population increase economic growth educational inequality and income distribution some recent evidence abstract using a recent inter country sample impacts of population increase short run growth rate and educational level and inequality on income distribution are assessed as in almost all other studies high population increase is observed to be a disequalizer however unlike the position indicated in several earlier studies rapid short run economic growth seems to reduce income inequality while higher mean schooling level appears to be a mild equalizer contrary to the results reported by earlier researchers no adverse effect of educational inequality on income distribution is found

moral hazard in lending and labor market volatility when the economy experiences a sharp economic downturn credit spreads widen and project financing costs for firms rise as funding sources begin to dry up the economy experiences a lengthy recovery with unemployment rates slow to return to full employment levels we develop a model that displays these features it relies on an interaction between labor search frictions and firm level moral hazard that is accentuated during recessions the model is capable of addressing the shimer puzzle with labor market variables exhibiting significantly more volatility on average as a result of the heightened moral hazard concerns during these episodes that significantly deepen and prolong periods of high unemployment as vacancy postings fall dramatically and the job finding rate declines our mechanism is also found to induce internal shock propagation causing the peak response of output unemployment and wages to occur with a several quarter delay relative to a model without such frictions many other labor market variables also show slower recovery their return to preshock level occurs at a slower pace for a number of periods after the peak response

in search of smoking guns what makes income inequality vary over time in different countries we investigate the forces affecting the distribution of income by analyzing an unbalanced panel of information for 16 industrialized countries for the years 1966 through 1994 income inequality is measured with the gini coefficient of equivalent disposable income individuals are the unit of analysis the statistical analysis uses panel methods the results suggest that many factors affect the development of income inequality some factors are strictly economic a decreased industrial sector generally fosters inequality and some support is found for the view that increased trade of manufactured goods from developing countries is also a factor other forces are outside a strictly defined market sphere low inequality is found when a large proportion of the labor force belongs to a trade union and also when there is a large public sector in addition demographic circumstances are important since the proportion of the population under age 15 has a positive effect on inequality we find however no association between the unemployment rate and inequality

nodal market power assessment in electricity markets market power assessment is an important aspect of electric market analysis and operation market power problems are more complicated in an electric market than those in other markets due to the specific properties of electricity this paper investigates market power problems and the related solution techniques in an electric power market the impact of load variation the size of a power supplier and random failures on market power has been investigated the geographic difference of market power caused by network constraints has been considered must run share mrs and nodal must run share nmrs have been proposed to represent system and local market powers respectively an optimization technique and the topological analysis of power flow have been used to determine the mrs and nmrs expected nodal must run share enmrs has been proposed to represent the impact of random failures on market power and the associated risk of customers paying a high price due to the exercise of market power the contingency enumeration and probabilistic technique have been used to determine the enmrs the ieee reliability test system is analyzed to illustrate the proposed indices and techniques

changing income inequalities within and between nations new evidence fresh data sources on cross national income are examined to document recent changes in the composition of world income inequality within and between nations new evidence shows that during the 1980s and 1990s the composition of world income inequality experienced a fundamental change characterized by the diminishing significance of between nation income differences and the growing prominence of within nation inequalities two competing trends account for this change 1 steady growth in the average level of income inequality within nations and 2 a decline in income inequality between nations these recent trends signify a reversal in one of the major legacies of the industrial revolution the internationalization of world income inequality across national borders the findings raise important questions for future studies of cross national inequality and development

economic development and income inequality further evidence on the u curve hypothesis abstract internationally comparable data on inequality and income are utilized to reassess the empirical status of kusnets u curve hypothesis the hypothesis seems well supported when both developed countries dcs and less developed countries lcds are included in the sample however the position changes rather dramatically if the sample is restricted to lcds and very small support for the hypothesis is then observed also a simple comparison indicates that some of the support reported in earlier studies may have been due to the use of conventional gross domestic product per capita in general results based on gini coefficient seem less favorable to the hypothesis than those derived from household income shares

the nature of economic development abstract economic development has been associated with a sustained increase in real per capita gdp over fairly long periods of time such growth rates have been associated with the phenomenon of structural transformation both among the european leaders and the late comers among the developing countries equally compelling though less pervasive has been an essentially harmonious relationship between the growth of per capita gdp macroeconomic stability and a better distribution of income moreover the incidence of poverty has sharply decreased while the leading indicators of human development have recorded a significant improvement wherever per capita income has increased rapidly this property of economic development christened as orderly transformation in this paper is one of the most outstanding stylized facts of economic development and it has been most evident among countries where growth of per capita income has been in excess of 3 per annum

development and inequality revisited three decades after the seminal article of kuznets 1955 and one decade after the empirical investigation of ahluwalia 1976b the relationship between income inequality and economic developement is still controversial this paper examines the above relationship within a time series cross section framework in a sample of countries which are representative of the non centrally planned economies of the world we use gdp per capita in real un international comparison project dollors as an indicator of a country s level of economic development the results lend support to the kuznets inverse u hypothesis although other factors relfecting the institutional setting of a country are found to affect income inequality significantly during the development process as well similar results are obtained if we exclude developed countries from the sample

cournot equilibrium calculation in power networks an optimization approach with price response computation since deregulated power markets are very often oligopolistic ones efficient models that are able to describe strategic behavior of firms must be developed in particular transmission constraints can easily increase the opportunities of market players to exercise market power this paper presents a model that describes the firms strategic interaction based on nash cournot equilibrium when the power network is taken into account specifically this paper introduces a new iterative algorithm that explicitly considers how the production at a certain bus affects the whole network and consequently models the opportunities for the firms of exercising market power taking into account their ability to influence the composition of the set of constrained lines the theoretical basis of the method as well as a case study based on the central european network is included

should the kuznets effect be relied on to induce equalizing growth evidence from post 1950 development abstract the large body of cross sectional statistical research assessing 1 a kuznets inverted u for less developed countries ldcs 2 b a turning point is analyzed an alternative methodology is presented those countries which started in 1950 well below the turning point in rgdp and which reached an rgdp well above the turning point by 1980 are utilized as key cases income distribution data and assessments from individual country experts are combined with historical comparative microanalyses for each key case brazil costa rica greece japan malaysia south korea taiwan and turkey to construct patterns of income distribution during this crucial growth period it is demonstrated that the jury is still very much out on the kuznets inverted u for ldcs and the notion of a turning point should be rejected copyright 1997 elsevier science ltd

