learning about a new technology pineapple in ghana this paper investigates the role of social learning in the diffusion of a new agri cultural technology in ghana we use unique data on farmers communication patterns to define each individual s information neighborhood conditional on many potentially confounding variables we find evidence that farmers adjust their inputs to align with those of their information neighbors who were surpris ingly successful in previous periods the relationship of these input adjustments to experience further indicates the presence of social learning in addition applying the same method to input choices for another crop of known technol ogy correctly indicates an absence of social learning effects jel d83 013 033 q16

pharmaceutical cost sharing systems and savings for healthcare systems from parallel trade this paper studies the consequences of parallel trade in a two country model it compares a coinsurance scheme consumers pay a percentage of the drug price and an indemnity insurance scheme reimbursement is independent of the drug price with respect to changes in copayments and public health expenditure in the destination country copayments for patients decrease to a larger extent under indemnity insurance whereas reductions in public health expenditure occur only under coinsurance in the source country copayments increase less under coinsurance whereas health expenditure is reduced more under indemnity insurance in both countries total expenditure under parallel trade is lower

comparing approval procedures for new drugs we analyse how drug approval procedures influence the incentives of pharmaceutical firms to commercialise new drugs in the presence of international reference pricing since 1995 the european medicines agency ema coordinates a centralised approval procedure for specific new drugs in the eu with such a centralised procedure the ema grants simultaneous drug approvals for all eu countries alongside non centralised procedures coexist for approvals of other new drugs and approvals can be sequential we focus on the effects of the exogenous timing of drug approvals either simultaneous or sequential and we compare the effects of centralised versus non centralised procedures on the firms incentives to commercialise new drugs in different markets in a context of international reference pricing we show that a centralised procedure limits the number of countries where the firm commercialises new drugs compared to a non centralised procedure we also show in a simplified framework that countries are better off with non centralised procedures while pharmaceutical firms in theory prefer the drug to be approved everywhere as soon as possible as in an early centralised procedure this is in line with the stated objective of the ema to generate savings for the pharmaceutical firms

what is to be done for third world commodity exporters an evaluation of the stabex scheme third world economies largely dependent on commodity exports other than oil have been the principal victims of the world recession attempts at restructuring international commodities regimes through the creation of the common fund have met with little success accordingly the possibility of helping commodity exporters through the provision of compensatory finance has attracted increasing attention one possible model for a new international compensatory facility is the eec s stabex scheme established as part of the lome convention however rather than operating automatically and without interfering with market mechanisms as its proponents suggest the administration of stabex has depended on discretionary judgments on the part of the eec commission and the scheme has introduced distortions into trade between the eec and its partners in the lome convention transfers under the stabex scheme have had only a minor impact on the economies of recipient countries especially on the sectors affected by fluctuations in export earnings stabex is an unsatisfactory model for a new compensatory facility additional finance to compensate ldcs for losses in export earnings might most feasibly be made available through further liberalization of the imf s compensatory financing facility

habit formation interdependent preferences and demographic effects in the almost ideal demand system the authors model myopic habit formation interdependence of preferences among consumers and demographic effects as taste shifters in a micro consumer demand model of the almost ideal demand variety the model is estimated for dutch micro data the authors investigate the dynamic properties of the model and find that it behaves very differently from models without interdependence of preferences the implications for micro macro modeling are discussed copyright 1991 by royal economic society

modeling regional economic dynamics spatial dependence spatial heterogeneity and nonlinearities abstract spatial modeling of economic phenomena requires the adoption of complex econometric tools which allow us to deal with important methodological issues such as spatial dependence spatial unobserved heterogeneity and nonlinearities in this paper we describe some recently developed econometric approaches i e spatial autoregressive semiparametric geoadditive models which address the three issues simultaneously we also illustrate the relative performance of these methods with an application to the case of house prices in the lucas county

