the infant export industry argument when actual consumption experiences are required to learn about a commodity s qualities subsidization of infant exporters can be justified as a first best policy measure this paper develops a dynamic model of optimal foreign market cultivation and examines the type and magnitude of trade intervention that is warranted and how this intervention adjusts over time it also focuses on changing production consumption and trade patterns as well as on welfare implications for individuals and society as the subsidization process unfolds international borrowing is allowed and is shown to cushion against severe welfare losses in the early phases of export subsidization l argument en faveur de la protection d une industrie d exportation dans la phase initiale de son developpement quand on ne peut apprecier les qualites d un bien qu en le consommant effectivement on peut defendre comme politique optimale les subventions aux exportateurs dans la phase initiale de production de leur bien ce memoire developpe un modele dynamique de mise en valeur optimale des marches etrangers et examine quel type d intervention est justifiee quelle intensite de support est necessaire et a quel moment cette aide doit etre modifiee a mesure que le temps passe l auteur examine aussi les implications pour la structure de la production de la consommation et du commerce de ce type d intervention ainsi que ses effets sur le niveau de bien etre des individus et de la collectivite l emprunt international permet d amortir le choc de pertes de bien etre importantes dans les phases initiales de la subvention des exportations

rational heuristics expectations and behaviors in evolving economies with heterogeneous interacting agents we analyze the individual and macroeconomic impacts of heterogeneous expectations and action rules within an agent based model populated by heterogeneous interacting firms agents have to cope with a complex evolving economy characterized by deep uncertainty resulting from technical change imperfect information coordination hurdles and structural breaks in these circumstances we find that neither individual nor macroeconomic dynamics improve when agents replace myopic expectations with less naive learning rules our results suggest that fast and frugal robust heuristics may not be a second best option but rather rational responses in complex and changing macroeconomic environments jel c63 d8 e32 e6 o4

the impact of body weight on occupational mobility and career development this paper examines the relationship between individuals weight and their employment decisions over the life cycle i estimate a dynamic stochastic model of individuals annual joint decisions of occupation hours worked and schooling the model allows body weight to affect non monetary costs switching costs and distribution of wages for each occupation and also allows individuals employment decisions to affect body weight i use conditional density estimation to formulate the distributions of wages and body weight evolution i find that heavier individuals face higher switching costs when transitioning into white collar occupations earn lower returns to experience in white collar occupations and earn lower wages in socially intensive jobs simulating the model with estimated parameters decreased occupational mobility accounts for 10 percent of the obesity wage gap while contemporaneous wage penalties for body weight are small the cost over the life cycle is substantial an exogenous increase in initial body mass by 20 percent leads to a 10 percent decrease in wages over the life course

estimating the economic impact of political party competition in the 1992 british election quences of government partisanship major problem facing researchers who study the consequences of government partisanship is that it is difficult to ascertain the potential economic impact of governments which because of election defeats never existed consider for instance a labour government in britain in 1992 a conservative government in 1997 or a dole administration in the united states none of these governments actually took office and for obvious reasons this impedes analysis of what effects they would have had on their respective national economies here i present a methodology designed to estimate the economic impact that an election losing party would have caused had it achieved office i focus in particular on the 1992 british polity and demonstrate that campaign period prices of london based publicly traded securities can be used to estimate what was expected to have happened in the british economy conditional on a 1992 labour victory the estimates show that a labour government in 1992 was expected by british investors to have ushered in significantly higher interest rates and depressed stock markets compared to those witnessed under the victorious conservative party these results imply that the labour conservative disparity in 1992 was substantial and that relative to the conservative party labour was truly left wing prices of market traded securities ostensibly nonpolitical variables can convey a great deal about political parties electoral competition and the consequences of government partisanship suppose for example that prices in london stock markets were unusually volatile during the 1992 british election campaign and that they jumped dramatically following polling day and the conservative victory according to the analytical ap

export industry policy and reputational comparative advantage abstract country of origin reputations are endogenized in this paper and it is shown that otherwise identical countries can be correctly perceived as differing in their percentage of high quality producers these self fulfilling reputations determine not only the average quality of a country s exports but also the type of products in which a country specializes hence the pattern of international trade can be determined by this reputational comparative advantage an inferior country of origin reputation leads to lower national welfare therefore several trade and industrial policies that can improve country of origin reputation are examined

