the value added of laboratory experiments for the study of institutions and common pool resources abstract this article provides an overview of the effects of communication on experimental studies of behavior and outcomes in common pool resource cpr dilemmas aggregate outcomes in cpr dilemmas without communication approximate predictions of non cooperative game theory but allowing cheap talk results in higher outcomes when exogenous rules are monitored at realistic levels subjects cheat even though following the rule would generate optimal outcomes if given the opportunity experimental subjects will devise their own rule systems and impose sanctions on each other these findings complement field research on more complex resources and communities by confirming the critical importance of communication and endogenous rule formation

statistical efficiency of double bounded dichotomous choice contingent valuation the statistical efficiency of conventional dichotomous choice contingent valuation surveys can be improved by asking each respondent a second dichotomous choice question which depends on the response to the first question if the first response is yes the second bid is some amount greater than the first bid while if the first response is no the second bid is some amount smaller this double bounded approach is shown to be asymptotically more efficient than the conventional singlebounded approach using data from a survey of californians regarding their willingness to pay for wetlands in the san joaquin valley we show that in a finite sample the gain in efficiency can be very substantial

analysis of contingent valuation data with multiple bids and response options allowing respondents to express uncertainty a comment abstract alberini et al j environ econom management 45 40 62 2003 propose using a random effects probit model to estimate the coefficient of correlation between responses from the same individual to different costs presented in multiple bounded discrete choice mbdc contingent valuation elicitation formats in an empirical application they report that the correlation coefficient from the random effects probit is close enough to zero to warrant treating the responses from the same individual as independent such a finding would call into question the viability of this elicitation method and past mbdc modeling efforts however our reestimation of the random effects probit using their data as well as two other mbdc datasets available to us suggests that the individual s wtp responses are driven by a single or at least highly correlated underlying wtp distribution our results imply models that assume perfect correlation between responses are more appropriate for modeling mbdc responses

pooling forecasts in linear rational expectations models abstract estimating linear rational expectations models in a limited information setting requires replacing the expectations of future endogenous variables either with instrumented actual values or with forecast survey data applying the method of gottfries and persson empirical examinations of the information sets of economic agents quarterly journal of economics 103 251 259 i show how to augment these methods with actual future values of the endogenous variables to improve statistical efficiency the method is illustrated with an application to the us hybrid new keynesian phillips curve where traditional lagged instruments and the median forecast from the survey of professional forecasters both appear to miss significant information used by price setters so that forecast pooling with actual values improves the statistical fit to inflation

uncovering financial market expectations of inflation this paper seeks to uncover market expectations of inflation from the joint dynamics of nominal interest rates and observed inflation i postulate 1 the existence of a stable vector autoregression in unobserved variables and 2 efficient financial markets the estimation procedure requires no further structural assumptions the econometrician need not observe all the information used by agents in forming forecasts or all the variables that influence real interest rates i find no empirical evidence that economic recessions are correlated with inflation forecast errors however postwar recessions are associated with ex ante real interest rates that are twice the postwar average

dealing with uncertainty in public preferences for rural development policies a contingent valuation survey dominguez torreiro m and solino m dealing with uncertainty in public preferences for rural development policies a contingent valuation survey regional studies rural development programmes are currently envisaged as a means to foster the provision of a broad range of non commodity outputs emanating from multifunctional rural environments this paper presents a contingent valuation survey that analyses individuals perceptions of and willingness to pay for the implementation of a rural development programme in cantabria spain uncertainty in individuals preferences is explicitly acknowledged and introduced into the analytical framework for that purpose a comparison is made between the open ended and the multiple bounded uncertainty elicitation formats the expectation of a positive welfare change constitutes a sound argument in favour of regional rural development policies

survey measures of expected u s inflation of real interest rates and cash flows for decisions concerning investment expenditures international capital flows and exchange rate movements hinge in large part on expected real yield differentials across countries the federal reserve needs reliable measures of expected inflation to formulate and gauge the thrust of monetary policy in fact inflation expectations have become more important to the fed given the diminished stability of the link between the monetary aggregates and gdp expenditures since the early 1980s and the greater role which has been thrust upon expected real short term interest rates in the implementation of federal reserve policy the issue of rationality of inflation expectations that is the extent to which agents form expectations without making systematic mistakes in their beliefs about what inflation will be is important if inflation expectations are formed rationally labor and financial markets will strongly tend to neutralize the potential redistributive effects of inflation over time financial capital will flow efficiently within and across national borders moreover some of the stronger claims of new classical macroeconomics like the claim that only unexpected monetary policy actions will