child labor and the labor supply of other household members evidence from 1920 america this paper analyses the effect of child labor on household labor supply using 1920 us census micro data the aim of the analysis is to understand who in the household benefits from child labor in order to identify a source of exogenous variation in child labor i use state specific child labor laws i find that a rise in the proportion of working children by household is associated with no variation in parents labor supply i also find a strong negative externality among children as the proportion of working children by household rises everything else equal the probability that each child works falls while the probability that he attends school rises this suggests that parents redistribute entirely the returns from child labor to the children in the household consistent with a model of household labor supply with fully altruistic parents

the effect of female education on fertility and infant health evidence from school entry policies using exact date of birth this paper uses age at school entry policies to identify the effect of female education on fertility and infant health we focus on sharp contrasts in schooling fertility and infant health between women born just before and after the school entry date school entry policies affect female education and the quality of a woman s mate and have generally small but possibly heterogeneous effects on fertility and infant health we argue that school entry policies manipulate primarily the education of young women at risk of dropping out of school

reevaluating the modernization hypothesis we revisit and critically reevaluate the widely accepted modernization hypothesis which claims that per capita income causes the creation and the consolidation of democracy existing studies find support for this hypothesis because they fail to control for the presence of omitted variables controlling for these factors either by including country fixed effects in a linear model or by including parameterized random effects in a nonlinear double hazard model removes the correlation between income and the likelihood of transitions to and from democratic regimes in addition the estimated fixed effects from the linear model are related to historical factors that affect both the level of income per capita and the likelihood of democracy in a country this evidence is consistent with the idea that events during critical historical junctures can lead to divergent political economic development paths some leading to prosperity and democracy others to relative poverty and non democracy

informal groups and health insurance take up evidence from a field experiment summary this paper presents the results of 20 randomized experiments aimed at understanding the low take up of in patient health insurance observed in developing countries take up does not increase when participants receive information about the product or an assistance to register or small subsidies of 2 10 or 30 take up does not increase when the same information is provided by local respected community leaders when participants are offered an in kind gift a chicken if they register when participants are offered the possibility to contribute lower and more frequent payments or the possibility to pay by cellphone a full subsidy generates a mere 45 take up with no retention after one year in contrast to these low take up rates presenting the same information without any subsidies to existing informal groups raises take up to 12 still 7 after one year as well as trust and knowledge of the product social networks play a major role in the adoption of health insurance this paper provides a cost effective way to increase take up of health insurance while subsidies are found to be largely ineffective at raising take up in the long run

peers at work we study peer effects in the workplace specifically we investigate whether how and why the productivity of a worker depends on the productivity of coworkers in the same team using high frequency data on worker productivity from a large supermarket chain we find strong evidence of positive productiv ity spillovers from the introduction of highly productive personnel into a shift worker effort is positively related to the productivity of workers who see him but not workers who do not see him additionally workers respond more to the presence of coworkers with whom they frequently interact we conclude that social pressure can partially internalize free riding externalities that are built into many workplaces jel j24 l81 m54

pharmaceutical price controls and entry strategies abstract this paper finds that the use of price controls has a statistically and quantitatively important effect on the extent and timing of the launch of new drugs firms headquartered in countries that regulate price reach fewer markets than those in countries without price controls companies avoid price controlled markets and are less likely to introduce products in additional markets after entering a price controlled country launches into low price european countries are further delayed following legalization of parallel imports the results suggest that price regulation in one country affects entry into other countries and may affect the strategies of domestic firms

price discrimination and patent policy patent and antitrust policy are often presumed to be in conflict as an important example there is ongoing controversy about whether price discrimination by a patent holder is an illegal or socially undesirable exploitation of monopoly power in this article we show that no conflict exists in many price discrimination cases even ignoring the dynamic effects on incentives for innovation third degree price discrimination by patent holders can raise static social welfare in fact pareto improvements may well occur welfare gains occur because price discrimination allows patent holders to open new markets and to achieve economies of scale or learning further even in cases where discrimination incurs static welfare losses it may be efficient relative to other mechanisms such as length of patent life for rewarding innovators with profits

