the effect of income on child development this study presents estimates of the effect of parental income on children s cognitive social and emotional development the effect of current income is small especially when income is treated as endogenous the effect of permanent income is substantially larger but relatively small when compared to the magnitude of recent policy induced changes in income family background characteristics play a more important role than income in determining child outcomes policies that affect family income will have little direct impact on child development unless they result in very large and permanent changes in income

long term intergenerational persistence of human capital an empirical analysis of four generations most previous studies of intergenerational transmission of human capital are restricted to two generations how parents influence their children in this study we use a swedish data set that links individual measures of lifetime earnings for three generations and data on educational attainment for four generations we find that estimates obtained from data on two generations severely underestimate long run intergenerational persistence in both labor earnings and educational attainments long run social mobility is hence much lower than previously thought we attribute this additional persistence to dynastic human capital the influence on human capital of more distant family members than parents

modelling output growth a new approach abstract the paper proposes a new approach to modelling output growth and empirically compares the relative efficiency in terms of average mse of forecasts of alternative estimation and modelling methods applied to two well known multi equation macroeconomic models fitted to australian data for the period 1962 to 1987 the gain in relative efficiency from the new approach is found to be up to 129 percent over the ols or ml procedures

role of parental income in educational attainment during the post world war ii era u s governmental policy has often been based on the idea that in the absence of government action access to college and to a lesser extent high school education may be limited because of liquidity constraints the federal and state and local governments have instituted a number of policies to overcome these constraints these policies include the basic opportunity grants loan programs that have been issued at or below market interest rates the expansion of state supported colleges that charge below market tuitions rates and the inception and expansion of local community or county colleges that also charge below market tuition rates while there may be noneconomic reasons that explain these changes or their magnitude economic reasons that rely on differences between private and social costs and benefits can also be advanced these include a wiser societal choices made by a more educated society b recoupment of social costs from higher tax revenues c the reduction of private risks from lending arising from the pooling of risks thereby making the social supply of funds curve available to all individuals at the social discount rate and d state and local economic development reason c implies that in the absence of governmental initiative some children would be restricted from achieving their socially optimal amount of education because parents income and wealth limit their children s choices gary becker 1975 arthur okun 1975 and jere behrman and myself 1985 argue that governmental policy to reduce private borrowing costs to the level of social costs reduces inefficiency while increasing equity a rare result in the realm of economics in this paper i consider why parental income might influence offspring s educational attainment and the policy implications of such an influence

does family income matter for schooling outcomes using adoptees as a natural experiment one would expect that family income is an important positive factor in children s school attainment however evidence is often tainted by the lack of control for parental ability since at least a portion of ability is transferred genetically to children this paper uses a sample of adopted children and offers genetically unbiased estimates we further correct for biases arising from unobserved parenting qualities and from parents differentiation between their own birth and adopted children family income still has a significant effect it implies that high ability children in low income families face binding credit constraints that society may wish to relieve

what fraction of stock option grants to top executives have been backdated or manipulated we estimate that 13 6 of all option grants to top executives during the period 1996 2005 were backdated or otherwise manipulated our study primarily focuses on grants that were unscheduled and at the money of which we estimate that 18 9 were manipulated the fraction is 23 0 before the new two day filing requirement took effect on august 29 2002 and 10 0 afterward for the minority of grants that are not filed within the required two day window the fraction of manipulated grants remains as high as 19 9 we further find a higher frequency of manipulation among tech firms small firms and firms with high stock price volatility in addition firms that use smaller non big five auditing firms are more likely to file their grants late finally at the firm level we estimate that 29 2 of firms manipulated grants to top executives at some point between 1996 and 2005

