fertility risk in the life cycle in this paper i study fertility decisions of women in the u s economy with special emphasis on the timing of births and abortions over the life cycle given the policy debate regarding abortion availability along with empirical evidence on its positive impact on women outcomes understanding the fertility process in a broad sense should help guide the discussion in this paper i present a life cycle model of consumption savings and fertility decisions in an environment with uninsurable income shocks and imperfect fertility control my model presents a unified framework in which opportunity costs of child rearing as well as technological restrictions in the form of contraception effectiveness have roles to understand lifetime fertility the model extends important earlier work on contraceptive decisions by women in the sense that it allows for stochastic fertility outcomes and is able to account for the interplay between asset accumulation and fertility decisions observed in the data

the long run relationship between nominal interest rates and inflation the fisher equation revisited stable url http links jstor org sici sici 0022 2879 28199602 2928 3a1 3c102 3atlrbni 3e2 0 co 3b2 2journal of money credit and banking is currently published by ohio state university press your use of the jstor archive indicates your acceptance of jstor s terms and conditions of use available athttp www jstor org about terms html jstor s terms and conditions of use provides in part that unless you have obtainedprior permission you may not download an entire issue of a journal or multiple copies of articles and you may use content inthe jstor archive only for your personal non commercial use please contact the publisher regarding any further use of this work publisher contact information may be obtained athttp www jstor org journals ohio press html each copy of any part of a jstor transmission must contain the same copyright notice that appears on the screen or printedpage of such transmission the jstor archive is a trusted digital repository providing for long term preservation and access to leading academicjournals and scholarly literature from around the world the archive is supported by libraries scholarly societies publishers and foundations it is an initiative of jstor a not for profit organization with a mission to help the scholarly community takeadvantage of advances in technology for more information regarding jstor please contact support jstor org http www jstor orgmon aug 27 13 58 08 2007

structural change in urban chinese food preferences we undertake a range of tests for structural food preference change in urban china using provincial level panel data from 2002 to 2010 we introduce a time transition function into the generalized quadratic almost ideal demand system gqaids to represent consumer preferences we apply this system to evaluate the demand structure for seven food groups the use of the gqaids specification relaxes many empirical demand system restrictions associated with previous analyses of structural preference change our findings suggest that chinese food preferences are continuing to evolve

the gender gap fertility and growth changes in fertility have long been recognized as important correlates of economic growth with the relationship between the level of fertility and the level of income per capita being one of the strongest observable correlations in cross country data this paper examines the linkages between fertility and growth theory the structure of the model is presented in sections on production couples decision making system dynamics and steady state equilibria the first component of the model is that increases in capital per worker raise womens relative wages since capital is more complementary to womens labor input than to mens the second component is that increasing womens relative wages reduces fertility by raising the cost of children more than household income finally lower fertility raises the level of capital per worker a positive feedback loop generates demographic transition a rapid decline in fertility accompanied by accelerated output growth

a note on nonstationarity structural breaks and the fisher effect abstract we find empirical evidence that inflation nominal and real interest rates in the us are trend stationary with a structural break in both the unconditional mean and the drift rate of a deterministic trend which occurs shortly after the change in operating procedures of the fed in september 1979 this finding casts some doubts on cointegration tests of the long run fisher effect conducted in recent studies since the results of these tests can be affected by the existence of common structural breaks in the series we propose an alternative test of the fisher effect based on a var representation in appropriately detrended variables we find strong support for the fisher effect both in the medium term and in the long term

family planning in a life cycle model with income risk several us states have recently restricted the access to abortions we study fertility intentions and how family planning and abortions are used as mechanisms to control fertility among couples facing income risk we formulate and estimate a life cycle consumption saving model with uninsurable income risk and imperfect contraceptive control that matches fertility behavior in the british household panel survey bhps well we use the estimated model to investigate how family planning and abortions are used to control fertility in our model our simulations suggest that income risk affects family planning and that abortion is used to control fertility due to the presence of income risk this indicates that the availability of abortions might play a role as an insurance mechanism