the ramsey problem for congestible facilities abstract in recent years a new set of models drawing on vickrey 1969 has been developed to analyze the economics of congestible facilities these models are structural in that they derive the cost function from consumers time of use decisions and the congestion technology standard models in contrast simply assume the general form of the cost function we apply the new approach to analyze the ramsey problem for a congestible facility and show that the solution generally entails cost inefficiency standard models have failed to reveal this result because they treat the cost function as completely determined by technology

federal lending and the market for credit abstract federal lending is an important but unrecognized feature of modern credit markets this paper analyzes the effects of credit interventions on credit allocation and economic efficiency the underlying model posits asymmetric information between borrowers and lenders and allows for market clearing rationed or redlined equilibria principal results include unsubsidized credit interventions are neutral the relative effectiveness of alternative lending instruments depends on whether rationing occurs interactions among programs can have perverse effects and even without an informational advantage the government may enact welfare improving credit policies under certain conditions

special and differential treatment of developing countries and export promotion policies under the wto this paper explains the export promotion measures that can be utilized by developing countries under the current world trade organization wto system and compares the wto members proposals on modification of export promotion provisions in the doha development agenda dda negotiations non reciprocity between developed countries and developing countries in favour of the latter needs to be strengthened in modifying the current wto regulations concerning export promotion due to the extremely different levels of economic development between those two groups of countries therefore from the viewpoint of distributional fairness it suggests ways of modifying the special and differential treatment sdt provisions applied to export promotion policies of developing economies in the agreement on subsidies and countervailing measures of the wto

the role of export subsisies when product quality is unknown abstract we explore the role of export subsidies when foreign goods are initially of unknown quality to domestic consumers absent export subsidies entry of high quality firms may be blocked by their inability to sell at prices reflecting their true quality export subsidies can break this entry barrier and increase welfare moreover even when high quality firms find it possible to signal their quality to consumers through an introductory pricing strategy a rolefor government policy can arise the signal low introductory price transfers surplus from foreign producers to domestic consumers and can be avoided with an appropriate export tax subsidy policy

information constrained optima with retrading an externality and its market based solution this paper studies the efficiency of competitive equilibria in environments with a moral hazard problem and unobserved states both with retrading in ex post spot markets the interaction between private information problems and the possibility of retrade creates an externality unless preferences have special restrictive properties the externality is internalized by allowing agents to contract ex ante on market fundamentals determining the spot price or interest rate over and above contracting on actions and outputs then competitive equilibria are equivalent with the appropriate notion of constrained pareto optimality examples show that it is possible to have multiple market fundamentals or price islands created endogenously in equilibrium

estimating the effect of income on health and mortality using lottery prizes as an exogenous source of variation in income a vast literature has established a strong positive relation between income and health status and a negative relation with mortality this paper studies the effects of income on health and mortality using only the part of income variation due to a truly exogenous factor monetary lottery prizes of individuals the findings are that higher income causally generates good health and that this effect is of a similar magnitude as when traditional estimation techniques are used a 10 percent income increase improves health by about 4 5 percent of a standard deviation

deposit insurance reform what are the issues and what needs to be fixed abstract the current problems in the commercial banking industry have led to widespread calls for reform of the deposit insurance contract on the grounds that it promotes moral hazard we review the empirical evidence for the significance of moral hazard as an important cause of the present crisis we then evaluate various reform proposals grouped into two broad classes proposals that seek to impose greater discipline on bank stockholders and proposals to increase the disciplinary role of bank debtholders finally we identify some issues that have received inadequate attention in the literature on bank regulation

purchasing health care services from providers with unknown altruism cost sharing rules for paying physicians have been advanced as a way of generating incentives for the provision of quality care while recognizing their potential negative effects on production efficiency however the optimal sharing rate typically depends on the degree to which the physician acts in the interest of the patient what we identify as the physician s altruism since the degree of altruism is likely to vary across physicians and to be private information the standard rules for setting the cost sharing rate are unlikely to be optimal this paper derives conditions for the optimal non linear cost sharing mechanism in the presence of asymmetric information about altruism and shows how it can sometimes be implemented through a menu of linear cost sharing schemes the model can be used to rationalize the design of the fund holder system for general practictioners that operated in the 1990s in the united kingdom

infant industry protection reconsidered the case of informational barriers to entry in industries with imperfect consumer information the lack of a reputation puts latecomers at a competitive disadvantage vis a vis established firms we consider whether the existence of such informational barriers to entry provides a valid reason for temporarily protecting infant producers of experience goods and services our model incorporates both moral hazard in an individual firm s choice of quality and adverse selection among potential entrants into the industry we find that infant industry protection often exacerbates the welfare loss associated with these market imperfections