prices and social behaviour evidence from adult smoking in canadian aboriginal communities this paper provides estimates of tobacco price elasticity explicitly distinguishing between two price effects the direct effect reflecting individual reaction to a price change and the indirect effect whereby price influences the individual by changing community smoking behaviour canada s aboriginal communities are small and secluded allowing for plausible identification of reference groups on a relatively large scale estimates suggest a 10 increase in price decreases daily smoking by 0 91 percentage points 2 11 occasional smoking by 1 24 percentage points 8 27 and average smoking intensity by 0 15 cigarettes per day 2 9 it is found that the indirect effect almost doubles the response to a change in tobacco prices over the direct effect alone

endogenous peer effects local aggregate or local average a b s t r a c t we develop a unified model embedding different behavioral mechanisms of social interac tions and design a statistical model selection test to differentiate between them in empirical applications this framework is applied to study peer effects in education effort in study ing and sport activities for adolescents in the united states we find that for education students tend to conform to the social norm of their friends while for sport activities both the social multiplier and the social norm effect matter

trading networks and liquidity provision abstract we study the profitability of traders in two fully electronic and highly liquid markets the dow and standard poor s 500 e mini futures markets using unique information that identify counterparties to a transaction we show and seek to explain the fact that the network pattern of trades captures the relations between behavior in the market and returns our approach includes a simple representation of how much a shock is amplified by the network and how widely it is transmitted this representation provides a possible shorthand for understanding the consequences of a fat finger trade a withdrawing of liquidity or other market shock

social ties within school classes the roles of gender ethnicity and having older siblings in this paper we identify the lines along which social ties between high school teenagers are primarily formed to this end we introduce interaction weights between pupils in the same school class that are a function of exogenous individual background characteristics such as gender ethnicity and having older siblings the resulting model with endogenous interactions and school specific fixed effects is estimated using data from the dutch national school youth survey nsys a survey in which in principle all pupils in a sampled class are interviewed by combining the 1992 1996 1999 and 2001 nsys data we are able to identify trends in social relationships of teenagers we find that the roles that gender and ethnicity play in how teenagers interact varies strongly across different types of behaviour for example going out shows strong within ethnicity interactions while expenditures on cell phones and on clothing exhibit mainly between girls interactions having older siblings has a minor effect on within school class social interactions there is weak evidence of decreased ethnic segregation within school classes during the decade considered

my end of the bargain are there cross district effects in teacher contract provisions a large literature on teacher collective bargaining describes the potential influence of the provisions in collectively bargained teacher union contracts on teachers and student achievement but li

payoff complementarities and financial fragility evidence from mutual fund outflows the paper provides empirical evidence that strategic complementarities among investors generate fragility in financial markets analyzing mutual fund data we find that consistent with a theoretical model funds with illiquid assets where complementarities are stronger exhibit stronger sensitivity of outflows to bad past performance than funds with liquid assets we also find that this pattern disappears in funds where the shareholder base is composed mostly of large investors we present further evidence that these results are not attributable to alternative explanations based on the informativeness of past performance or on clientele effects we analyze the implications for funds performance and policies

trade gaps analytical gaps regime analysis and international commodity trade regulation studies of international regimes have sought to describe international collaborative arrangements in more systematic terms than in the past and to analyze their development in terms of major schools of international relations theory this article refines the commonly used definition of regimes and elucidates the major hypotheses of one theoretical school structural realism the strength and nature of the international commodity trade regime are systematically described and their development is analyzed in terms of the major hypotheses of structural realism in large part these hypotheses are supported by the analysis of what is a relatively weak international regime

democratization and civil war this article examines the impact of civil war on democratization particularly focusing on whether civil war provides an opportunity for institutional reform we investigate the impact of war termination in general along with prolonged violence rebel victory and international intervention on democratization using an unbalanced panel data set of 96 countries covering a 34 year period our analysis suggests that civil war lowers democratization in the succeeding period our findings also suggest that united nations intervention increases democratization as do wars ending in stalemates however wars ending in rebel victories seem to reduce democratization these findings appear robust to conditioning different instrument sets modelling techniques and the measurement of democracy