modeling evaluation and methodology in the new century i what is changing it appears that any overt expression of interest in methodology is considered a clear sign of weak mindedness or premature senility l boland methodology entry in the new palgrave dictionary of economics as time passes one should expect the techniques and consequently the underlying methodology also to evolve this article will discuss some of the major changes in methodology since the middle of the last century to now among the major driving forces for this change is the growth in the amount of data available in most parts of economics together with the tremendous growth in the speed and storage ability of computers as well as the interactive aspects of the internet techniques or methodologies that were unthinkable or certainly unavailable 25 years ago are now standard and common a new mind set is required to limit dissension i will consider economics to be a decision science describing the decisions made by economic agents such as consumers employers investors and policy makers it follows that the purpose of any economic analysis will be to help actual decision makers make better decisions on average in a stochastic environment such an analysis can be thought of as a final good some analysis will be an intermediate good which helps another economist produce a better final good by taking these attitudes a pragmatic viewpoint can be taken in many situations and provide solutions to some questions as will be seen the many books and articles on economic methodology and philosophy in the past century consider many topics that were considered of considerable interest then but have since lost their importance for example a topic earlier viewed as being of some importance was is economics a science although i believe that it is no longer a hot topic around economics departments the answer to the question is that no one really cares however that may not be the correct response because if economics was classified as a science the discipline may be eligible for much larger research grants another major topic with a lasting impact was about whether a model needs an input of economic theory or not or equally can a satisfactory model be achieved just by introspection without any use of data i can recommend a very interesting short article on this topic titled methodenstreit or battle of the models by daniel fusfield in the new palgrave 1987 the battle was between carl menger and gustav schmoller starting in the 1880s with menger in favor of pure theory and schmoller wanting to use just an empirical approach unfortunately their initial debate became confused in a more political one with menger pushing laissez faire policies whereas schmoller supported interventionist government policy approaches essentially right versus left in today s terminology fusfield states that on the basic issue of the place of theory and empirical studies in economics menger and schmoller agreed that both were necessary they disagreed on the emphasis to be placed on each and their role in the development of conclusions menger correctly pointed out that a model based just on data is limited in generality because the data cover only some of the possible space it needs correct theory to go beyond the sample space he also said that data acted as a bridge between the principles of pure economics and the policy problems of applied economics in fact he warned against policy analysis without an empirical study schmoller was less generous to theorists finding the work too abstract irrelevant and based on assumptions that are unrealistic a later similar discussion took place between koopmans 1947 and burns and mitchell 1947 that influenced modeling into the 1960s and 1970s where do we stand 115 years later in this discussion in many ways it seems quite modern certainly compared to some of the remarks made around real business cycle theory a few years back

structural change in factor substitution in finnish manufacturing the possibility of structural change in finnish factor substitution relations between energy and nonenergy factors is analyzed the standard generalized leontief klemf cost function is modified so that the substitution parameters related to electricity and fuel factors may shift to new levels over time the initial point of transition is 1974 during which the first energy crises took place likelihood ratio tests confirm that there has indeed been a statistically significant change in energy versus nonenergy substitution our estimates imply stronger substitutability for most input pairs after the energy crisis

the fisher effect and the term structure of interest rates tests of cointegration the literature on the fisher effect has ignored the potential relationship between inflation and long term interest rates using an expectations model of the term structure of interest rates the authors establish the conditions under which innovations in short term inflation will be transmitted to long term as well as short term interest rates cointegration tests find support for both the fisher effect and the expectations theory of the term structure copyright 1993 by mit press

energy crises and change of technology a production model is formulated for the finnish metal product and machinery industry for studying energy crises related structural changes two models are estimated a partial static equilibrium model where capital is treated as a fixed input in the short run and a dynamic model where adjustment costs of the capital input are taken into account alternative hypotheses of structural change are formulated as gradual parameter shifts the results show that some of the energy related parameters have changed over time also the contributions of parameter changes and variations in the average values of the variables on the changes in the energy demand elasticities are studied the most important effect is the strengthening of the energy saving bias in technical change

