highest income levels need to be compensated with 1141 sek euro 109 3 per person and year for the year 2009 these compensations correspond to 0 74 and 0 78 of total expenditures for the low and high income group respectively when instead comparing the compensation with income levels the effects correspond to 0 99 for the households with the smallest income levels and to 0 51 for the households with the largest income

the welfare effects and the distributive impact of carbon taxation on italian households in this work the welfare effects and the distributive impact on italian households of the italian carbon tax are calculated the carbon tax has been introduced in italy at the beginning of 1999 asking for smooth increases over a number of years in the prices of most fossil fuels its welfare effects have been calculated using true cost of living index numbers and the compensating variation the parameters have been obtained through estimation of a complete almost ideal demand system using households data from 1985 to 1996 the welfare loss turns out to be quite substantial and affects italian households in a non negligible way but the distribution of welfare losses across different levels of total monthly expenditures does not allow sustaining the regressivity of carbon taxation as the effect becomes bigger as we move up the income distribution this evidence might encourage the use of carbon taxes at least in the transport sector as cost effective instruments of environmental policy especially after the ratification of the kyoto protocol on climate change

what do we learn about consumer demand patterns from micro data the aim of this paper is to assess the importance of using micro level data in the econometric analysis of consumer demand to do this we utilize a time series of repeated cross sections covering some 4 000 households in each of 15 years employing a number of different aggregation procedures we conclude that aggregate data alone are unlikely to produce reliable estimates of structural price and income coefficients however once certain aggregation factors as well as trend and seasonal components are included an aggregate model is not necessarily outperformed across all demand equations in terms of forecasting ability jel d12 c52 c31 the purpose of this paper is to develop a complete consumer demand system based on a time series of individual household data and to use it to measure the biases introduced into the study of consumer de mand behavior when aggregate data are used in place of the appropriate microeco nomic data we assess the suitability of ag gregate data through the impact on income and price elasticities and by evaluating the ability of both micro and aggregate based models to forecast aggregate consumer de mand the biases introduced by the use of aggregate data depend upon the way that household characteristics interact with in come and price effects and on departures of demand systems from linearity we explore the structure of microeconomic demand sys tems and the role of household characteris tics in the behavior of consumer demand both for the light this may shed on the pattern of future demands and for the im plications this behavior has for issues of aggregation consumer demand patterns typically found in micro data sets vary considerably across households with different household characteristics and with different levels of income we model this variability by making intercept and slope parameters in the budget share equations of our demand sys tem depend on household characteristics and by allowing for nonlinear total log expenditure terms in fact in theory consistent demand systems it is total ex penditure rather than disposable income that is allocated across goods we find that this general framework leads to a well specified data coherent demand system which is a quadratic extension of the popu lar almost ideal model of angus s deaton and john muellbauer 1980 the micro level estimates are shown to be sensitive to the treatment of endogeneity of total expen diture and to the specification of interaction terms with household characteristics in ad dition this specification is also shown to possess many attractive features for the evaluation of aggregate models

estimation of complete demand systems from household budget data the linear and quadratic expenditure systems in this paper we explore two issues in empirical demand analysis the estimation of complete systems of demand equations using household budget data section i and the incorporation of demographic characteristics into such systems section ii although there are numerous studies which use time series data to estimate complete demand systems and many which estimate engel curves from household budget data there are virtually none which combine budget data from different periods to estimate complete systems since each budget study corresponds to a single price situation one might conjecture that estimation of complete systems would not be possible unless budget studies were available from a large number of periods this is incorrect in section i we argue that interesting complete demand systems can be estimated from a small number of budget studies despite the limited price variability represented in such data to demonstrate this we use budget study data for two periods to estimate a pair of related demand systems the familiar linear expenditure system les and a quadratic expenditure system qes a generalization of les in which the demand equations are quadratic in total expenditure the inclusion of demographic variables in the analysis of household consumption patterns is desirable because there are likely to be systematic differences in the consumption behavior of households with different demographic characteristics but the effects of demographic characteristics have seldom been studied within the framework of complete demand systems in section ii we propose translating as a general method for incorporating demographic variables into complete systems of demand equations this method has not previously been discussed as a general technique for bringing demographic variables into demand systems although it has been employed in several studies to improve the estimates of the les and the qes presented in section i we reestimate these two systems using translating to incorporate family size

the hartwick rule myths and facts we shed light on the hartwick rule for capital accumulation and resource depletion by providing semantic clarifications and investigating the implications and relevance of this rule we extend earlier results by establishing that the hartwick rule does not indicate sustainability and does not require substitutability between man made and naturalcapital we use a new class of simple counterexamples i to obtain the novel finding that a negative value of net investments need not entail that utility is unsustainable and ii to point out deficiencies in the literature

quadratic engel curves and consumer demand this paper presents a model of consumer demand that is consistent with the observed expenditure patterns of individual consumers in a long time series of expenditure surveys and is also able to provide a detailed welfare analysis of shifts in relative prices a nonparametric analysis of consumer expenditure patterns suggests that engel curves require quadratic terms in the logarithm of expenditure while popular models of demand such as the translog or the almost ideal demand systems do allow flexible price responses within a theoretically coherent structure they have expenditure share engel curves that are linear in the logarithm of total expenditure we derive the complete class of integrable quadratic logarithmic expenditure share systems a specification from this class is estimated on a large pooled data set of u k households models that fail to account for engel curvature are found ro generate important distortions in the patterns of welfare losses associated with a tax increase

adjusting vat rates to promote healthier diets in norway a censored quantile regression approach the effects of health related taxes and subsidies on food and beverages have mainly been investigated using models that assume identical price responses among high and low consuming households diet related health problems are however more likely among households with high intakes of unhealthy foods or low intakes of healthy foods than in households with average intakes in this article we focus on purchases of healthy and unhealthy foods among low median and high purchasing households the effects of an increase in the norwegian value added tax vat on some unhealthy foods and a removal of the vat on some healthy foods are investigated using censored quantile regressions we reject equality of the own price elasticities for eight of nine food and beverage groups we find that a vat increase is more effective in reducing purchases of unhealthy foods among high purchasing households than a vat removal is in increasing the purchases of healthy foods among low purchasing households