growth and its disparity in rich and poor regions abstract we use international comparison data to relate the regional growth and the inequality across countries for four regions of the non communist world the north south east asia south central asia and sub saharan asia the results are compared with findings by kuznets and others

market power analysis for the iranian electricity market the market power problem in iranian electricity market is addressed in this study this paper by using various structural indices of market power and reviewing market results analyzes the intensity of competition in iran s electricity market and examines whether this market is functioning at an appropriate level of efficiency in this article the most well known indices of market power are calculated in two approaches for two different scenarios current situation and future outlook of generation sector s ownership in iran s power industry comparing the results of these scenarios promises more competitive market for the second scenario calculating residual supply index for iran s power market shows despite admissible values of concentration ratios due to supply scarcity during periods when the demand is close to the total available capacity some suppliers can exercise market power even with a relatively small market share the most important price and load indices like weighted average prices and load price duration curves of iranian electricity market during march 2007 march 2008 are also analyzed in this paper these results imply the existence of economic withholding the main limiting factors of competition and significant implemented countermeasures for market power mitigation in iran s electricity market are also mentioned

the economics of development a survey i the subject our definition of the subject will be the use of economic analysis to understand the economies of poor or developing countries this includes in particular how standards of living in the population are determined and how they change over time and further how policy can or should be used in the influence of these processes the definition contains in principle much or most of analytical methods in economics insofar as they can be put to use in the examination of the issues of interest this is as it should be but it poses a problem for a survey in a journal a comprehensive treatment is infeasible so we shall follow a different route the survey will focus on what i take to be the major themes and approaches which characterise the productive aspects of the subject there is therefore no pretence at being exhaustive the purpose is rather to highlight some of the advances many of these have been of real substance there are a number of possible purposes for a survey and it is important to be clear at the outset for whom it is intended what it is and what it is not this survey is addressed to economists and students of economics who know the tools of their trade but not necessarily how they have been applied to and fashioned for the analysis of the economics of developing countries it is a description of the ways in which problems can be productively formulated and approached in terms of examples chosen for their intrinsic importance and interest the vastness of the subject means that we have to be highly selective it does not seek to provide a summary evaluation of the current view of the appropriate response to immediate policy questions it is not a history of thought nor a research manifesto nor an attempt to adjudicate or settle the major debates where they arise naturally from the major purpose some judgements on these subjects will be offered but they do not themselves constitute the primary intent of this survey there are three lines of enquiry or sets of questions which have i suggest been distinctive of the most fruitful work in development economics they will

womens labour force participation and the distribution of household incomes evidence from cross national data this study investigates the effects of womens labour force participation on household income inequality the theoretical background is examined an econometric model is specified and tested and a simulation is performed it is found that the direction and strength of the income distribution effects depend on the level of womens participation starting from low levels a rise in their activity rates intensifies income inequality but the disequalizing tendency diminishes as participation continues to increase and is replaced by an equalizing process when high levels of participation are attained excerpt

modeling long term dynamics of electricity markets in the last decade many countries have restructured their electricity industries by introducing competition in their power generation sectors although some restructuring has been regarded as successful the short experience accumulated with liberalized power markets does not allow making any founded assertion about their long term behavior long term prices and long term supply reliability are now center of interest this concerns firms considering investments in generation capacity and regulatory authorities interested in assuring the long term supply adequacy and the stability of power markets in order to gain significant insight into the long term behavior of liberalized power markets in this paper a simulation model based on system dynamics is proposed and the underlying mathematical formulations extensively discussed unlike classical market models based on the assumption that market outcomes replicate the results of a centrally made optimization the approach presented here focuses on replicating the system structure of power markets and the logic of relationships among system components in order to derive its dynamical response the simulations suggest that there might be serious problems to adjust early enough the generation capacity necessary to maintain stable reserve margins and consequently stable long term price levels because of feedback loops embedded in the structure of power markets and the existence of some time lags the long term market development might exhibit a quite volatile behavior by varying some exogenous inputs a sensitivity analysis is carried out to assess the influence of these factors on the long run market dynamics

distributional implications of macroeconomic policy theory and applications to el salvador abstract this article offers a theoretical framework for designing macroeconomic strategy for el salvador that will both respect stabilization and structural adjustment needs and enhance social equity after outlining the largely negative distributional implications of the orthodox policies followed by el salvador in recent years we argue that stabilization and efficiency could actually be improved by increased equity and sketch out the elements of an alternative approach that would be distributionally sensitive and thereby help consolidate the peace

costly monitoring financial intermediation and equilibrium credit rationing abstract this paper establishes a link between equilibrium credit rationing and financial intermediation in a model with asymmetrically informed lenders and borrowers costly monitoring and investment project indivisibilities intermediation is shown to dominate borrowing and lending between individuals and these financial intermediaries exhibit several of the important features of intermediaries as we know them equilibrium interest rates and the aggregate quantity of loans respond quite differently to changes in taste and technology parameters depending on whether or not there is rationing in equilibrium

concentration of income and land holdings abstract economic growth is one of the causes of income disparity among countries however some evidence suggests that the maldistribution of land holdings is the underlying factor of the inequality of income kuznets speculates that over the stages of economic growth it is the initial unequal income distribution that induces a high concentration of asset holdings and this in turn contributes to a high concentration of income to resolve this ambiguity the paper introduces latent variables in a path model designed for causal prediction estimation is done by world s partial least squares method prediction is based on the q 2 statistic findings show that for both dcs and ldcs as well as for a sample of all countries the causal predictive direction between concentrations of income and land holdings is from the former to the latter