the macroeconomic implications of a resource discovery in an open economy this paper analyses the macroeconomic impact on an economy of the discovery of significant quantities of a natural resource the resource will be termed oil and the analysis is intended to be suggestive of the effects on the u k economy of the discovery of north sea oil and of possible policy responses our motivation is what appears to be an inconsistency between the commonly expressed view that north sea oil has generated unemployment by causing the exchange rate to appreciate2 and the contention of proponents of the new classical macroeconomics that the oil discovery creates no special macroeconomic problems 3 in order to abstract from microeconomic questions we shall assume that oil is perfectly tradable and that there are no extraction costs 4 we also assume that the foreign currency oil price is exogenous and rises at the foreign interest rate the effect of these assumptions is that for the economy as a whole the oil discovery can be considered as a foreign exchange windfall of fixed magnitude and we define the term oil revenue in a permanent income sense as the infinite term foreign exchange annuity value of this windfall oil revenue as defined is independent of depletion policy it accrues whether or not depletion is occurring at any date since it includes capital gains on the oil stock and depends in no way on whether the oil is exported or used domestically it will be assumed throughout that the economy operates with a flexible exchange rate and that international capital mobility is perfect at the date of discovery the economy is assumed to be at zero inflation full employment with both current and capital accounts balanced we are primarily interested in the dynamics of adjustment to the oil discovery but comparative static analysis5 provides a convenient point of departure for this purpose only we suppose that depletion is managed so as actually to realise the oil revenue each year if all the oil revenue is saved then there are no effects on demand prices or

the origins of intergenerational associations lessons from swedish adoption data we use unique swedish data with information on adopted children s biological and adoptive parents to estimate intergenerational mobility associations in earnings and education we argue that the impact from biological parents captures broad prebirth factors including genes and prenatal environment and the impact from adoptive parents represents broad postbirth factors such as childhood environment we find that both pre and postbirth factors contribute to intergenerational earnings and education transmissions and that prebirth factors are more important for mother s education and less important for father s income we also find some evidence for a positive interaction effect between postbirth environment and prebirth factors

the nature and nurture of economic outcomes this paper uses data on adopted children to examine the relative importance of biology and environment in determining educational and labor market outcomes i employ three long term panel data sets which contain information on adopted children their adoptive parents and their biological parents in at least two of the three data sets the mechanism for assigning children to adoptive parents is fairly random and does not match children to adoptive parents based on health race or ability i find that adoptive parents education and income have a modest impact on child test scores but a large impact on college attendance marital status and earnings in contrast with existing work on iq scores i do not find that the influence of adoptive parents declines with child age this abstract was borrowed from another version of this item

coffee economic fluctuations and stabilisation an intertemporal disequilibrium model with capital market imperfections abstract this paper develops a two period disequilibrium model of a small open economy under keynesian unemployment to analyse the effects of temporary anticipated and permanent coffee price shocks the model includes a government sector that administers a commodity price stabilisation fund and allows for capital market imperfections the type of capital market imperfection makes an important difference to the results of the model in particular when the government borrows on more favourable terms than individuals the coffee price stabilisation fund reduces the multiplier effects of temporary and permanent shocks not only in the first but also in the second period by contrast when individuals face an upward sloping supply of capital curve the stabilisation fund shifts some of these effects from the first to the second period

does increasing women s schooling raise the schooling of the next generation the positive cross sectional relationship between the schooling of mothers and their children is substantially biased upward due to correlations between schooling and heritable ability as well as assortative mating an increase in the schooling of women would not have beneficial effects in terms of the schooling of children increased maternal schooling leads to reduced home time for mothers anticipating the consequences of investing in women s schooling requires attention to the role that schooling plays in the marriage market as well as to opportunities in the labor market for women

coffee export booms and monetary disequilibrium some evidence for colombia the theoretical models that analyse the monetary consequences of export booms show that under a regime of fixed exchange rates they affect not only the demand for money via real income but also the money supply via foreign exchange accumulation within this theoretical framework this study proposes an empirical approach to determine whether the coffee booms of the second half of the 1970s and mid 1980s led to excess money supply in the colombian economy the findings provide evidence in favour of a direct association between coffee export booms and excess money supply implying that external disturbances jeopardize the ability of the economic authorities to carry out successful monetary policy