fertility choice in a life cycle model with idiosyncratic uninsurable earnings risk abstract motivated by large shifts in uninsurable earnings risk over time this paper studies the link between delaying and reducing fertility on the one hand and earnings and fertility risks on the other when children are modeled as consumption commitments increases in earnings risk are associated with a reduction in family sizes and patterns of delayed childbearing since household ability to bear children declines with age the postponement of birth associated with the increased earnings risk drives down the number of birth per family further an access to in vitro fertilization ivf is shown to have only a limited offsetting effect

the demographic transition and the sexual division of labor this paper presents a theory in which increases in female labor force participation and reductions in the gender wage gap are generated as part of a single process of demographic transition initially characterized by reductions in mortality and fertility the paper suggests a relationship between gains in life expectancy and changes in the role of women in society that has not been identified before in the literature mortality reductions affect the incentives of individuals to invest in human capital and to have children with implications for female labor force participation and the wage differential between men and women the paper also presents some empirical evidence to support the predictions of the theory

the baby boom and baby bust what caused the baby boom and can it be explained within the context of the secular decline in fertility that has occurred over the last 200 years the hypothesis is that a the secular decline in fertility is due to the relentless rise in real wages that increased the opportunity cost of having children b the baby boom is explained by an atypical burst of technological progress in the household sector that occurred in the middle of the last century this lowered the cost of having children a model is developed in an attempt to account quantitatively for both the baby boom and bust

life insurance and household consumption abstract using life insurance holdings by age sex and marital status we infer how individuals value consumption in different demographic stages we estimate equivalence scales and bequest motives simultaneously within a fully specified model where agents face us demographics and save and purchase life insurance our findings indicate that individuals are very caring for dependents that economies of scale are large that children are very costly or yield very high marginal utility that wives with children produce lots of home goods and that females display habits from marriage while men do not these findings contrast sharply with standard equivalence scales

estimating policy effects on spatial market efficiency an extension to the parity bounds model the standard parity bounds model pbm is extended to allow for dynamic shifts in regime probabilities in response to changes in marketing policy the approach allows estimation of the length of the adjustment period and a statistical test for no policy effects the extended pbm is applied to maize and wheat markets in ethiopia evidence of a dynamic adjustment path is found and grain marketing reforms are found to have improved spatial efficiency in a few markets worsened it in a few others but generally to have had little effect on the spatial efficiency of ethiopian grain markets

abortion legalization and child living circumstances who is the marginal child weexaminethe impact ofincreased abortion availabilityon the averageliving standards of children through a selection effect would the marginal child whowas not born have grown up in different circumstances than the average child we use variation in the timing of abortion legalization across states to answer this question cohorts born after legalized abortion experienced a signiecant reduction in a number of adverse outcomes we end that the marginal child would have been 40 60 percent more likely to live in a single parent family to live in poverty to receive welfare and to die as an infant access to abortion is one of the most contentious public policy issues facing the united states today the period since the legalization of abortion under the roe v wade decision of 1973 has been marked by incessant debate over the appropriate government enancing and legal status of abortions meanwhile pregnancy resolution through abortion is a very common outcome in the united states roughly 25 percent of all pregnancies are aborted ventura et al 1995 as a result major changes in abortion access could have substantial effects on the birthrate indeed levine staiger kane and zimmerman end that the legalization of abortion in the early 1970s led to an 8 percent reduction in the birthrate 1

more on marriage fertility and the distribution of income according to pareto 1896 the distribution of income depends on the nature of the people comprising a society on the organization of the latter and also in part on chance in the model developed here the nature of the people is captured by attitudes toward marriage divorce fertility and children singles search for mates in a marriage market married agents bargain about work and the quantity and quality of children they can divorce social policies such as child support requirements reflect the organization of the society finally chance is modeled by randomness in income marriage opportunities and marital bliss

an estimable dynamic stochastic model of fertility and child mortality this paper develops a finite horizon dynamic stochastic model of discrete choice with respect to life cycle fertility within an environment where infant survival is uncertain the model yields implications for the number timing and spacing of children a tractable estimation method is developed for the linear constraint quadratic utility case that is intimately tied to the dynamic optimization problem and the method is applied to malaysian household data estimation is based on integrating the numerical solution of the dynamic programming model of behavior with a maximum likelihood procedure