equilibrium shirking access to credit and endogenous tfp fluctuations this paper develops a model in which idea rich cash poor entrepreneurs undertake risky investment projects that are subject to future liquidity needs and shirking due to moral hazard the model suggests that the strength of the entrepreneur s incentive to shirk is countercyclical and that endogenous shirking adds volatility to the economy by increasing the persistence and volatility of tfp this increase in persistence and volatility is driven by the variation in the number of successfully completed projects compounded by the effect of the incentive to shirk on access to credit changes in factor employment play only a minor role

income and gender inequalities in asia testing alternative theories of development during the 1970s and 1980s debates raged about the effects of economic development on income inequality most dependency theorists viewed economic development as a two edged sword linking increasing income inequalities in third world countries to their high growth rates on the other side of the debate economists following simon kuznets along with sociologists of the modernization school claimed that income inequality increases at an early stage of development and later decreases as with advancing development incomes become more evenly distributed among the population 2 yet a third view held that the latter stage of development generally occurs with structural transformation a term used by hollis chenery as well as bruce f johnston and peter kilby to describe long term changes in the structure of demand production and employment which allows the transformation of a traditional mostly agricultural economy to a modem economic system with strength in agricultural manufacturing and service sectors 3 the empirical work on income inequality has not been related to work on other kinds of inequalities for example gender inequality nor have the results been used to contrast the different predictions of the different theories dependency versus kuznets versus structural transformation on the gender issue most of the empirical work in the women in development wid literature 4 however including our own previous efforts 5 fits within the theoretical framework of the dependency school better than it does within the framework of kuznets or structural transformation this is because most of the evidence documents third world women producers unequal access to modern inputs of production that would increase their yields and incomes if equal access were available to them the most famous of the wid studies have concluded that the benefits of economic development do

natural resource booms and inequality theory and evidence we develop a theory in the context of a two sector growth model in which learning by doing drives growth to explain the time path of income inequality following natural resource booms in resource rich countries under the condition of a relatively unskilled labor intensive non traded sector inequality falls immediately after a boom and then increases steadily over time until the initial impact of the boom disappears using data for 90 countries between 1965 and 1999 we find evidence in support of the theory especially for oil and mineral booms we also find that uncertainty about future commodity prices increases long run inequality

foreign direct investment and income inequality further evidence abstract this paper examines the relationship between foreign direct investment fdi and income inequality special attention has been paid to data comparability and model specification by comparing models with and without geographical dummies this study shows that the statistically significant correlation between fdi and income inequality widely obtained in earlier studies might capture more of the geographical difference in inequality than the deleterious influence of fdi and to the extent that fdi does give rise to more unequal income distribution in the host less developed countries ldcs only east southeast asia ldcs appear to have been harmed by the inflow of fdi during the 1970s it should be noted however that the second result refers only to the marginal impact not the total impact apart from fdi our empirical evidence suggests that the level of economic development the direct role of government and to a smaller degree the significance of the agriculture sector in an ldc are crucial determinants of income inequality

the measurement of inequality and poverty a policy maker s guide to the literature abstract mathematical measures of poverty and inequality embody values that reflect the historical political social intellectual and ethical forces prevalent at the time of their formulation so that policy makers may select measures of poverty and inequality that are consistent with their values it is important to make explicit the value judgements implicit in the measures models designed to measure poverty and inequality fall into four categories absolute poverty measures absolute income measures relative poverty measures and relative inequality measures this article examines the principal models within each category and discusses the assumptions limitations and values implicit in the models

two stage robust generation expansion planning a mixed integer linear programming model this paper presents a new uncertainty handling framework for optimal generation expansion planning gep amalgamating the notions of single stage and two stage robust optimization ro the proposed multiyear robust gep methodology as a tractable mixed integer linear programming optimization problem copes with the inherent planning uncertainties associated with forecasted electricity load demand as well as estimated investment and operation costs through distribution free bounded intervals producing polyhedral uncertainty sets the optimal generation expansion plan obtained from the proposed ro approach is immunized against worst case planning uncertainties considering the adopted degree of conservatism for each uncertainty set therefore the proposed methodology is capable of controlling the robustness of the optimal investment schedule regarding the enforced planning uncertainties simulation results demonstrate the efficacy and efficiency of the proposed ro framework throughout gep studies

2002 lawrence r klein lecture liquidity and asset prices we broadly define liquid assets or monetary assets as any asset that can be readily sold in the market and can be held by a number of people in succession before maturity we ask in what environment is the circulation of liquid assets essential for the smooth running of the economy by developing a canonical model of a monetary economy i e where the circulation of liquid assets is essential we are able to examine the interaction between liquidity asset prices and aggregate economic activity

the structure of income inequality in puerto rico abstract the kuznets hypothesis predicts that the level of income inequality will rise then fall during the course of economic development however empirical studies have found that for many countries inequality levels off after a certain stage of development and remains at this level for a long period of time in this paper one possible reason for the formation of such an inequality plateau is suggested puerto rico is used for our case study employing an augmented input output model we find that the 1963 puerto rican economy had reached such an inequality plateau with a very narrow range of inequality levels permitted by its economic structure we then investigate the relation between the inequality band and the degree of sectoral interdependence we find that under certain assumptions one can show a direct correspondence between the two with the equality range narrowing as the linkages increase once an economic system has reached a certain degree of sophistication in its linkage structure its inequality level may become immobile the implication of this is that after a point the natural course of development will not result in further reduction in inequality at this stage the government might have to intervene directly in income determination to reduce inequality

efficient capacity investment and joint production agreements in an oligopolistic electricity market the hidroaysen joint venture project abstract we develop a model for a power market with the characteristics of the chilean power supply industry which is an integrated system with a system operator so with a vast authority to define the dispatch of the system we evaluate whether a large joint power generator project made up by the two largest power generators is an anti competitive project considering four investment technologies for power generation namely hydro coal diesel and an advantageous hydro technology which can only be built in a large scale hidroaysen for the joint venture case we use an oligopolistic cournot model and a benevolent social planner both calibrated to the chilean power industry in order to assess the efficiency of alternative investment strategies and conditions whether the hidroaysen joint venture project can be barred to be judged as anti competitive results suggest that the joint venture is an efficient investment and there is a pro competitive behaviour on the part of the two power generators and that there are benefit to consumers who should expect non increasing energy prices as a result of the advantageous hydrotechnology