latent homophily or social influence an empirical analysis of purchase within a social network consumers who are close to one another in a social network often make similar purchase decisions this similarity can result from latent homophily or social influence as well as common exogenous factors latent homophily means consumers who are connected to one another are likely to have similar characteristics and product preferences social influence refers to the ability of one consumer to directly influence another consumer s decision based upon their communication we present an empirical study of purchases of caller ring back tones using data from an asian mobile network that predicts consumers purchase timing and choice decisions we simultaneously measure latent homophily and social influence while also accounting for exogenous factors identification is achieved due to our dynamic panel data structure and the availability of detailed communication data we find strong influence effects and latent homophily effects in both the purchase timing and product choice decisions of consumers this paper was accepted by sandra slaughter information systems

school attendance and child labor a model of collective behavior this paper theoretically investigates how community approval or disap proval aects school attendance and child labor and how aggregate behavior of the community feeds back towards the formation and persistence of an anti or pro schooling norm the proposed community model continues to take aggregate and idiosyncratic poverty into account as an important driver of low school attendance and child labor but it provides also an explanation for why equally poor villages or regions can display dierent attitudes towards schooling distinguishing between three dierent modes of child time allocation school attendance work and leisure the paper shows how the time costs of schooling and child labor productivity con tribute to the existence of a locally stable anti schooling norm it proposes policies that eectively exploit the social dynamics and initiate a permanent escape from the anti schooling equilibrium an extension of the model explores how an education contingent subsidy paid to the poorest families of a community manages to initiate a bandwagon eect towards education for all the optimal mechanism design of

does income polarization affect economic growth the case of the european regions ezcurra r does income polarization affect economic growth the case of the european regions regional studies this paper examines the relationship between income polarization and economic growth in the regions of the european union over the period 1993 2003 the results indicate that the level of income polarization is negatively associated with regional growth this finding is in fact robust to various alternative specifications including a number of additional explanatory variables such as initial per capita gross domestic product industry mix human capital stock population density or market potential furthermore it should be noted that the observed negative correlation between polarization and economic performance does not depend on the number of groups used to analyse the degree of income stratification within the sample regions ezcurra r la polarisation des revenus affecte t elle la croissance economique le cas des regions europeennes regional studies cet article etudie les relations en

an empirical investigation of the determinants of democracy trade aid and the neighbor effect empirical investigation by dynamic panel data models of the determinants of democracy shows a strong positive neighbor effect foreign aid is stabilizing but not inducing democratic development while there is no significant relationship to openness to trade and income

juvenile crime and punishment evidence from japan over the last decade juvenile crime has become a serious social problem in japan the juvenile law was revised in 2001 to impose harsher punishment on juvenile offenders this revision makes it possible to impose criminal punishment on 14 and 15 year old criminal offenders while those offenders aged 16 19 have always faced criminal punishment both before and after the revision using this revision as a natural experiment this study conducts a difference in differences estimation to examine the effect of punishment on juvenile crime the analysis provides evidence that punishment can deter juvenile crime in addition this research examines the criminal behaviour of 13 year olds who face no change in punishment but who soon will in the near future the results suggest that the revision also had a negative impact on the criminal behaviour of these younger offenders

diffusion or confusion clustered shocks and the conditional diffusion of democracy scholars observing clustering in transitions to democracy argue that democratization diffuses across borders as citizens in autocracies demand the same reforms they witness in neighboring states we disagree this article demonstrates that diffusion plays only a highly conditional role in democratization we advance and test an alternative two step theory of clustered democratization 1 economic and international political shocks which are clustered spatially and temporally induce the breakdown of authoritarian regimes then 2 democratic diffusion in turn influences whether a fallen dictatorship will be replaced by a democracy or a new autocracy diffusion despite playing an important role is insufficient to explain the clustering of transitions using data on 125 autocracies from 1875 to 2004 we show that economic crises trigger authoritarian breakdowns while diffusion influences whether the new regime is democratic or authoritarian