the effect of protest votes on the estimates of wtp for use values of recreational sites contingent valuation studies are often characterized by a considerable number of protest responses which may cause selectivity bias on the final estimates for wtp sample selection models can detect and if necessary correct selectivity bias in economic applications where the relevant dependent variable is continuous sample selection models are generally estimated using heckman s 2 step method rather than the fiml estimator either method has its own drawback computational complexity for the fiml method susceptibility to collinearity problems for the 2 step method using data on valuation of forest resources for recreational use we analyse the performance of the two estimators in this application given the presence of some collinearity the fiml is preferred to the 2 step method a procedure is outlined to deal with selectivity problems in similar settings

the new keynesian phillips curve from sticky inflation to sticky prices the new keynesian phillips curve nkpc model of inflation dynamics based on forward looking expectations is of great theoretical significance in monetary policy analysis empirical studies however often find that backward looking inflation inertia dominates the dynamics of the short run aggregate supply curve this inconsistency is examined by investigating multiple structural changes in the nkpc for the u s between 1960 and 2005 employing both inflation expectations survey data and a rational expectations approximation we find that forward looking behavior plays a smaller role during the high and volatile inflation regime to 1981 than in the subsequent period of moderate inflation providing empirical support for sticky price models over the last two decades a break in the intercept of the nkpc is also identified around 2001 and this may be associated with u s monetary policy in that period

trust and cooperation social capital and community resource management social capital is one of the main determinants of community resource management success we use the average amount sent in a trust game as a measure of social capital in five rural villages in india combining these experimental data with household surveys we analyze i how the amount sent is correlated with socio cultural community characteristics ii how social capital affects community resource management and iii to what extent experimental play is consistent with real on farm behavior in terms of providing a semi public good the results are interesting from a policy perspective and provide insight into bridging the gap between lab experiments and the field

the un importance of forward looking behavior in price specifications the seminal work of edmund s phelps 1978 john b taylor 1980 and guillermo a calvo 1983 developed forward looking models of price determination that imparted inertia to the price level these models incorporate expectations of future prices and excess demand by imposing constraints typically lag lead symmetry constraints that force future variables to enter the specification in this paper the author tests the empirical significance of future prices in specifications like those of taylor he finds that expectations of future prices are empirically unimportant in explaining price and inflation behavior however the dynamics of a model that includes a purely backward looking inflation specification differ substantially and not altogether pleasingly from those with a forward looking specification copyright 1997 by ohio state university press

are preliminary announcements of the money stock rational forecasts abstract we develop a theoretical framework of analyzing preliminary announcements of economic data and then apply this framework to the money stock we find that preliminary announcements of the money stock are best characterized as measured with classical errors in variables that is the revision is not correlated with the true value of the series the revision is however forecastable using information available at the time of the preliminary announcement our ability to forecast the revision implies that preliminary announcements are not rational estimates of the true money stock

do expected future marginal costs drive inflation dynamics abstract this article discusses a more general interpretation of the two step minimum distance estimation procedure proposed in sbordone 2002 the estimator is again applied to a version of the new keynesian phillips curve where inflation dynamics are driven by the expected evolution of marginal costs the article clarifies econometric issues addresses concerns about uncertainty and model misspecification raised in recent studies and assesses the robustness of previous results while confirming the importance of forward looking terms in accounting for inflation dynamics it suggests how the methodology can be applied to extend the analysis of inflation to a multivariate setting

how informative are preliminary announcements of the money stock in canada the authors examine hypotheses about the relation between provisional estimates and final values of m1 m2 and m3 and their growth rates in canada using monthly data and multiple revisions preliminary values cannot be viewed as final values plus an error revision uncorrelated with these but they are approximately unbiased forecasts of final values the second difference in short term interest rates is a leading indicator of revisions in m1 growth rates and revisions exhibit significant seasonality hence preliminary values are not completely rational forecasts

changes in the federal reserve s inflation target causes and consequences this paper estimates a new keynesian model to draw inferences about the behavior of the federal reserve s unobserved inflation target the results indicate that the target rose from 1 1 4 percent in 1959 to over 8 percent in the mid to late 1970s before falling back below 2 1 2 percent in 2004 the results also provide some support for the hypothesis that over the entire postwar period federal reserve policy has systematically translated short run price pressures set off by supply side shocks into more persistent movements in inflation itself although considerable uncertainty remains about the true source of shifts in the inflation target jel e31 e32 e52

new keynesian economics and the phillips curve models with sticky prices are an important part of new keynesian economics the author shows that several of the new keynesian models imply a formulation that is similar to the expectations augmented phillips curve of milton friedman and edmund phelps he then presents new estimates of the new keynesian phillips curve the author uses two proxies for price expectations survey based measures and an econometric based measure originally developed by bennett mccallum 1976 overall the results are consistent with the model but the survey based results are more precise suggesting that the surveys may be better measures of actual expectations copyright 1995 by ohio state university press