large scale market power modeling analysis of the u s eastern interconnection and regulatory applications this paper presents results from a large scale cournot model of the u s eastern interconnection using a dc load flow network there are 100 network locations at the level of control areas along with 2725 generators owned by 99 cournot firms and 200 competitive fringe suppliers these results demonstrate that this modeling approach can analyze potential generation market power with a reasonable approximation of the actual transmission network over a large integrated region while such models have been used to analyze market design alternatives their application to regulatory decision making concerning generation market power mitigation has been more controversial we suggest that such large scale market price simulations could improve upon aspects of the existing generation market power screening methods used in the united states for mergers and market based rates illustrating such applications using this model

financial intermediation business failures and real business cycles in this paper a general equilibrium business cycle model is construct ed that when subjected to real disturbances mimics observed qualita tive comovements among real output money business failures risk pr emia intermediary loans and prices in contrast monetary disturban ces generate cycles that have several inconsistencies with empirical evidence thus providing support for real business cycle theory at th e expense of monetary theories of the business cycle financial inter mediation arises endogenously in the model and intermediation matters for business cycle behavior a credit supply mechanism acts in tande m with an intertemporal substitution effect in propagating stochastic disturbances copyright 1987 by university of chicago press

learning asymmetries in real business cycles when a boom ends the downturn is generally sharp and short when growth resumes the boom is more gradual our explanation rests on learning about productivity when agents believe productivity is high they work invest and produce more more production generates higher precision information when the boom ends precise estimates of the slowdown prompt decisive reactions investment and labor fall sharply when growth resumes low production yields noisy estimates of recovery noise impedes learning slows recovery and makes booms more gradual than downturns a calibrated model generates growth rate asymmetry similar to macroeconomic aggregates fluctuations in agents forecast precision match observed countercyclical errors of forecasters

semiparametric bayesian inference of the kuznets hypothesis abstract in contrast to the parametric quadratic specification used for examining the kuznets hypothesis this study relies on the semiparametric bayesian inference of the partially linear regression to re assess the validity of an inverted u shape of the kuznets curve the simple framework permits us to perform estimation and model comparison in a unified way empirical results using cross sectional data on 75 countries indicate that there exists an approximately inverted hence asymmetric relation between inequality and per capita gdp moreover judged by the bayes factor overwhelming evidence is found in favor of our semiparametric specification finally robustness check using alternative measure of inequality and pool data confirms our findings

agrarian structures urbanization and inequality summary this study examines the impact of agrarian structures on income inequality over the long run first it exhibits the relationship between land and income distribution by developing a theoretical model based on harris and todaro 1970 and lewis 1954 high land inequality increases income gini coefficients in the urban sector as well as the rural sector not only by creating congestion in the urban subsistence sector but also by feeding the growth of the urban reserve army of labor which pulls down the wages in the urban capitalist sector next the study investigates the empirical relationship between land inequality level of urbanization and income inequality using cross country datasets the estimation results support the theoretical model and indicate that the level of land inequality has a significant impact on determining the level of urbanization and urban and overall income inequalities moreover the analysis finds that overurbanization increases income inequality the empirical analysis controls for institutional factors like education inequality and the level of democracy the results present a stronger evidence on the land inequality s influence through urbanization than through education and democracy these results suggest that policymakers should have a broader view as to the importance of agrarian policies a progressive land reform or and subsidies protecting small peasantry can also reduce urban income inequality and poverty over the long run

inequality growth and democracy the analysis of the relationship between inequality and economic growth in distinct politi coeconomic environments has been one of the central preoccupations of the extensive theoretical and empirical work on growth in the last decade the authors argue that the empirical evidence available to date strongly indicates the relevance of this work for understanding the elusive causal connection between economic development and democracy the state of the literature suggests considerable sophistication in conceptualizing the direct economic effects of inequality and contains critical insights into politically unconstrained policy making aimed at the alleviation of their negative economic impact however the political feasibility of the recommended policy measures and the politically mediated effects of inequality and redistributive policy on growth and on the strength and stability of democratic regimes are understood less well the authors discuss the critical factors influencing these effects and sketch several approaches to creating a comprehensive politicoeconomic account of the interaction between inequality redistributive policy making and political regimes

an alternative source of measurement error as an explanation for the inverted u hypothesis in the rapidly growing literature on the relationship between income distribution and economic development two of the most frequently investigated issues are the so called inverted u hypothesis otherwise known as the kuznets curve and short run trends in income distribution the inverted u hypothesis alleges that the relationship between income inequality and per capita income resembles an inverted u wherein at low levels of development there is little inequality but as income per capita rises inequality rises also but only up to a point after which it gradually decreases irrespective of the u shape of the relationship there is also very considerable interest in the direction size and explanation for trends in income distribution in developing countries

understanding liquidity shortages during severe economic downturns abstract one feature of economic recessions is the appearance of aggregate liquidity shortages that can exacerbate the economic downturn we develop a model in which the demand for liquidity arises suddenly in response to continued funding needs of partially completed investment projects whose outcomes are subject to idiosyncratic shocks and moral hazard when the economy experiences an adverse aggregate productivity shock incentive constraints that underlie equity contracts may bind provided the shock is severe enough in this case credit rationing appears and the heightened demand for liquidity coincides with a greater reluctance to take on equity positions or deepen investments in on going investment projects the consequence is a reduction in new investment and termination of on going projects due to a lack of liquidity thereby worsening the economic slowdown

modeling energy and development an evaluation of models and concepts most global energy models are developed by institutes from developed countries focusing primarily on issues that are important in industrialized countries evaluation of the results for asia of the ipcc sres models shows that broad concepts of energy and development the energy ladder and the environmental kuznets curve can be observed in the results of the models however improvements can be made in modeling the issues that underlie these concepts like traditional fuels electrification economic structural change income distribution and informal economies given the rapidly growing importance of energy trajectories of developing countries for global sustainability the challenge for the future is to develop energy models that include all these aspects of energy and development