revisiting the effect of household size on consumption over the life cycle abstract although the link between household size and consumption has strong empirical support there is no consistent way in which demographics are dealt with in standard life cycle models we study the relationship between the predictions of the single agent model the standard in the literature versus a simple model extension the demographics model where deterministic changes in household size and composition affect optimal consumption decisions we show theoretically that the demographics model is conceptually preferable to the single agent model as it captures economic mechanisms ignored by the latter however our quantitative analysis demonstrates that differences in predictions for consumption are negligible across models when using standard calibration strategies this suggests that it is largely irrelevant which model specification is used

modeling the pattern of structural change in u s meat demand the hypothesis of structural change in u s meat demand is tested in a four meat almost ideal demand system with parameters following a gradual switching regression model the results support the notion that structural change partly explains the observed u s meat consumption patterns structural change is biased against beef neutral for pork in favor of chicken and fish and it does not affect estimated elasticities the estimated path of structural change implies a rapid transition to a new regime in the mid 1970s although a smooth path cannot be ruled out

housing decision with divorce risk we build a realistically calibrated life cycle model of housing decisions under divorce risk as observed in the data our model predicts the recent increase in divorce rates leads to reduced homeownership rates the event of a divorce negatively affects homeownership and this effect is long lasting the risk of a divorce triggers a precautionary savings motive however this motive is weaker when individuals can invest in owner occupied homes because homeowners higher savings partially substitute for precautionary savings when young the larger asset accumulation due to divorce risk induced precautionary savings enables households to buy homes earlier whereas the presence of transaction costs leads to reduced homeownership for middle aged and older households when divorce risk goes up

impact of bse and bird flu on consumers meat demand in japan in this article we investigate the impact of bse and bird flu on consumers meat demand in japan by using the almost ideal demand system the bse and bird flu scares brought about a fall in demand for beef and chicken respectively and an upturn in demand for pork and fishery products which are substitutes for beef and chicken in japan we also find that the bird flu outbreak had no impact on the market share for beef this suggests that bse had a larger impact on consumers meat demand than did bird flu our empirical results also show that bse has had a persistent impact whereas bird flu has not these differences might depend on the characteristics of each disease such as the incubation period cure rate and infection risk

inflation real returns and capital investment we find evidence for the hypothesis of mundell 1963 and tobin 1965 that the expected real return component of interest rates is negatively related to the expected inflation component in the mundell tobin model the variation in expected real returns is caused by the variation in expected inflation our evidence suggests however that the variation in expected real returns is more fundamentally an outcome of the capital expenditures process equilibrium expected real returns vary directly with capital expenditures in order to induce equilibrium allocations of resources between consumption and investment this positive relation between expected real returns and real activity which comes out of the real sector combines with a negative relation between expected inflation and real activity which is traced to the monetary sector thus inducing the negative relation between expected inflation and expected real returns predicted by mundell and tobin but explained in terms of a model much different from theirs

optimizing time series forecasts for inflation and interest rates using simulation and model averaging abstractmotivated by economic theory concepts the fisher hypothesis and the theory of the term structure we consider a small set of simple bivariate closed loop time series models for the prediction of price inflation and of long and short term interest rates the set includes vector autoregressions var in levels and in differences a cointegrated var and a non linear var with threshold cointegration based on data from germany japan uk and the us following a traditional comparative evaluation of predictive accuracy we subject all structures to a mutual validation using parametric bootstrapping ultimately we utilize the recently developed technique of mallows model averaging to explore the potential of improving upon the predictions through combinations while the simulations confirm the traded wisdom that vars in differences optimize one step prediction and that error correction helps at larger horizons the model averaging experiments point at problems in allotting an adequate penalty for th