location costs product quality and implicit franchise contracts abstract in the literature on international trade only little attention has been given to informational asymmetries between firms and consumers with respect to product quality the few economic models that analyze the question of how asymmetric information about product quality might affect trade flows treat product quality as exogeneous in contrast our model takes product quality as an endogeneous variable i e firms can choose the quality they wish to produce in this case location costs can signal product quality under certain conditions and thereby affect international trade flows more specifically intra industry trade in vertically differentiated experience goods can be determined by information asymmetries about product quality

impatience incentives and obesity this paper explores the relationship between time preferences economic incentives and body mass index bmi using data from the 2006 national longitudinal survey of youth we rst show that greater impatience increases bmi and the likelihood of obesity even after controlling for demographic human capital occupational and nancial characteristics as well as risk preference next we provide evidence of an interaction

political risk and market efficiency tests based in british stock and options markets in the 1987 election abstract this paper examines the behaviour of the stock and options markets in london during the 1987 election we find an extremely close relationship between opinion polls and the ftse 100 index of share prices however in the last week of the election the options prices showed evidence of gross inefficiency they implied a decreasing probability of a conservative win while the polls indicated the opposite the inefficiency was sufficiently large for a volatility arbitrage to be feasible net of transactions costs these two tests appear to indicate that a speculative bubble was present in the options

food deserts and the causes of nutritional inequality we study the causes of nutritional inequality why the wealthy eat more healthfully than the poor in the united states exploiting supermarket entry and household moves to healthier neighborhoods we reject that neighborhood environments contribute meaningfully to nutritional inequality we then estimate a structural model of grocery demand using a new instrument exploiting the combination of grocery retail chains differing presence across geographic markets with their differing comparative advantages across product groups counterfactual simulations show that exposing low income households to the same products and prices available to high income households reduces nutritional inequality by only about 10 while the remaining 90 is driven by differences in demand these findings counter the argument that policies to increase the supply of healthy groceries could play an important role in reducing nutritional inequality

does economic diplomacy work a meta analysis of its impact on trade and investment we review the literature on economic diplomacy and provide a meta analysis of 32 empirical studies published in 1986 2011 that deal with the trade and investment impact of economic diplomacy embassies consulates other diplomatic facilities investment and export promotion offices trade and state visits controlling for differences in research design methodology time frame and manner of data we find a positive and significant effect of economic diplomacy on international economic flows with the exception of state visits and that this is true in a sample of 627 t statistics analysed with ols and for a larger sample of 963 reported significance levels analysed with logit thus illustrating robustness with respect to sample and estimation technique our analyses show that reported effects of economic diplomacy on trade and investment in individual studies are sensitive to model specification the primary studies that investigate only one source country are less likely to report significant positive effects compared to other sciences economic studies are less likely to report significantly positive effects of economic diplomacy primary studies lump embassies and consulates general into one indicator miss that these instruments differ significantly embassies consulates and agencies should thus be included as separate instruments in future research

asymptotic efficiency in large exchange economies with asymmetric information the authors provide conditions on an exchange economy with asymmetric information that guarantee that when the economy is replicated sufficiently often there will be an allocation that is incentive compatible individually rational and nearly efficient the main theorem covers both the case in which aggregate uncertainty remains when the economy is replicated and the case in which replication eliminates aggregate uncertainty in addition the authors demonstrate how their theorem does or does not apply to standard asymmetric information problems such as the buyer s bid double auction problem akerlof s lemons problem and insurance with asymmetric information copyright 1992 by the econometric society

where modern macroeconomics went wrong this paper provides a critique of the dsge models that have come to dominate macroeconomics during the past quarter century it argues that at the heart of the failure were the wrong microfoundations which failed to incorporate key aspects of economic behaviour e g incorporating insights from information economics and behavioural economics inadequate modelling of the financial sector meant they were ill suited for predicting or responding to a financial crisis and a reliance on representative agent models meant they were ill suited for analysing either the role of distribution in fluctuations and crises or the consequences of fluctuations on inequality the paper proposes alternative benchmark models that may be more useful both in understanding deep downturns and responding to them