financial intermediation and delegated monitoring this paper develops a theory of financial intermediation based on minimizing the cost of monitoring information which is useful for resolving incentive problems between borrowers and lenders it presents a characterization of the costs of providing incentives for delegated monitoring by a financial intermediary diversification within an intermediary serves to reduce these costs even in a risk neutral economy the paper presents some more general analysis of the effect of diversification on resolving incentive problems in the environment assumed in the model debt contracts with costly bankruptcy are shown to be optimal the analysis has implications for the portfolio structure and capital structure of intermediaries

bureaucratic corruption as a constraint on voter choice this paper has attempted to explain variations among countries in the tax level in the importance of progressive taxes and transfers and in the after tax share of middle income groups particular attention was paid to the declines in each of these variables which are observable in cross section data in the intermediate ranges of development it was argued that these phenomena are difficult to explain by variations in the demand for public spending or in the degree of tax evasion

economic models for the environmental kuznets curve a survey abstract the environmental kuznets curve ekc refers to an inverted u shaped relationship between some pollutant level and per capita income i e the environmental quality deteriorates at early stages of economic growth and subsequently improves at a later stage since the early 1990s a considerable number of empirical studies have been conducted on the ekc and although there is no conclusive proof it has been recognized that the ekc emerges as an empirical regularity however some recent studies cast doubt on the concept and methodology of empirical results and evidence of the existence of the ekc has been questioned in fact how economic growth affects the environmental quality i e the shape of the ekc is still controversial in order to identify the actual relationship between the environmental quality and economic growth it is essential to develop economic models from various points of view this paper overviews the current stage of theoretical models that explain such relationship

the effect on income distribution of development the growth rate and economic strategy abstract an analysis of cross section and time series data for 83 countries confirms some and contradicts other work on income distribution new findings include a dualistic socio political system is highly unfavorable for equality neither the extent of government intervention in the economy nor the rate of manufactured exports are systematically related to income distribution the analysis confirms that there is no systematic relationship between equality and the rate of economic growth educational participation and a reduction in the share of primary exports in gdp are both favorable for equality there is some support for the kuznets hypothesis that inequality increases as per capita income rises to about 400 and then declines with further income increase but the empirical support is not strong and may be weakening over time these findings lead to more optimistic conclusions then other work that rapid growth in a mixed economy is quite consistent with unchanged or even improved income distribution even at early stages of development

enterprise inequality and economic development we characterize an equilibrium development process driven by the interaction of the distribution of wealth with credit constraints and the distribution of entrepreneurial skills when efficient entrepreneurs are relatively abundant a traditional development process emerges in which the evolution of macroeconomic variables accord with empirical regularities and income inequality traces out a kuznets curve if instead efficient entrepreneurs are relatively scarce the model generates long run distributional cycles driven by the endogenous interaction between credit constraints entrepreneurial efficiency and equilibrium wages

promise and pitfalls in the use of secondary data sets income inequality in oecd countries as a case study this paper examines the role of secondary data sets in empirical economic research taking the field of income distribution as a case study we illustrate problems faced by users of secondary statistics showing how both cross country comparisons and time series analysis can depend sensitively on the choice of data after describing the genealogy of secondary data sets on income inequality we consider the main methodological issues and discuss their implications for comparisons of income inequality across oecd countries and over time the lessons to be drawn for the construction and use of secondary data sets are summarized at the end of the paper

can the kuznets effect be relied on to induce equalizing growth abstract the use of internationally comparable income data to test kuznet s inverted u hypothesis introduces several econometric problems this study a explains and corrects for these econometric problems b assesses the sensitivity of estimated results to alternative functional specifications and sample variations c provides a more rigorous test for structural change between more and less developed countries in the phasing of the inequality trend and d estimates the time likely to elapse before various of the developing countries reach the turning point the study s findings offer broad support for kuznets s hypothesis but do not support the advocacy of development policies focused exclusively on growth for low income countries growth s equalizing phase cannot be anticipated to set in for half a century

sensitivity of reserve margin to factors influencing investment behaviour in the electricity market of england and wales abstract the electricity generation and distribution industries of england and wales have recently undergone major re structuring as part of the privatization process of taking them out of the public sector on the generation side three major companies have been created which compete both with each other and with the new independent companies who are expected to enter the market trading between generators and distributors is controlled centrally by a pool system which attempts to ensure the optimal operation of the system in the short term and gives a pricing signal for longer term investment this pricing signal depends upon an a priori loss of load probability this paper is intended to provide insights into how the investment in capacity for generation could evolve according to various regulatory conditions economic assumptions degrees of competition and the strategic behaviour of the separate companies using a system dynamics approach a simulation model of investment is developed to generate insights into the volatility of the reserve margin variations in the loss of load probability and the various market share scenarios the degree of uncertainty in the demand the amount of information exchange between competitors and the degree of foresight in planning are considered as well as different financial or market share objectives for companies

development and distribution a critique of the cross country u hypothesis abstract this paper questions the validity of a modern paradigm viz the u hypothesis it argues that notwithstanding contrary claims the recent cross country econometric studies by ahluwalia and others have little in common from a methodological point of view with kuznets earlier intertemporal national studies ahluwalia s cross country u curve is found to be based on defective statistics and questionable methodological premises in specific the estimation of one u curve from observations on both ldcs and dcs is criticised a sample restricted to the ldc group considerably weakens support for the u hypothesis further even marginal variations in the data set lead to the virtual disappearance of ahluwalia s empirical relationship the paper concludes that the cross country u hypothesis is more of a hindrance than an aid to our comprehension of the relationship between economic growth and income distribution