consumption and labor supply with partial insurance an analytical framework we develop a model with partial insurance against idiosyncratic wage shocks to quantify risk sharing closed form solutions are obtained for equilibrium allocations and for moments of the joint distribution of consumption hours and wages we prove identification and demonstrate how labor supply data are informative about risk sharing the model estimated with us data over the period 1967 2006 implies that i 39 percent of permanent wage shocks pass through to consumption ii the share of wage risk insured increased until the early 1980s and iii preference heterogeneity is important in accounting for observed dispersion in consumption and hours jel e21 e23 e31 e52

schooling information and nonmarket productivity contraceptive use and its effectiveness information from two u s fertility surveys on couples knowledge about and use of specific contraceptives are used to estimate the technology of human reproduction in order to examine the association between schooling and productivity in the household sector the results indicate that more schooled couples have a wider knowledge of contraceptive methods use more efficiently those contraceptive methods for which there is little information and large scope for misuse and are better able to mitigate the effects of their biological constraints fecundity on their fertility compared to less schooled couples excerpt

inflation and real interest rates on assets with different risk characteristics given the importance of ex ante real interest rates to economic decision making it is no surprise that much empirical research focuses on them 1 several recent studies find that the ex ante real returns for short term u s treasury securities are not constant and are negatively correlated both with inflation and with nominal interest rates this paper examines the extent to which these findings hold for assets of longer maturity are robust with respect to the choice of price index and are stable over time we expand the set of assets studied to include those of longer maturity both publicly and privately issued for two reasons first their ex ante real returns may differ substantially from that of a short term nominally riskless security second because longer maturity assets have risk characteristics closer to capital their ex ante real returns are potentially more relevant for investment and savings decisions we explore the use of various price indices because the index used in most studies the consumer price index severely overstates inflation during the 1970s as a result of its inappropriate treatment of residential housing costs 2 this overstatement casts doubt on an important finding of previous studies that there are long stretches of time during the 1970s when ex ante real rates are significantly negative given the existence of holding costs for the goods relevant to most price indices and the absence of a riskless real return no arbitrage conditions are violated by a negative ex ante real rate however its persistence is problematical because asset holders are typically assumed to have a positive rate of time preference which ensures a positive ex ante real rate in the long run we find that before 1979 a negative relationship of ex ante real rates both with inflation and with nominal interest rates appears for the longer maturity assets as well as the short term nominally riskless asset indeed the relationship grows

real interest rates and inflation an ex ante empirical analysis we develop a method of measuring ex ante real interest rates using prices of index and nominal bonds employing this method and newly available data we directly test the fisher hypothesis that the real rate of interest is independent of inflation expectations we find a negative correlation between ex ante real interest rates and expected inflation this contradicts the fisher hypothesis but is consistent with the theories of mundell and tobin darby and feldstein and stulz we also find that nominal interest rates include an inflation risk premium that is positively related to a proxy for inflation uncertainty

non stationarity and the import demand for virgin olive oil in the european union the aim of this study is to analyse the importation of virgin olive oil to european union countries paying special attention to the spanish export contribution the method used is based on the estimation of an imports demand system the novelty of the paper lies not in the modelling approach but in the explicit consideration of the univariate characteristics of series that is included in the analysis since prices are non stationary cointegration among them has been tested results indicate that they are cointegrated and that homogeneity holds as a result relative prices are included in the imports demand system structural change is also considered so as to account for the entrance of both spain and greece into the eu during the period studied results demonstrate the leadership of spain within the eu virgin olive oil market as well as the increasing competitiveness of greek oil

a gradual switching regression model with autocorrelated errors abstract in this note we set up the gradual switching regression model with autocorrelated errors and show the maximum likelihood estimation procedure as an empirical example we examine structural change in the energy demand in japan at the first oil crisis

do expected shifts in inflation affect estimates of the long run fisher relation recent empirical studies suggest that nominal interest rates and expected inflation do not move together one for one in the long run a finding at odds with many theoretical models this article shows that these results can be deceptive when the process followed by inflation shifts infrequently we characterize the shifts in inflation by a markov switching model based upon this model s forecasts we reexamine the long run relationship between nominal interest rates and inflation interestingly we are unable to reject the hypothesis that in the long run nominal interest rates reflect expected inflation one for one