quality choice trade policy and firm incentives quality choice is examined in a duopoly with one foreign and one domestic firm where consumers have similar preferences for quality but different preferences for brands firms make quality commitments prior to choosing price and policy intervention assumes several forms the policy conclusions depend on whether firms face set up costs in raising product quality in the absence of set up costs both domestic and foreign firms make socially optimal quality choices in the presence of set up costs the foreign firm and often the domestic firm sets quality below the socially optimal level incomplete information alters these conclusions however copyright 1992 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

rising cigarette prices and rising obesity coincidence or unintended consequence economists have begun to debate if the rise in cigarette prices in the u s in recent decades has contributed to the nation s rise in obesity reaching conclusions that are surprisingly sensitive to specification i show that allowing for the effect to occur gradually over several years leads to the conclusion that a rise in cigarette prices is actually associated with a long run reduction in body mass index and obesity this result is robust to the different methodologies used in the literature i also provide evidence that indirect effects on exercise and food consumption may explain the counterintuitive result

a near rational model of the business cycle with wage and price inertia this paper presents a model in which insignificantly suboptimal behavior causes aggregate demand shocks to have significant real effects the individual loss to agents with inertial price wage behavior is second order in terms of the parameter describing the shock while the effect on real economic variables is first order thus significant changes in business activity can be generated by anticipated money supply changes provided that some agents are willing to engage in nonmaximizing behavior which results in small losses

optimal export policy in the presence of informational barriers to entry and imperfect competition abstract this paper examines government intervention to help exporters overcome informational barriers to entry into foreign markets foreign consumers know the quality of a local good but not that of the imported substitute an exporter who chooses high quality needs to signal this choice to foreign consumers via a high introductory price export policy affects both the signaling distortion and competition between exporter and incumbent the signaling distortion may call for an export subsidy competition for an export tax which policy is adopted in equilibrium depends on industry characteristics over time the export tax tends to rise as the signaling distortion disappears

employment with asymmetric information in an economy without informational and other distortions entrepreneurs and workers can write labor contracts that support a pareto optimal allocation of resources this paper is an attempt to characterize contracts when enterpreneurs are better informed about the state of nature than are their workers asymmetric information generally results in a suboptimal allocation of both risk and worker effort in particular if consumption and leisure are perfect substitutes employment will be less than fully pareto optimal in all but the most favorable states of nature

jointly optimal regulation of bank capital and liquidity in an economy with financial frictions banks endogenously choose excessive leverage and maturity mismatch in equilibrium as they fail to internalize the risk of socially wasteful fire sales macroprudential regulators can achieve efficiency with simple linear constraints which require less information than pigouvian taxes the liquidity coverage and net stable funding ratios of basel iii can implement efficiency additional microprudential regulation of leverage is required when bank failures are socially costly micro and macroprudential rules are imperfect substitutes optimally macroprudential policy reacts to systematic risk and credit conditions over the cycle while microprudential policy reacts to systematic and idiosyncratic risk

integration of unemployment insurance with retirement insurance abstract this paper analyzes a social insurance system that integrates unemployment insurance with a pension program allowing workers to borrow against their future wage income to finance consumption during an unemployment episode and thus improving search incentives while reducing the risks arising from unemployment this paper identifies the conditions under which integration improves welfare and the factors which determine the optimal degree of integration we show that when the duration of unemployment is very short compared to the period of employment or retirement the optimal system involves exclusive reliance on pension funded self insurance this system imposes a negligible risk burden for workers while avoiding attenuating search incentives we also argue that joint integration of several social insurance programs with a pension program through an individual account is desirable unless the risks are perfectly correlated with each other

can changing economic factors explain the rise in obesity a growing literature examines the effects of economic variables on obesity typically focusing on only one or a few factors at a time we build a more comprehensive economic model of body weight combining the 1990 2010 behavioral risk factor surveillance system with 27 state level variables related to general economic conditions labor supply and the monetary or time costs of calorie intake physical activity and cigarette smoking controlling for demographic characteristics and state and year fixed effects changes in these economic variables collectively explain 37 of the rise in body mass index bmi 43 of the rise in obesity and 59 of the rise in class ii iii obesity quantile regressions also point to large effects among the heaviest individuals with half the rise in the 90th percentile of bmi explained by economic factors variables related to calorie intake particularly restaurant and supercenter warehouse club densities are the primary drivers of the results