investment incentives in the korean electricity market abstract this paper develops a model based analysis of the effects of various capacity incentive systems on new investment in the korean electricity market the restructuring process in korea allocated power generation to six firms competing within a wholesale market albeit strictly on a cost basis because of this cost based pool capacity payments were also introduced to encourage new investment however it is an open question whether the current fixed capacity payment scheme is enough to secure resource adequacy and consideration is being given to alternative mechanisms such as the use of lolp using a detailed market simulation model based on system dynamics we compare these approaches in terms of how they may influence the investors decisions and thereby determine the system reserve margin the simulation results suggest that there may be serious problems in staying with the current fixed capacity payments in order to achieve resource adequacy in contrast an lolp based capacity mechanism may in the longer term increase the reserve margin compared with a fixed capacity payment more generally this paper indicates how crucial the effective modeling of the investment behavior of the independent power producers is for adequate policy support even if they only constitute a fringe in a substantially centrally influenced market

income inequality development and dependence a reconsideration we reconsider the role of foreign investment in income inequality in light of recent critiques that question the results of quantitative cross national research on foreign capital penetration we analyze an unbalanced cross national data set in which countries contribute different numbers of observations with a maximum of 88 countries and 488 observations dated from 1967 to 1994 random effects regression models that control for unmeasured country heterogeneity are used to investigate effects of foreign capital penetration on inequality measured as the gini coefficient against the background of an internal developmental model of inequality we adapt firebaugh s 1992 1996 critique of the literature on the effect of foreign investment on economic growth to the study of income inequality and find that the stock of foreign direct investment has an effect on inequality that is independent of the mechanisms identified by firebaugh we explore tsai s 1995 claim that the effect of foreign capital penetration is spurious and find that foreign stock has a significant positive effect on inequality net of region specific differences an alternative interpretation of the findings of the foreign investment inequality literature is discussed in light of the discovery of an inverted u shaped relationship between income inequality and foreign investment stock per capita we conclude that thinking on the relationship between income inequality and investment dependence should be revised in light of an investment development path relating the inflow and outflow of foreign capital to economic development

political regimes and income inequality abstract we construct a theoretically motivated model of income inequality through a pooled regression on an international panel we demonstrate that political regime whether extractive redistributive or reinvestment oriented correlates with within country income inequality

mickey mouse numbers and inequality research in developing countries the usage of unreliable statistics is common in development economics particularly in research on income distributional issues it is widely believed for example that the distribution of income in taiwan equalised dramatically between the early 1950s and about 1980 under close examination it is clear much of the evidence advanced is flawed the treatment of data by a number of analysts is puzzling and links between export orientation and inequality trends are flimsy it is argued that economists should be far more concerned about data problems in their research

inequality and development across and within countries summary this paper provides a cross country comparison of how income inequality has evolved within countries at different levels of development it uses overlapping nonparametric regression which allows visual comparisons of inequality both within and across countries as a result the methodology allows more specific conclusions than cross country regressions and yet is more general than within country case studies the approach highlights the problematic conclusions that can arise with parametric regressions in particular with tests of the kuznets curve while some previous results are confirmed some new results on inequality across countries are also discovered

testing the determinants of income distribution in major league baseball i introduction income of professional athletes is a frequent topic of discussion of fans sportscasters and the general public economists have also increasingly been attracted to this topic because the distribution of income of these players has both policy and business implications as a consequence the report of major league baseball s mlb blue ribbon panel formed in 1998 by mlb commissioner bud selig received quite a lot of attention this panel was charged with describing and explaining the economic condition of mlb comprised of such dignitaries as former federal reserve chairman paul volker senator george mitchell yale university president richard levin and columnist george will this panel reported that team payrolls have become increasingly disparate the gap between rich and poor teams is not only wide but is growing levin et al 2000 a case in point is the fact that the salary of the highest paid player in the 2000 season los angeles kevin brown at 15 7 million was 95 of the entire payroll of the poorest team the minnesota twins the effect according to the panel s report is a dramatic decline in parity and competitiveness of mlb since 1994 a team in the top payroll quartile has won every world series game in 1999 the teams with the five largest payrolls had an average winning percentage of 0 557 whereas the five poorest teams had a comparable figure of 0 444 the report discusses various recommendations that may narrow this gap leading to what one might call convergence in team payrolls this article examines the distribution of income in mlb for 1985 to 2000 we revive and extend a technique first suggested by thurow 1970 and show how it can be used to test for time trends versus cross sectional demographic and economic aspects influencing income distribution thurow 1970 discusses the impact of various measures on median income in the present case by calculating the gini coefficient we can discuss the impact that the explanatory variables have on income inequality in the context of mlb we attempt to shed light on the reasons why teams have greater or lesser payroll disparity we leave the question of the effect of between team payroll inequality on team wins and team revenues for future research the issue of whether to use an inequality measure that is based on a particular distribution or one that is distribution free has been widely discussed in the income distribution literature silber 1999 ryu and slottje 1999 in advocating the use of parametric distributions point to several benefits of estimating the lorenz curve in this manner these benefits include the ability to summarize thousands of observation points with a few parameters the ability to estimate the density function at any point an enhanced ability to construct inequality measures and the ability to formulate possible laws that would otherwise not be possible to detect however there are problems associated with the use of a parametric lorenz curve such as the choice of a suitable distribution the problem is compounded by the fact that income data are often grouped and have an open ended highest income category making it difficult to obtain accurate estimates one advantage of using professional sports data is the fact that the salary is available per individual and is not grouped consequently an actual number is available for the highest income this study analyzes payroll inequality in a professional sport by team that is for each year we calculate a measure of inequality for each mlb team and consider the characteristic differences in within team payroll distributions our study is not however the first to consider income inequality within professional team sports depken 2000 and jewell and molina 2004 find that mlb teams with greater wage disparity have fewer wins furthermore sommers 1998 finds a negative relationship between team success and within team payroll inequality using national hockey league data