clean evidence on peer effects we study subjects who were asked to fill letters into envelopes with a remuneration independent of output in the pair treatment two subjects worked at the same time in the same room and peer effects were possible in the single treatment subjects worked alone and peer effects were ruled out we find evidence of peer effects in the pair treatment because the standard deviations of output are smaller within pairs than between pairs moreover average output is higher in the pair treatment thus peer effects raise productivity finally low productivity workers are the most sensitive to the behavior of peers

u s state and local fiscal policy and economic activity do we know more now early reviews of the academic literature on the economic effects of state and local taxes and expenditures suggested that not enough was known upon which to base policy the reviews called for better data and improvements in empirical methodology this paper reviews studies conducted since the early literature reviews to assess our current state of knowledge the conclusion of the study is that we know more now but our knowledge is unlikely to ever be sufficient to provide universal policy guidance rather we suggest that more research is needed on specific state and local policies for specific circumstances consistent with the general principles that guide place based policy

ethnic capital and intergenerational mobility this paper analyzes the extent to which ethnic skill differentials are transmitted across generations i assume that ethnicity acts as an externality in the human capital accumulation process the skills of the next generation depend on parental inputs and on the quality of the ethnic environment in which parents make their investments or ethnic capital the empirical evidence reveals that the skills of today s generation depend not only on the skills of their parents but also on the average skills of the ethnic group in the parent s generation

the role of information and social interactions in retirement plan decisions evidence from a randomized experiment this paper analyzes a randomized experiment to shed light on the role of information and social interactions in employees decisions to enroll in a tax deferred account tda retirement plan within a large university the experiment encouraged a random sample of employees in a subset of departments to attend a benee ts information fair organized by the university by promising a monetary reward for attendance the experiment multiplied by more than e ve the attendance rate of these treated individuals relative to controls and tripled that of untreated individuals within departments where some individuals were treated tda enrollment e ve and eleven months after the fair was signie cantly higher in departments where some individuals were treated than in departments where nobody was treated however the effect on tda enrollment is almost as large for individuals in treated departments who did not receive the encouragement as for those who did we provide three interpretations differential treatment effects social network effects and motivational reward effects to account for these results

the marketization of new zealand schools assessing fiske and ladd edward fiske and helen ladd s review of market based educational reforms in new zealand are assessed in light of recent developments we agree that predicted benefits were overstated that there were both losers and winners and that educational nirvana did not result in our view however the main impact was to make schools problems more transparent creating discomforting pressures and attempts to undermine this transparency we examine responses to changes in zoning laws the effects of socioeconomic status on observed outcomes signalling and value added behavior and school accountability we find that educational reforms produce substantial short term changes largely on the demand side

something to talk about social spillovers in movie consumption we exploit the randomness of weather and the relationship between weather and moviegoing to quantify social spillovers in movie consumption instrumenting for early viewership with plausibly exogenous weather shocks captured in lasso chosen instruments we find that shocks to opening weekend viewership are doubled over the following five weekends our estimated momentum arises almost exclusively at the local level and we find no evidence that it varies with either ex post movie quality or the precision of ex ante information about movie quality suggesting that the observed momentum is driven in part by a preference for shared experience and not only by social learning

trade developments during the first lome convention abstract the lome convention signed in 1975 between the european economic community eec and 46 african caribbean and pacific acp states was hailed as a model for a new international economic order this article analyses the trade between the two groupings during the five years 1975 1979 of the first convention in the context of world trade in general there was no substantial change in trade flows contrary to acp aspirations for an improvement in their export performance with the europeans the eec share of acp exports declined despite the convention s provisions the acp even failed to maintain their shares of the eec market actually faring worse than other non oil ldcs little diversification was achieved in acp exports in contrast the eec maintained its position in acp markets