externalities in economies with imperfect information and incomplete markets this paper presents a simple general framework for analyzing externalities in economies with incomplete markets and imperfect infonnation by identifying the pecuniary effects of these externalities that net out the paper simplifies the problem of determining when tax interventions are pareto improving the approach indicates that such tax interventions almost always exist and that equilibria in situations of imperfect information are rarely constrained pareto optima it can also lead to simple tests based on readily observable indicators of the efficacy of particular tax policies in situations involving adverse selection signaling moral hazard incomplete contingent claims markets and queue rationing equilibria traditional discussions of externalities have emphasized the distinction between technological externalities in which the action of one individual or firm directly affects the utility or profit ofanother and pecuniary externalities in which one individual s or firm s actions affect another only through effects on prices while the presence of technological externalities imply in general that a competitive equilibrium may not be pareto efficient pecuniary externalities hy themselves are not a source of inefficiency the fact that prices change has of course important consequences there are both distributional and allocational effects but the distribution effects net out gains for example hy firms whose prices increase are precisely offset by losses e g to individuals who must pay higher prices and there are no welfare losses from the allocation effects as long as the price changes involved are small if firms are maximizing profits and individuals are maximizing utility both facing prices that correctly refiect opportunity costs then standard envelope theorem arguments imply that changes in profits or utility induced by changes in allocations resulting from any small change in prices are negligible

estimating welfare in insurance markets using variation in prices we provide a graphical illustration of how standard consumer and producer theory can be used to quantify the welfare loss associated with inefficient pricing in insurance markets with selection we then show how this welfare loss can be estimated empirically using identifying variation in the price of insurance such variation together with quantity data allows us to estimate the demand for insurance the same variation together with cost data allows us to estimate how insurers costs vary as market participants endogenously respond to price the slope of this estimated cost curve provides a direct test for both the existence and the nature of selection and the combination of demand and cost curves can be used to estimate welfare we illustrate our approach by applying it to data on employerprovided health insurance from one specific company we detect adverse selection but estimate that the quantitative welfare implications associated with inefficient pricing in our particular application are small in both absolute and relative terms

information in stock prices the case of the 2016 u s presidential election on the day before the 2016 u s presidential election the odds of hillary clinton winning the presidency according to political prediction markets were above 90 surprisingly donald trump won

bayesian learning in an infant industry model abstract most analyses of the infant industry argument assume that production early on benefits subsequent production in deterministic fashion this paper presents an alternative framework for evaluating the infant industry argument that focuses on imperfect information as a barrier to entry initial entrants provide information of social value by reducing uncertainty for potential followers about the suitability of local conditions in contrast to earlier work i show that factors that increase the informational barrier to entry may lower the optimal subsidy to the infant industry and that the standard test of the success of infant industry policy is not always valid 1997 elsevier science b v

capital market liberalization economic growth and instability summary this paper reviews briefly the arguments for capital market liberalization and identifies their theoretical and empirical weaknesses this provides the foundations for the argument for intervention in short term capital flows the paper concludes with a brief discussion of the various ways in which such interventions may be implemented 2000 elsevier science ltd all rights reserved

have efforts to reduce smoking really contributed to the obesity epidemic i introduction two of the most notable trends in public health over the past 30 yr are the reductions in smoking rates and the rapid increase in obesity rates based on data from the national health interview survey the smoking rate among adult americans was roughly 37 in the early 1970s and is 21 today a reduction of more than 40 in contrast the adult obesity rate increased 135 from 14 in the early 1970s to 32 2 in 2004 national health and nutrition examination survey nhanes 71 04 figure 1 because the medical literature has shown that smoking cessation is associated with weight gain these trends have given rise to a puzzling question have efforts to reduce smoking rates in the united states inadvertently caused increases in rates of obesity there is substantial evidence that at least in the short term smoking and obesity are not independent klesges and shumaker 1992 found that reductions in smoking and or quitting altogether is associated with increases in dietary intake as well as metabolic changes that promote weight gain as a result weight gain is often an unwanted side effect of quitting smoking the 1990 surgeon general s report the health benefits of smoking cessation concluded that the average weight gain after smoking cessation was about 5 pounds or 2 3 kg u s department of health and human services 1990 however there is additional evidence that this increase may be short lived mizoue et al 1998 found that given enough time the weight of former smokers inevitably returns to that of never smokers as a result the long term impact on weight of efforts to reduce smoking rates may be negligible figure 1 omitted to date three articles have attempted to quantify what proportion of the increase in obesity rates over the past several decades is caused by efforts to reduce smoking chou grossman and saffer 2004 used repeated cross sections from 1984 to 1999 behavioral risk factor surveillance system brfss data to estimate the impact of several state level measures on body mass index bmi and on the probability of being obese including increases in state level cigarette prices figure 1 the results of this study suggest that increases in cigarette prices may be responsible for as much as 20 of the increase in bmi and trends in obesity rates over this period this finding is used to argue that rising obesity rates are an unintended consequence of the success of the antismoking movement gruber and frakes 2006 extended the models presented in chou grossman and saffer 2004 using the same data set they examined the relationship between cigarette taxes and body weight and argue that cigarette taxes are a more appropriate measure than prices because price changes may be driven by market factors that affect the rates of smoking and eating their specification also includes several other differences including controls for state and year effects gruber and frakes found that cigarette taxes are negatively associated with body weight suggesting that increases in cigarette taxes result in reductions in bmi this result is in direct contrast with the findings of chou grossman and saffer however not even the authors find their result plausible p 196 flegal 2007 presents yet another analysis of the link between smoking and obesity using nhanes data the author models the contemporaneous relationship between smoking and weight and then reestimates the current prevalence of obesity under the assumption that past smoking levels had remained unchanged using this approach she concludes that decreases in the prevalence of cigarette smoking had only a small effect less than 1 percentage point on the overall prevalence of obesity in this article we revisit the analyses presented by chou grossman and saffer and gruber and frakes to explain the dichotomy of results and provide further evidence of the relationship between antismoking efforts and increases in bmi