growth and equity with endogenous human capital taiwan s economic miracle revisited this paper presents an endogenous growth model for a small open economy with a significant trade surplus and active government development strategies in order to reexamine the major determinants of economic growth and income distribution this analysis provides a better interpretation for the intertwined relationship between growth and equity an important economic issue that has not been fully addressed by the well known models 5 9 20 in traditional growth studies economists have emphasized the role of two major factor inputs physical capital and labor output growth is considered to depend merely on exogenous shifts in population and technology recently lucas points out that this conventional approach to studying economic growth may leave more than half of output growth unexplained 12 in order to improve the understanding of the underlying endogenous forces promoting economic development new growth theorists have proposed several alternatives to the conventional models such as the endogenous fertility choice 4 the endogenous technological evolution 16 and the endogenous human capital accumulation or learning process 12 13 to name but a few these contributions have generated additional interests in and rich implications for empirical studies of public policy 6 and cross country comparisons 3 15 lucas s endogenous human capital formation model is particularly suitable for studying the

stochastic trends and fluctuations in national income wages and profits macroeconomics and especially the theory of business cycles went through very important changes during the last ten years during the seventies most macroeconomists believed that economic activity evolved around a deterministic trend cyclical components and unanticipated changes in policy were believed to be the source of economic fluctuations the real business cycle rbc models which began to emerge in the early eighties cast doubt on this belief according to the rbc theory the cumulative effect of permanent shocks to productivity explains economic fluctuations the proponents of the rbc theory assume that productivity shocks are exogenous and are not affected by aggregate demand shocks therefore monetary shocks have no role in explaining economic fluctuations in fact according to the rbc theories money responds positively to fluctuations in production induced by technological shocks therefore the positive correlation between output and money is one of reverse causation critics of the rbc theories argue that productivity shocks cannot be treated strictly as exogenous evans 5 provides evidence that a significant portion of the variance of productivity impulse can be attributed to aggregate demand shocks another line of research by christiano and eichenbaum 4 shows that monetary policy shocks have persistent liquidity effects as well as persistent increases in output in this paper we investigate the role of monetary factors in explaining fluctuations in both

level of development rate of economic growth and income inequality most of the research mentioned above focused on estimating the relation between the level of economic development usually proxied by real gross domestic product gdp per capita and income inequality so as to judge whether an inverted u pattern is observed however notwithstanding the potential significance of the kuznets paradigm it should be evident that level of development or income is just one determinant of income inequality and that rate of economic growth is another important and related factor nevertheless very few studies have investigated how the rate of growth is related with inequality at various levels of development or income except perhaps incidentally and through an additive growth term in kuznets type models of inequality even the studies that did consider the growth inequality nexus have reported somewhat contradictory results for example an additive gdp growth term in m ahluwalia s regression estimates indicated a statistically insignificant equalizing effect of growth and in a later work he noted that

productivity shocks and real business cycles abstract productivity shocks play a central role in real business cycles as an exogenous impulse to macroeconomic activity however measured solow prescott residuals do not behave as an exogenous impulse rather econometric evidence provided in this paper indicates that 1 money interest rates and government spending granger cause these impulses and 2 a substantial component of the variance of these impulses between one quarter and one half is attributable to variations in aggregate demand these results are robust to a number of econometric issues including measurement errors specification of the production function and certain forms of omitted real variables

can an oil rich economy reduce its income inequality empirical evidence from alaska s permanent fund dividend abstract the main focus of this paper is to empirically examine the effect of the permanent fund dividend pfd payouts on alaska s income inequality by taking into account the roles of income and population to that end an autoregressive distributed lag ardl approach to cointegration and the johansen cointegration approach are applied to annual time series data from 1963 to 2012 we find that the pfd payouts tend to worsen income inequality in alaska in both the short and long run we also provide evidence to support the existence of kuznets hypothesis for alaska growth deteriorates income inequality initially and improves it later finally population is found to reduce alaska s income inequality in the short and long run

the kuznets process and the inequality development relationship abstract in his classic paper on economic growth and income inequality kuznets discussed the process of population shift from traditional to modern activities as the basis for a theory of distributional change during the course of development in this paper we present a formalization of the kuznets process conduct a general analysis of distributional change under this process and derive the functional forms of and conditions for a turning point in the inequality development relationship for six commonly used indices of inequality the functional form appropriate to each index is then estimated using cross section data on 60 developing and developed countries finally some extensions to the initial formalization of the kuznets process are considered

income distribution and development some stylized facts in recent years the relationship between income distribution and the process of development has come under increasing scrutiny much of the debate has focused on the hypothesis originally advanced by simon kuznets that the secular behavior of inequality follows an inverted u shaped pattern with inequality first increasing and then decreasing with development this hypothesis has become so much a part of the conventional wisdom on this subject that it has generated considerable skepticism about the welfare implications of the development process indeed on some interpretations developing countries face the grim prospect not just of increasing relative inequality but also of declining absolute incomes for the lower income groups

income distribution development and foreign trade a cross sectional analysis abstract this paper analyses cross sectional evidence on income inequality in developing countries within a consistent theoretical framework where the major explanatory variables are factor endowments their ownership structure and foreign trade distortions the resulting explanation of cross country differences in income distribution is considerably better than what is found in the existing literature endowments in mineral resources land concentration in agricultural exports trade protection and secondary schooling are shown to be major determinants of differences in income inequality across developing countries

the kuznets curve and the great u turn income inequality in u s counties 1970 to 1990 the authors examine the determinants of inequality in the distribution of family income in approximately 3 100 counties of the united states in 1970 1980 and 1990 such a study provides a window on global trends in social inequality during the period which spans the tail end of the kuznets curve and the more recent upswing in income inequality results from random effects regression models that control for unmeasured heterogeneity among states reveal the continued importance of the kuznetsian pattern of declining inequality with economic development a positive effect of urbanization on inequality a declining positive impact of sector dualism an increasing positive effect of educational heterogeneity and a persistent effect of racial dualism several variables associated with the recent upswing in inequality have significant effects female labor force participation negative female headed households positive percent of the population over age 65 changes from positive to negative over the period manufacturing employment negative and unemployment ambiguous they also discuss methods of estimating the gini coefficient for income inequality at the county level and measures of sector farm nonfarm dualism racial black white dualism and educational heterogeneity