a discrete choice model with social interactions with an application to high school teen behavior we develop an empirical discrete choice interaction model with a finite number of agents we characterize its equilibrium properties in particular the correspondence between interaction strength number of agents and the set of equilibria and propose to estimate the model by means of simulation methods in an empirical application we analyze the individual behavior of high school teenagers in almost 500 school classes from 70 schools in our baseline model endogenous social interaction effects are strong for behavior closely related to school truancy somewhat weaker for behavior partly related to school smoking cell phone ownership and moped ownership and absent for behavior far away from school asking parents permission for purchases intra gender interactions are generally much stronger than cross gender interactions in a model with school specific fixed effects social interaction effects are insignificant with the exception of intra gender interactions for truancy copyright c 2007 john wiley sons ltd

estimating housing demand with an application to explaining racial segregation in cities we present a three stage nonparametric estimation procedure to recover willingness to pay for housing attributes in the first stage we estimate a nonparametric hedonic home price function in the second stage we recover each consumer s taste parameters for product characteristics using first order conditions for utility maximization finally in the third stage we estimate the distribution of household tastes as a function of household demographics as an application of our methods we compare alternative explanations for why blacks choose to live in center cities while whites suburbanize

random interactions in the chamber legislators behavior and political distance abstract i investigate the role of social interaction among members of parliament mps and the impact of such interaction on the political distance between parties using the random allocation of seats in the icelandic parliament i find that mp s voting and speech behaviors are affected by the behavior of legislators seated nearby i also show that greater random exposure to mps from different parties ultimately reduces the political distance between parties similar evidence is found using historical data for the u s house of representatives by exploiting the introduction of a lottery mechanism to determine desk assignments in 1845 i argue that random seating arrangements could constitute a low cost way of reducing differences within the political arena

the social multiplier aggregate data is often used to make inferences about individual level behavior if there are social interactions in which one person s actions influence his neighbor s incentives or information then these inferences are inappropriate the presence of positive social interactions or strategic complementarities implies the existence of a social multiplier where aggregate relationships will overstate individual elasticities we present a brief model and then estimate the size of the social multiplier in three areas the impact of education on wages the impact of demographics on crime and group membership among dartmouth roommates in these contexts there is a significant social multiplier jel ho jo co

identification of endogenous social effects the reflection problem this paper examines the reflection problem that arises when a researcher observing the distribution of behaviour in a population tries to infer whether the average behaviour in some group influences the behaviour of the individuals that comprise the group it is found that inference is not possible unless the researcher has prior information specifying the compisition of reference groups if this information is available the prospects for inference depend critically on the population relationship between the variables defining reference groups and those directly affecting outcomes inference is difficult to implossible if these variables are functionally dependent or are statistically independent the prospects are better if the variables defining reference groups and those directly affecting outcomes are moderately related in the population

an epidemic model of investor behavior i test whether social influence affects individual investors trading and stock returns in each of the 20 most active stocks in finland over 9 years the number of owners in a municipality multiplied by the number of investors who do not own a stock a measure of the rate of transmission of diseases and rumors through social contact predicts individual investor trading i control for known determinants of trade including daily news and show that competing explanations for the relation are unlikely socially motivated trades predict stock returns and the effects are not reversed suggesting that individuals share useful information individuals susceptibility to social influence has declined during the period but the opportunities for social influence have increased

the most favored nation pricing policy and negotiated prices previous work has viewed the most favored nation mfn contract as a practice capable of facilitating collusion among sellers but this paper shows that even a monopoly seller may gain by including the mfn provision in sales contracts we consider a case in which the seller negotiates price separately with each of two buyers by including a mfn clause in her contract with the first buyer the seller raises her cost of granting price concessions to the second buyer this increases the seller s bargaining strength with respect to the second buyer thereby helping her negotiate a higher price

durable goods monopoly with discrete demand we analyze a dynamic game between consumers and the sole seller of a durable good unlike previous analyses we assume that there exists a finite collection of buyers rather than a continuum none of the main conclusions of the literature on durable goods monopoly survives this change in assumption coase s conjecture that a durable goods monopolist cannot earn supracompetitive profits in the continuous time limit bulow s proposition that renting a durable is always more profitable than selling it and stokey s proposition that precommitting to a time path of prices is always optimal are all false when the set of buyers is finite thus the assumption of a continuum of consumers so innocuous and useful a simplification in other contexts has proved misleading in the context of durable goods monopoly