stock watson dynamic ols dols and error correction modelling approaches to estimating long and short run elasticities in a demand function new evidence and methodological implications from an application to the demand for coal in mainland china in this paper robust elasticity estimates of coal demand for china are derived using annual data 1953 92 in so doing we illustrate the use of a powerful yet practically convenient and recently developed modelling procedure devised by stock and watson known as dynamic ols dols who provide evidence based on monte carlo simulations of this estimator being superior in small samples compared to a number of alternative estimators as well as being able not only to accommodate higher orders of integration but also to account for possible simultaneity within regressors of a potential demand system furthermore cointegration and error correction methods are employed to derive short run price and income elasticities estimated results are quite robust not only in terms of statistical prowess but also in terms of economic intuition and indicate that over the long run both price and income elasticities are close to unity while short run price and income elasticities are less in absolute value than their long run counterparts there seems to be some divergence in short run parameters from a subsample analysis overall results seem to imply that for china coal consumption should remain relatively constant as future modernization strategies for economic development are pursued in addition the study has clear methodological implications for estimating the long and short run elasticities in a demand function in general and in a wide variety of fields in future applied research

oil prices and rural migration the dutch disease goes south abstract we construct a two period general equilibrium model to evaluate policies affecting agricultural migration and exports the model is applied to mexico for the period 1986 1987 to obtain certain qualitative policy conclusions related to the dutch disease brought about by oil price increases dutch disease phenomena can be brought about both as the result of real exchange rate changes as well as price changes caused by migration out of agriculture in the short run it may be possible to use fiscal policy such as value added subsidies to agriculture to at least partially negate the effects of an oil price increase on agricultural exports jel f31 f41

an empirical analysis of adoption i introduction adoption is as old as recorded history it was practiced by the ancient egyptians greeks and romans technically adoption is a legal procedure by which a couple or less commonly an individual takes someone else s child into their family and raises it as their own the child may be unrelated to either adoptive parent but is often the child of one member of the couple or related in some other way to the adoptive parents adoption severs all legal ties between the birth parents and the child and replaces them by a legal relationship between the child and the adoptive parents in most cases of adoption the birth parents voluntarily surrender their parental rights so that an adoption can take place it seems highly likely that the u s supreme court will allow further restrictions on the availability of abortion as a consequence considerable attention is certain to be focused on the adoption option and its social implications prior to 1970 fertility behavior was little studied by economists partly because it was thought that the determinants were largely noneconomic during the past two decades however economists using a choice theoretic framework have examined a variety of fertility issues such as marriage becker 1974 procreation and children detray 1973 birth control willis 1973 and abortion leibowitz eisen and chow 1986 surprisingly no economic research exists on the issue of adoption despite the fact that it represents a natural extension of the traditional theory of consumer choice most adoption research focuses on sociological issues such as infertility or adoption procedures this paper empirically estimates the supply of adoptions using the decision making economic framework of completed fertility developed by becker 1960 and extended by michael 1973 i believe their model s determinants of desired fertility and family size will also be significant in explaining a household s decision to give up a child for adoption section ii outlines the adoption model and relates it to the economic theory of desired fertility and family size the third and fourth sections discuss the empirical estimates of the adoption model the fifth section examines the impact of various state regulations on the adoption decision and the last section discusses public and social implications of the empirical results ii the adoption model michael argues that households decisions concerning desired family size and the timing of childbearing can be explained in terms of a household production function michael s model is based on a comparison of the benefits and costs from an additional child over time his theory of completed fertility purports to be over a household s full reproductive age span but it is in actuality a period by period analysis households are myopic in that although they consider the future costs and benefits of a child an independent decision is made in each period regarding whether to have a child a household s optimal family size may be for example two children but if when the first child is conceived the household perceives the timing of the birth as undesirable then at that point in time the net benefit from the additional child is negative the consequence is that the child is unwanted and the household will take steps to reduce the discrepancy between the desired and actual stock of children one possible solution is an adoption once a child is born a household has two choices keep the child or put it up for adoption michael s framework implies that the likelihood that a household will place a child for adoption is positively related to the negative discrepancy between the household s desired and actual stock of children at that time the factors affecting a household s desired family size income time values relative productivities and revealed tastes are reflected in the discrepancy between the desired and actual stock of children