taking the u out of kuznets a comprehensive analysis of the ekc and environmental degradation unlike most environmental kuznets curve ekc studies which focus on narrow measures of pollution as proxies for environmental quality we test the validity of the ekc using the ecological footprint ef a more comprehensive measure of environmental degradation we find no empirical evidence of an ekc relationship between the ef and economic development and only limited support for such a relationship among the components of the ef in addition we discover that energy is largely responsible for the lack of an ekc relationship and that energy consumption levels would have to be cut by over 50 in order for a statistically significant ekc relationship to emerge from the data overall these results suggest that growth alone will not lead to sustainable development

factor shares and savings in endogenous growth in models of steady investment driven growth an individual s propensity to save depends on how much of his income is drawn from accumulated factors of production capital rather than from nonaccumulated factors when agents are heterogeneous in this respect growth oriented policies have distributional consequences and in the absence of lump sum redistribution their implementation faces political constraints if the median voter is capital poor relative to the economy s representative agent political interactions tend to slow down growth when policy acts on capital s income share and tend to accelerate it when investment subsidies are the policy instrument of choice copyright 1993 by american economic association

pricing of contracts for difference in the nordic market abstract the purpose of this paper is to give an introduction to and a pricing analysis of a new forward locational price differential product contracts for difference cfd introduced the 17th of november 2000 at nord pool the nordic electricity exchange to our knowledge there is no literature available of how the nordic cfds are priced the cfd is a forward market product with reference to the difference between the future seasonal area price and system price by using available historical trading prices and spot prices for four seasonal contracts and one yearly contract we analyze the relationships between the contract prices and the value of the underlying asset for the first four seasonal contracts it appears that cfds traded at nord pool are mostly over priced relative to the underlying asset pricing theory for forward contracts explains this by the presence of a majority of risk averse consumers who are willing to pay a risk premium for receiving the future price differential we utilize statistical analysis with regard to the contract prices and the underlying asset and find some interesting relationships the analysis is preliminary due to the fact that the cfd market is relatively new

concentration of land holdings an empirical exploration of kuznets conjecture abstract according to kuznets 1963 the dynamics of the maldistribution process starts from an initial unequal income distribution then through a cumulative effect a high concentration of asset holdings is induced which in turn contributes to a high concentration of income in other words unequal income distribution tends to be self perpetuated and unequal asset holdings is a medium of such process the literature on rural income distribution seems to suggest a different emphasis by assigning a more crucial role to asset holdings i e land in the explanation of unequal income distribution this study shows via a simultaneous equation model and a multi nation cross sectional set of data that both the land and income concentration ratios are positively related of the two rival conjectures of emphasis the empirical evidence lends support in the general case to kuznets that is over the entire range of countries developed and less developed inequality in income seems to cause inequality in land holdings rather than vice versa in the specific case of less developed countries it is the high concentration of land holdings that influences the unequal distribution of income

lapm a liquidity based asset pricing model the intertemporal capm predicts that an asset s price is equal to the expectation of the product of the asset s payoff and a representative consumer s intertemporal marginal rate of substitution this paper develops an alternative approach to asset pricing based on corporations desire to hoard liquidity our corporate finance approach suggests new determinants of asset prices such as the distribution of wealth within the corporate sector and between the corporate sector and the consumers also leverage ratios capital adequacy requirements and the composition of savings affect the corporate demand for liquid assets and thereby interest rates starting with the capital asset pricing model capm derived by sharpe 1964 lintner 1965 and mossin 1966 market finance has emphasized the role of consumers time preference and risk aversion in determining asset prices the intertemporal consumption based asset pricing model e g rubinstein 1976 lucas 1978 breeden 1979 harrison and kreps 1979 cox ingersoll and ross 1985 hansen and jagannathan 1991 predicts that an asset s current price is equal to the expectation conditioned on current information of the product of the asset s payoff and a representative consumer s intertemporal marginal rate of substitution imrs while fundamental this dominant paradigm for pricing assets has some wellrecognized shortcomings see below and there is clearly scope for alternative and complementary approaches this paper begins developing one such approach based on aggregate liquidity considerations 1 our starting point is that the productive and financial spheres of the economy have autonomous demands for financial assets and that their valuations for these assets are often disconnected from the representative consumer s corporate demand for financial assets is driven by the desire to hoard liquidity in order to fulfill future cash needs in contrast with the

dynamic analysis of various investment incentives and regional capacity assignment in iranian electricity market this paper develops a system dynamics model to analyze the impacts of different kinds of capacity payment as investment incentive mechanisms in iranian electricity market since it is aimed that the incurred capital and operating costs of generation technologies be recovered in iranian electricity pool the noncompetitive capacity payment mechanism has been introduced for this purpose in order to encourage new investments in electric power generation system in the current mechanism the capacity payments are designated to the generating units in the whole country electricity market an annual base value of capacity payment is proposed based on recovering the capital cost of a benchmark generation technology this value is altered according to the operational reserve in the day ahead electricity market this supporting policy is simulated and analyzed in the proposed dynamic framework in order to track the trend of new investments in the iranian electricity market the feasibility study of implementing the regional capacity assignment is the main focus of this paper different possible regulating policies such as floating rates for capacity payment and electricity price cap the multiple capacity payments to various technologies and the regional electricity market with territorial capacity allocation are examined in order to investigate the consequences and performances of different decisions and policies in the capacity investment of iranian electricity market

short term market power assessment in a long term dynamic modeling of capacity investment this paper proposes a dynamic time simulation model for long term generation capacity investment decisions in the presence of either perfect or imperfect electricity market the model is based on system dynamics concept in which the dynamics of capacity construction is traced using the forecast of electricity price cleared in the short term electricity market both the perfect and oligopolistic competitions are considered and a market power index is defined to evaluate the competition level of the electricity market the short term and long term dynamic analysis are used to represent the generation firms behavior in bidding strategy and capacity investment respectively both possibilities of using forward bilateral contracts and application of wind power generation have been assessed individually in the proposed model in order to mitigate the market power the time simulation results derived from a case study demonstrate the effectiveness of the model in illustrating the oligopoly in electricity marketplace and also the alternative decisions to attenuate it such a decision tool enables both the generation firms and the regulators to gain perfect insight into the oligopoly and its consequences in the long term capacity investment in the electricity market