reputational comparative advantage and multinational enterprise 1 introduction when cultivating a new export market or attempting to expand its share of an existing market an exporter is likely to find that it has been preceded by its reputation minus a readily identifiable brand name quality reputation may solely reflect the country of origin for example when consumers are presented with a large amount of complex product information they may use the country of origin as a heuristic in forming product impressions without considering other product attributes 1 in this article i show that this heuristic decision making process can affect a firm s quality decision and can therefore become self fulfilling hence any bias that consumers have may be well founded however it is only correct because firms respond rationally to it colombia s garment industry provides an interesting example of a self fulfilling unfavorable quality reputation in international trade as described by morawetz 1981 a single colombian garment firm took a contract for 50 000 men s suits that was beyond its capability the poor quality result so tarnished the american importer s name that other high quality importers become wary of colombian sewn garments with the payoff to high quality production reduced colombian garment firms then concentrated on low quality markets and the newly found unfavorable reputation was justified in the model constructed here consumers see only a noisy signal of the product s quality at the time of purchase therefore their posterior beliefs are based on this noisy signal and the country of origin reputations as will be made clear higher quality firms benefit more from an increase in their country s reputation so that a better reputation generates an increase in the percentage of high quality firms in this way the reputation becomes self fulfilling and ex ante identical countries can be correctly perceived as differing in their percentage of high quality producers i next introduce an economy with two sectors one sector produces more complex goods where high quality is not easily verified and is more essential to the product s performance these may be technology intensive products or they may consist of the design and marketing of the goods produced in the other sector in particular high quality production costs and the consumer s value for high quality goods is greater in this sector i show that this sector becomes more profitable as the country of origin reputation increases hence if one country s equilibrium reputation is low and the other country s equilibrium reputation is high then the pattern of specialization and international trade can be determined solely by reputational comparative advantage 2 finally i show that reputational comparative advantage can overshadow a small technological comparative disadvantage in determining the pattern of international trade given this pattern of trade and specialization based on reputational comparative advantage a high reputation firm may expend resources to establish a multinational enterprise mne in the low reputation country for example many mne products require the differing specializations of both the high and low reputation countries although differing in motivation this result accords well with more traditional models of vertical mne 3 however this impetus for mne as well as its more traditional counterparts does not explain why the mne would choose foreign direct investment fdi over a less costly licensing arrangement 4 the quality uncertainty in this model along with the difference in equilibrium reputations allows us to address this question in particular appropriable reputational rents are generated by fdi when the high reputation parent firm procures and internalizes production with a low reputation host firm this fdi breaks the low reputation equilibrium of the host firm and generates reputational rents

estimating a household production function heterogeneity the demand for health inputs and their effects on birth weight the household production literature emphasizes that technical or biological processes condition input selection by households in their production activities along with prices and income exogenous variations in health to the extent that they are perceived by individuals heterogeneity lead to correlations between inputs and health outcomes that cannot be used to derive causal conclusions therefore estimates of health technology must be obtained from a behavioral model in which health inputs are themselves choices consistent estimates are reported of the effect of endogenous inputs such as medical care smoking and fertility on birth weight and fetal growth in the presence of health heterogeneity