oil production and macroeconomic adjustment in the indonesian economy abstract this paper is concerned with identifying and modelling the macroeconomic contribution of the oil sector to the indonesian economy a brief overview of macroeconomic developments for indonesia is conducted for the period 1970 1991 focusing upon the contribution of oil revenues to gdp the current account and government revenue in addition a simple theoretical macroeconomic model incorporating oil is presented and used for numerical simulation purposes to identify and analyse potential macroeconomic developments for indonesia arising from oil related shocks the overview suggests that oil price shocks are of particular interest in the context of indonesia as are therefore the simulation results derived from this case consideration is also given to the effects upon macroeconomic outcomes arising from various policy responses to oil related shocks in particular emphasis is given to the use of oil revenues for the purpose of stimulating domestic demand or the supply side of the economy and the adoption of a more or less export oriented policy towards oil production

electrical energy usage over the business cycle causality from macroeconomic conditions to electrical usage overall and in the residential commercial industrial and other sectors is examined the paper shows that changes in macroeconomic conditions cause significant changes in electrical usage in the commercial and industrial sectors and overall in addition the paper shows that causality occurs at business cycle frequencies and that there are asymmetries over the business cycle an implication is that forecasts used to assess the probability of exceeding capacity constraints should incorporate forecasts of macroeconomic conditions asymmetries over the cycle and how the commercial and industrial sectors will respond to such changes

does parents money matter abstract this paper asks whether parents income per se has a positive impact on children s abilities previous research has established that income is positively correlated across generations this does not prove that parents money matters however since income is presumably correlated with ability this paper estimates the impact of parents income by focusing on income variation due to factors union industry and job loss that arguably represent luck i find that changes in parents income due to luck have a negligible impact on children s human capital for most families although parents money does matter for families whose father has low education

cointegration based tests of daily foreign exchange market efficiency abstract an immediate implication of cointegration is the existence of granger causal orderings among cointegrated series this implies that asset prices determined in a weakly efficient market cannot be cointegrated this proposition is tested using daily data for 18 foreign currencies tests are conducted for both pairwise combinations of currencies and higher order systems no significant evidence of cointegration among exchange rates is found

does money matter for intergenerational income transmission the intergenerational income elasticity iie is a crucial measure of income mobility in this article we develop a structural model to examine the channels through which this elasticity operates using data from the panel study of income dynamics we separately identify the human capital and the financial components the human capital component examines the transmission of human capital independent of financial investments whereas the financial component examines the impact of income that is uncorrelated with human capital that is exogenous income using a two stage framework we show that the iie operates through both channels moreover our estimates show that the financial component may have a larger effect than previously estimated plausibly attributing to 36 of intergenerational income transmission indeed this result holds even when the financial component is defined in an incredibly narrow manner this suggests that cash payments could promote intergenerational mobility

income schooling and ability evidence from a new sample of identical twins we develop a model of optimal schooling investments and estimate it using new data on approximately 700 identical twins we estimate an average return to schooling of 9 percent for identical twins but estimated returns appear to be slightly higher for less able individuals simple cross section estimates are marginally upward biased these empirical results imply that abler individuals attain more schooling because they face lower marginal costs of schooling not because of higher marginal benefits

the inter generational link in income mobility evidence from adoptions abstract estimates of the inter generational link in income mobility are often contaminated by the correlation of genetic ability with measures of parental income we introduce the use of adoption data to sever this correlation finding that the inter generational link is attenuated substantially

life cycle schooling and dynamic selection bias models and evidence for five cohorts of american males this paper examines an empirical regularity found in many societies that family influences on the probability of transiting from one grade level to the next diminish at higher levels of education we examine the statistical model used to establish the empirical regularity and the intuitive behavioral interpretation often used to rationalize it we show that the implicit economic model assumes myopia the intuitive interpretive model is identified only by imposing arbitrary distributional assumptions onto the data we produce an alternative choice theoretic model with fewer parameters that rationalizes the same data and is not based on arbitrary distributional assumptions