modeling choice interdependence in a social network this paper investigates how individuals product choices are influenced by the product choices of their connected others and how the influence mechanism may differ for fashion versus technology related products we conduct a novel field experiment to induce and observe choice interdependence in a closed social network in our experiment we conceptualize individuals choices to be driven by multiattribute utilities and we measure their initial attribute preferences prior to observing their choice interdependence and collecting network information these design elements help alleviate concerns in identifying social interaction effects from other confounds given that we have complete information on choices and their sequence we use a discrete time markov chain model nonetheless we also use a markov random field mrf model as an alternative when the information on choice sequence is missing we find significant social interaction effects our findings show that whereas experts exert asymmetrically gre

quantifying equilibrium network externalities in the ach banking industry we seek to estimate the causes and magnitudes of network externalities for the automated clearinghouse ach electronic payments system using a panel data set on individual bank usage of ach we construct an equilibrium model of consumer and bank adoption of ach in the presence of a network the model identifies network externalities from correlations of changes in usage levels for banks within a network from changes in usage following changes in market concentration or sizes of competitors and from adoption decisions of banks outside the network with small branches in the network and can separately identify consumer and bank network effects we structurally estimate the parameters of the model by matching equilibrium behavior to the data using simulated maximum likelihood and a data set of localized networks and use a bootstrap to recover confidence intervals the parameters are estimated with high precision and fit various moments of the data reasonably well we find that most of the impediment to ach adoption is due to large consumer fixed costs of adoption the deadweight loss from the network externality is moderate the optimal number of ach transactions is about 16 higher than the equilibrium level

income and democracy existing studies establish a strong cross country correlation between income and democracy but do not control for factors that simultaneously affect both variables we show that controlling for such factors by including country fixed effects removes the statistical association between income per capita and vari ous measures of democracy we present instrumental variables estimates that also show no causal effect of income on democracy the cross country corre lation between income and democracy reflects a positive correlation between changes in income and democracy over the past 500 years this pattern is con sistent with the idea that societies embarked on divergent political economic development paths at certain critical junctures jel d7 e 1

financial literacy externalities this paper uses unique administrative data and a quasi field experiment of exogenous allocation to apartments in sweden to estimate medium and longer run effects on financial behavior from exposure to financially literate neighbors it contributes evidence of causal impact of financial literacy and points to a social multiplier of effective programs to enhance it exposure promotes saving in private retirement accounts and stockholding especially when neighbors have economics or business education but only for educated or male headed households findings point to relevant knowledge transfer through social interactions rather than to labor market or other channels linked to local economic conditions

identification of spatial durbin panel models identi cation of a spatial durbin model is a concern in the spatial econometrics literature the concern is similar to the identi cation of the endogenous eect the contextual eect and correlation eect in social interactions and networks this paper considers identi cation of spatial durbin dynamic panel models under 2sls and ml estimations we show that the parameters are generally identi ed via 2sls moment relations or expected log likelihood or quasi likelihood functions although identi cation might fail under some particular situations with the 2sls moments parameters can be generally identi ed via the quasi likelihood function of a model with intuitively appealing identi cation conditions monte carlo experiments suggest that omitting relevant durbin terms can result in signi cant biases in regression estimates while including an irrelevant durbin term causes no obvious loss of e ciency empirical illustration of the international spillover of economic growth through bilateral trade shows that inclusion of durbin terms can be important

mental health expenditure in england a spatial panel approach we empirically investigate the determinants of local authority mental health expenditure in england we adopt a reduced form demand and supply model extended to incorporate possible interaction among authorities as well as unobserved heterogeneity the model is estimated using an annual panel dataset that allows us to explore both time series and cross municipality variation in mental health expenditure results are consistent with some degree of interdependence between neighbouring municipalities in spending decisions this first attempt to apply spatial panels in investigating health expenditure offers insights and raises new questions