are seasonal anomalies real a ninety year perspective in recent years there has been a proliferation of empirical studies documenting unexpected or anomalous regularities in security rates of return in addition to the widely studied relation between firm size and rate of return 1 these include seasonal regularities related to the time of the day harris 1986 the day of the week see ball and bowers 1986 cross 1973 french 1980 gibbons and hess 1981 jaffe and westerfield 1985 keim and stambaugh 1984 and lakonishok and levi 1982 the time of the month ariel 1987 and the turn of the year see haugen and lakonishok 1988 jones pearce and wilson 1987 lakonishok

sharecropping and the interlinking of agrarian markets one of the often noted features of less developed agrarian economies is the existence of interlinkages among the land labor credit and product markets the landlord is often the supplier of credit he frequently purchases and markets the output of the tenant farmers and often sells raw materials and even consumption goods to his tenant farmers how can this phenomenon be explained what are the welfare consequences of attempts to restrict these practices which often seem to constitute restraints on free trade these are the questions to which this paper is addressed a general set of arguments applicable to both competitive and noncompetitive environments are presented to situations where all the terms of the contract are determined in an optimal way as well as to situations where many of the terms are specified institutionally section i examines interlinked credit and tenancy contracts section ii examines interlinked marketing and tenancy contracts section iii points out the possible interlinking between labor contracts and consumption goods markets and section iv presents the different equilibrium frameworks discussed in the paper such as monopoly monopsony competition and equilibria with surplus labor

conceptual issues in the design of trade policy for industrialization abstract this paper considers the following question starting from first principles what kind of a case can be made for an industry oriented trade policy and what would such a policy look like the answer lies in an explicit consideration of specific market failures and externalities which in the absence of corrective policies may leave industry in command of a socially suboptimal share of the economy s resources the paper considers such market failures and the role that trade policy can play in addressing them special attention is paid to a the appropriate level of protection b price versus nonprice measures c the role of targeting selectivity and uniformity d the stability of incentives over time and e the qualitative aspects of trade regimes

the role of r d subsidies when incomplete information is an entry barrier abstract this paper explores the role of r d subsidies in the presence of incomplete information we consider a market for experience goods where a firm s r d investment determines the quality of its product but where quality becomes observable to consumers only through experience with the product in this model externalities emerge in that individual firms cannot fully appropriate the benefits of their quality enhancing investment outlays we show that an r d subsidy can internalize this externality and characterize optimal infant industry intervention in this setting

classifying monetary economics fields and methods from past to future we propose a simple yet sufficiently encompassing classification scheme of monetary economics it comprises three fundamental fields and six recent areas that expand within and across these fields the elements of our scheme are not found together and in their mutual relationships in earlier studies of the relevant literature neither is this an attempt to produce a relatively complete systematization our intention in taking stock is not finality or exhaustiveness we rather suggest a viewpoint and a possible ordering of the accumulating knowledge our hope is to stimulate an improved understanding of the evolving nature and internal consistency of monetary economics at large

supersizing supercenters the impact of walmart supercenters on body mass index and obesity abstract researchers have linked the rise in obesity to technological progress reducing the opportunity cost of food consumption and increasing the opportunity cost of physical activity we examine this hypothesis in the context of walmart supercenters whose advancements in retail logistics have translated to substantial reductions in the prices of food and other consumer goods using data from the behavioral risk factor surveillance system matched with walmart supercenter entry dates and locations we examine the effects of supercenters on body mass index bmi and obesity we account for the endogeneity of walmart supercenter locations with an instrumental variables approach that exploits the unique geographical pattern of supercenter expansion around walmart s headquarters in bentonville arkansas an additional supercenter per 100 000 residents increases average bmi by 0 24 units and the obesity rate by 2 3 points these results imply that the proliferation of walmart supercenters explains 10 5 of the rise in obesity since the late 1980s but the resulting increase in medical expenditures offsets only a small portion of consumers savings from shopping at supercenters

a silver lining the connection between gasoline prices and obesity i find evidence of a negative association between gasoline prices and body weight using a fixed effects model with several robustness checks i also show that increases in gas prices are associated with additional walking and a reduction in the frequency with which people eat at restaurants explaining their effect on weight my estimates imply that 8 of the rise in obesity between 1979 and 2004 can be attributed to the concurrent drop in real gas prices and that a permanent 1 increase in gasoline prices would reduce overweight and obesity in the united states by 7 and 10