can an oil discovery lead to a recession a comment on eastwood and venables in a recent paper in this journal eastwood and venables ev present an analysis of the macroeconomic consequence of an oil discovery in an open economy model which assumes perfect international capital mobility rational exchange rate expectations and sluggish adjustment of domestic goods prices in this note the authors attempt to reconcile this apparent contradiction in the literature in particular the authors show that ev s results hinge crucially on their failure to allow for a direct impact of higher oil wealth on money demand even when all the oil revenue accrues to the government this should raise private sector wealth through the anticipated reduction in future tax liabilities in any case the authors find it difficult to conceive a situation in which an oil discovery will raise spending but leave money demand permanently unaffected the purpose of this note is to show the important implications of this observation for the effects of an oil discovery when appropriate monetary accommodation does not take place

booming sector and de industrialisation in a small open economy this paper presents a theoretical analysis of the dutch disease the phenomenon whereby a boom in one traded goods sector squeezes porfitability in other traded goods sectors both by directly bi

permanent and transitory components in macroeconomic fluctuations fluctuations in real gnp have traditionally been viewed as transitory deviations from a deterministic time trend the purpose of this paper is to review some of the recent developments that have led to a new view of output fluctuations and then to provide some additional evidence using post war quarterly data it is hard to reject the view that real gnp is as persistent as a random walk with drift we also consider the hypothesis that the recent finding of persistence are due to the failure to distinguish the business cycle from other fluctuations in real gnp we use the measured unemployment rate to decompose output fluctuations we find no evidence for the view that business cycle fluctuations are more quickly trend reverting this abstract was borrowed from another version of this item

ceo stock option awards and the timing of corporate voluntary disclosures abstract we investigate whether ceos manage the timing of their voluntary disclosures around stock option awards we conjecture that ceos manage investors expectations around award dates by delaying good news and rushing forward bad news for a sample of 2 039 ceo option awards by 572 firms with fixed award schedules we document changes in share prices and analyst earnings forecasts around option awards that are consistent with our conjecture we also provide more direct evidence based on management earnings forecasts issued prior to award dates our findings suggest that ceos make opportunistic voluntary disclosure decisions that maximize their stock option compensation

the quality of consumption some australian evidence abstract the paper reports new estimates of theil s index of the quality of consumption for four age groups and at two levels of affluence income for australian households over the period 1975 iv to 1982 iv with special emphasis on the role played by energy and non energy commodity groups the evidence reveals an improvement in the quality of consumption of energy and energy related goods and a quality deterioration in food clothing and rent at all income levels and for all four age groups

educational choice families and young people s earnings this paper presents two optimizing models of educational choice discusses issues of identification estimates earnings equations in the context of these models and presents conditions under which we can test one against the other the estimates indicate that education is endogenous for young people s earnings creating a downward bias in estimated returns from education that assume exogeneity identification and estimation relies on family background information from a special sample from the british household panel study 1991 95 which matches mothers and their young adult children our estimates favor a family model over an individual model and they suggest that parents allocate resources to education to compensate for differences in their children s earnings endowments

the effect of oil discoveries on the british economy theoretical ambiguities and the consistent expectations simulation approach the finding of oil in the north sea has stimulated the interest of u k economists in the effect of resource discoveries on an open economy this has spawned a large number of theoretical papers including those by neary 1983 eastwood and venables 1982 buiter and miller 1981 and neary and purvis 1981 these papers are primarily concerned with the various dynamic effects which are likely and have typically assumed perfect capital mobility and perfect foresight in order to keep the analysis tractable however it turns out that these models can say nothing about the dynamic response to an oil discovery unless some unrealistic assumptions are made about the associated monetary effects this is demonstrated in the first part of the paper this point has been made independently by neary and wijnbergen 1982 the second part of the paper describes some results obtained by simulating the treasury macroeconomic model under similar assumptions to those used in the theoretical literature in an attempt to throw some empirical light on these ambiguities

on the use and abuse of stock option grants recently a significant number of companies have come under public and regulatory scrutiny for backdating stock option grants this article discusses factors that influenced the dramatic increase in stock option compensation and summarizes the academic research that led to the discovery of backdating the information gained in this early stage of investigation provides some insight into the number of companies and potential costs of option backdating increased transparency and timely disclosure should curtail grant date manipulation but the credibility of the disclosure system requires active enforcement of the rules and standards investors need accurate complete disclosures of executive compensation to hold boards of directors accountable for executive compensation