provided and perceived status quo in choice experiments implications for valuing the outputs of multifunctional rural areas this article presents a choice experiment analyzing multifunctional rural development policies targeting conservation and recovery of environmental social and cultural assets in choice experiments a base alternative is usually included in order to estimate the welfare change associated to policy proposals this study is concerned with the much neglected issue of the impact on policy analysis of the definition of a status quo alternative either as an objective assessment by experts or as a self reported perception by respondents convergent validity analysis and prospective policy scenarios show a significant impact of different status quo specifications on individuals preferences and related welfare measures when complex and unfamiliar biophysical systems are involved in policy analysis and evaluation

does market participation promote generalized trust experimental evidence from southern africa does market participation promote generalized morality and trust as postulated by some recent theories we use experimental data from zimbabwe and mozambique to probe into one specific component of this question and find evidence to the contrary the short term effect of market integration appears to be to lower generalized trust however this finding is not robust across all countries

identification issues in forward looking models estimated by gmm with an application to the phillips curve limited information methods are commonly used to estimate forward looking models with rational expectations such as the new keynesian phillips curve of gal and gertler 1999 in this paper we address issues of identiflcation that have been overlooked due to the incompleteness of the single equation formulation we show that problems of weak instruments may arise depending on the properties of the exogenous variables and that they are empirically relevant we also uncover a link between identiflcation and dynamic mis speciflcation and examine the lack of power of hansen s 1982 j test to detect invalid over identifying restrictions with regards to the new phillips curve we flnd that problems of identiflcation cannot be ruled out and they deserve further attention

trend inflation indexation and inflation persistence in the new keynesian phillips curve purely forward looking versions of the new keynesian phillips curve nkpc generate too little inflation persistence some authors add ad hoc backward looking terms to address this shortcoming we hypothesize that inflation per sistence results mainly from variation in the long run trend component of inflation which we attribute to shifts in monetary policy we derive a version of the nkpc that incorporates a time varying inflation trend and examine whether it explains the dynamics of inflation when drift in trend inflation is taken into account a purely forward looking version of the model fits the data well and there is no need for backward looking components jel e12 e31 e52 in this paper we consider the extent to which guillermo calvo s 1983 model of nominal price rigidities can explain inflation dynamics without relying on arbitrary backward looking terms in its baseline formulation the calvo model leads to a purely forward looking new keynesian

protest responses in contingent valuation a significant number of respondents to contingent valuation surveys tend to either state a zero bid or refuse to state a bid at all for reasons associated with the process of valuation these protest responses are routinely removed from contingent valuation samples because it is assumed that they are not indicative of respondents true values the censoring of protest responses has led to the emergence of a definitional controversy one view is that the definition of protest responses and the rules for censoring them are dependent on whether the practitioner conceives of the contingent valuation survey as a market or as a referendum however what is not acknowledged is the possibility that protest responses and their meaning may vary according to the type of good being valued the elicitation format and the interaction between these elements and external factors this potential renders the development of unambiguous rules for censoring protest responses difficult moreover when willingness to pay is viewed as a behavioural intention it becomes important to determine what the responses actually mean this approach does not assume an interpretative position a priori against which the responses should be judged but seeks to inform an existing understanding which is inadequate

understanding conditions for co management a framed field experiment amongst the tsimane bolivia we experimentally assess the willingness to self enforce restricted resource use by playing a common pool resource extraction game in four tsimane indigenous communities in the bolivian amazon we analyse the role of trust in participant s willingness to self restrict resource use and collaborate with the authorities contrary to game behaviour in the industrialized world we find that amongst the tsimane extractions decrease across rounds we also find that participants who trust a non tsimane and b the authorities extract less than other participants but findings are not robust across rounds using the economic and anthropological literature we interpret the findings arguing that trust in non tsimane which is strongly correlated with market access may capture generalized trust levels and that people with higher levels of generalized trust interact more easily in non personal transactions like the situation presented in the game as co management also entails non personal interactions with and trust in the authorities our findings seem relevant for community based conservation and co management

to aggregate pool or neither it is well known that even if all forecasters are rational unbiasedness tests using consensus forecasts are inconsistent because forecasters have private information however if all forecasters face a common realization pooled estimators are also inconsistent in contrast we show that when predictions and realizations are integrated and cointegrated microhomogeneity ensures that consensus and pooled estimators are consistent therefore contrary to claims in the literature in the absence of microhomogeneity pooling is not a solution to the aggregation problem we reject microhomogeneity for a number of forecasts from the survey of professional forecasters therefore for these variables unbiasedness can only be tested at the individual level