trade policy with several goods and market linkages abstract in this paper we demonstrate a substantial role for trade policy in a competitive model finding that a an export subsidy may benefit the exporting country b a voluntary export restraint may benefit the importing country and c a countervailing duty may benefit the importing country even if it has no effect on the foreign price of that good these results are in sharp contrast to the conventional wisdom from two good or partial equilibrium models and are derived in a framework of several goods the pattern of substitution and complementarity across goods or market linkages determines the role for trade policy

free trade agreements and world obesity we study the causal link between trade openness via free trade agreements ftas and obesity rates when applying a difference in differences approach by exploiting the year a country entered a free trade agreement with the united states during the period 1990 2016 we find a positive and causal impact of ftas on obesity rates which are statistically and economically significant we show that our findings are robust to placebo tests the use of synthetic control methods and a maximized sample furthermore we show that when using an event studies approach the equal trends assumption holds

welfare enhancing technological change and the growth of obesity the theory explores how technological change can produce obesity as an unintended consequence of economic development which reduces food prices and the strenuousness of work the empirical analysis presents a specific example of how food price declines can improve health and well being even in a developed country

new developments in trade theory and ldcs abstract this paper surveys the new literature on international trade relevant to the north south controversy in the first part two types of north south models are considered the unequal exchange theory of lewis and emmanuel and the models of dynamic interaction of findlay taylor and others the analysis focuses on the determinants of growth the terms of trade and relative employment in the world economy in the second part the paper reviews the empirical literature on south north and south south trade and the theories of north south technological gaps intra industry trade and external economies finally we analyze the literature on exports and economic growth and the neo classical keynesian and disequilibrium approaches to the theory of import controls

wage structure as implicit insurance on human capital in developed versus underdeveloped countries abstract this paper explores the role of wage structure as implicit insurance on human capital it illustrates how smaller wage differentials in the developed world can be welfare enhancing by acting as implicit insurance while larger wage differentials in underdeveloped countries make investments in human capital riskier in other words with smaller wage differentials the students in a developed country are insured against poor educational outcomes through the existence of well paid alternative employments which are not present in the economy of a less developed country this result arises as multiple equilibria in a general equilibrium model when there are no insurance markets for human capital

understanding overeating and obesity abstract the combination of economic and biological factors is likely to result in overeating in the current environment of cheap and readily available food this propensity is shown using a dual decision approach where choices reflect the interaction of a deliberative system operating as in standard economic models and an affective system that responds rapidly to stimuli without considering long term consequences this framework is characterized by excess food consumption and body weight in that individuals prefer both ex ante and ex post to eat and weigh less than they actually do with weight loss attempts being common but often unsuccessful or only partially successful as in the standard model weight is related to prices however another potentially important reason for rising obesity is that food producers have incentives to engineer products to stimulate the affective system so as to encourage overeating data from several sources are used to investigate predictions of the dual decision model with the evidence providing broad support for at least some irrationality in food consumption most importantly there is little indication that the large secular increases in body mass index have been accompanied by corresponding growth in utility maximizing weight one result is that efforts to reduce weight have become more common as obesity has increased

information and efficiency in political stock markets using computerized markets to predict election results this study concentrates on four computerized political markets in germany between 1990 and 1998 while this new method for the prediction of election events worked quite well in the usa it did not perform as well in germany searching for the causes of this distinction it is shown that in contrast to the findings of forsythe et al 1992 i extraordinary profits were achieved less by people who took advantage of other people s anomalies than by those people who acquired an advantage from the existence of asymmetric information ii the marginal trader hypothesis does not hold when applied to german markets and that iii traders relied on public opinion polls it is argued that these distinctions are caused by the differences in the german and the us voting systems additionally it is shown that to a certain extent iv election markets were able to predict the contemporary mood of the electorate without the help of public opinion polls v first of all the informed traders used public opinion pol

democracy the market and the logic of social choice this article compares the types of knowledge democracy and the market require to rationally allocate resources i argue that high levels of public ignorance and voters inability to compare the effects of different parties policies make it difficult for parties and elections to rationally allocate resources markets mitigate these problems because the simultaneous existence of multiple firms products facilitates comparisons that mimic the conditions of scientific experimentation the economy of knowledge involved in such comparisons indicates there are epistemic advantages to using firms and markets instead of political parties and elections to allocate scarce resources however in contrast to arguments that markets merely provide better information than political decisions i argue markets epistemic advantages are derived from the way they facilitate comparisons that minimize decision makers need for knowledge or understanding