what do twins studies reveal about the economic returns to education a comparison of australian and us findings conventional estimates of rates of return to education are constrained because they are unable to isolate the returns to schooling from the contribution of individual ability and the influence of family background potentially studies using a sample of twins may overcome these problems monozygotic twins are genetically identical and if they have been reared together share the same family background differences in income between identical twins can therefore be associated with differences in the amount of education they have undertaken in order to estimate the independent influence of education comparisons of such estimates with estimates made from a sample of dizygotic twins who are genetically similar but not identical and who are also reared together may permit evaluation of the biases associated with ability and family background in conventional estimates of the return to education in an important paper jere behrman et al 1977 analyzed data from a sample of male world war ii veteran twins and found that of the overall rate of return to schooling of 8 percent 2 7 percentage points could be attributed to schooling per se 3 2 percentage points could be attributed to genetic factors and 2 1 percentage points could be attributed to shared family environment in a recent paper however orley ashenfelter and alan krueger 1994 have estimated the economic returns to education using data on a new sample of twins which permitted them to adjust their estimate for omitted ability variables and measurement error on this basis they find that family and genetic effects make virtually no contribution to the returns to schooling measurement error however biases the estimated return to schooling downward the findings of ashenfelter and krueger 1994 are very different from previous work in this field and there is now some confusion as to what analysis of twins data really reveals about the economic returns to schooling ashenfelter and krueger s results are based on analysis of data for a sample of 298 individuals 149 pairs of identical twins who attended a twins festival in 1991 they remark at the end of their paper only additional data collection is likely to lead to better estimates of the returns to schooling p 1171

nigeria during and after the oil boom a policy comparison with indonesia nigeria and indonesia provide an interesting contrast with regard to performance and policy during and after the oil boom roughly a decade after the first oil shock nigeria is faced with several economic problems including a serious decline in its agricultural sector and a deteriorating external debt situation while some decline in the nonoil traded goods sector reflects efficient adjustment to the oil boom policy with regard to public expenditure exchange rates pricing and the trade regime could exacerbate such decline and impede readjustment as the boom subsides the links between oil prices deficits inflation and real exchange rate appreciation are analyzed and nigerian and indonesian fiscal and exchange rate and agricultural and foreign borrowing strategies are compared it is concluded that with the exception of cuts in the deficit since 1984 nigerian policy following the boom has not been conducive to adjustment to the current period of low oil prices and high real interest rates corrective measures and policy options are discussed

on the regional labour market determinants of female university enrolment in europe casarico a profeta p and pronzato c d on the regional labour market determinants of female university enrolment in europe regional studies this paper empirically investigates how young women s decisions of investing in post secondary education are affected by labour market outcomes of older women living in the same region eu silc data on educational decisions of women who completed secondary schooling are used and indicators of the regional labour market are constructed exploiting regional and time variability it is found that the share of working women with young children of women with managerial positions and the self employed positively affect the probability to enrol significant effects of these variables for men are not found

endowments and the allocation of schooling in the family and in the marriage market the twins experiment 03 we show how comparisons between the within twin correlations of human capital outcomes across identical and nonidentical twins can be used to identify the variability in the individual specific component of endowments and the responsiveness of schooling to individual specific endowments in the family and in the marriage market even when schooling is measured with error estimates from two twins samples indicate that 27 42 percent of the variance in log earnings obesity is due to variability in individual specific endowments allocations of schooling reinforce specific endowments and individual specific earnings endowments of men and their wives schooling are negatively associated

fiscal policy and the real exchange rate abstract this paper reconsiders some conventional notions about fiscal policy under flexible exchange rates using an extended version of the dornbusch overshooting model the extension allows for a long run link between output and the real exchange rate unanticipated permanent fiscal policy affects both current and long run output while the long run effect is always in the expected direction it is possible that the current effect is perverse both fiscal and monetary policy must cause either nominal exchange rate overshooting or perverse domestic interest rate effects the results suggest that real shocks are a potential source of high exchange rate variability

macro policy responses to natural resource windfalls and the crash in commodity prices policy prescriptions for managing natural resource windfalls are based on the permanent income hypothesis none of the windfall is invested at home and saving in an intergenerational swf is dictated by smoothing consumption across different generations furthermore with dutch disease effects the optimal response is to intertemporally smooth the real exchange rate smooth public and private consumption and limit sharp fluctuations in the intersectoral allocation of production factors we show that these prescriptions need to be modified for the following reasons first to cope with volatile commodity prices precautionary buffers should be put in a stabilisation fund second with imperfect access to capital markets the windfall must be used to curb capital scarcity invest domestically and bring consumption forward third with real wage rigidity consumption must also be brought forward to mitigate transient unemployment fourth the real exchange rate has to temporarily appreciate to signal the need to invest in the domestic economy to gradually improve the ability to absorb the extra spending from the windfall fifth with finite lives the timing of handing back the windfall to the private sector matters and consumption and the real exchange rate will be volatile finally with nominal wage rigidity we show that a taylor rule is a better short run response to a crash in commodity prices than a nominal exchange rate peg

long term relationships of major macro variables in a resource related economic model of australia a cointegration analysis abstract the paper reports the results of a simple cointegration analysis applied to bivariate causality models using data on resource output oil prices terms of trade current account and output growth to investigate the long term relationships in the sense of granger among these major macroeconomic aggregates in a resource related economic model of australia for the period 1960 90 the empirical evidence indicates that these five macro variables as formulated in our model are not random walks in addition resource production and oil prices are significantly cointegrated and they are also significantly cointegrated with the current account terms of trade and economic growth these findings provide support to the long term adjustments foundation of our resource related model

boom or gloom examining the dutch disease in two speed economies traditional studies of the dutch disease do not account for productivity spillovers between the booming resource sector and other domestic sectors we put forward a simple theory model that allows for such spillovers we then identify and quantify these spillovers using a bayesian dynamic factor model the model allows for resource movements and spending effects through a large panel of variables while also identifying disturbances to other shocks using australia and norway as representative cases studies we find that a booming resource sector has substantial productivity spillovers on non resource sectors effects that have not been captured in previous analysis

energy consumption in australia evidence from a generalized working model abstract the paper reports an application of the generalized working model as proposed by laitinen theil raparla 1981 to australian household expenditure data to obtain estimates of income elasticities for four types of energy electricity gas other fuels and petrol the evidence indicates some gain in the laitinen theil raparla model but this gain is insufficient in terms of the atkinson 1973 test to significantly discriminate it from the linear expenditure system

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

resource price turbulence and macroeconomic adjustment for a resource exporter a conceptual framework for policy analysis abstract increased global demand for energy and other resources particularly from the rapidly developing economies of china and india and the opening up of global resource markets to global investors and speculative activity has resulted in considerable recent turbulence in resource prices the recent magnitude of change in resource prices both positive and negative and their macroeconomic implications is of considerable contemporary importance to both resource importing and exporting economies for a resource exporting economy such as that of australia the recent resource price boom has resulted in increased government taxation revenue increased employment and wages in the resource and resource related sectors increased spending in the domestic economy that contributed to buoyant economic growth increased resource exports to the booming economies of china and india and contributed to a stronger domestic currency with beneficial effects upon inflation on the other hand these developments have had adverse effects on the non resource sector by subjecting it to more intense competition for limited resources contributing to a loss of international competitiveness and reduced exports arising from a stronger exchange rate reducing employment in the relatively more labour intensive non resource sector and contributing to an eventual slow down in the overall economy these positive and negative effects and the overall impact of a resource price boom require a fundamentally closer analysis of the structure of the economy under scrutiny in this context the policy response by government is likely to be pivotal in determining the overall macroeconomic outcomes from a resource price boom the aim of this paper is to develop a generic analytical framework to appraise economic outcomes in the wake of a resource price boom for a resource producing and exporting economy to this end a dynamic long run macroeconomic model is developed emphasising the important role and contribution of government fiscal policy in influencing subsequent macroeconomic outcomes the adjustment process in the model arising from a resource price shock emphasises a spending or wealth effect an income effect a revenue effect a current account effect and an exchange rate effect which facilitate a robust analysis of subsequent macroeconomic outcomes from such a shock as well as related policy responses