shaky roads and trembling exports assessing the trade effects of domestic infrastructure using a natural experiment abstract our knowledge of the trade effects of domestic infrastructure is very limited the reason is twofold first data needed to examine these effects are not readily available second identifying such effects requires properly addressing potential endogeneity problems affecting the relationship between internal infrastructure and trade in this paper we overcome these limitations by combining firm level export data with detailed geo referenced information on chile and by exploiting the earthquake that took place in this country in 2010 as an exogenous source of variation in available infrastructure and thereby in transport costs we find that diminished transportation infrastructure had a significant negative impact on firms exports

comparative estimates of a macroeconomic disequilibrium model france germany the u k and the u s a the paper gives comparative estimates of a macroeconomic disequilibrium model for four countries first a theoretical mini disequilibrium model close to the barro grossman formulation is presented the productivity cycle is linked with the changes in regimes a new technique allows to compute comparative estimates of the model for france germany the u k and the u s a on the sample period 65 iv to 85 iv the results are used to assess the wage gap doctrine according to which the difference in the unemployment rates of europe and the u s a can be explained by a larger discrepancy between the real wage and the marginal productivity of labor on the eastern side of the atlantic

the district effect and the competitiveness of manufacturing companies in local productive systems the present study evaluates the existence of differences in competitiveness of spanish industrial firms as a consequence of the district effect a quantitative analysis has been performed in order to assess external competitiveness taking into account whether firms are located in industrial districts in the sense proposed by marshall becattini or remain isolated the methodological approach considers geographical and sectoral variables it attempts to establish the existence of a relationship between sectoral specialisation and business efficiency measured as the capacity to export in local productive systems most of the variables come from a 1991 fiscal data set and the territorial units of analysis are 332 municipalities with a population of over 15 000 inhabitants from the results on the econometric model it can be inferred that the geographical concentration of companies in the same activity positively influences their level of competitiveness

domestic trade and transportation costs as barriers to international trade available evidence indicates that costs of nontraded services in domestic transportation wholesaling and retailing domestic margins are higher if a good is shipped in international trade than if it is shipped from domestic producers to domestic consumers consequently domestic margins appear to act as natural barriers to trade in the same manner as international transp ort costs do this paper presents estimates of the barriers that the domestic margins impose against u s imports and shows that they exc eed the barriers imposed by tariffs and international transport costs combined

the household response to persistent natural disasters evidence from bangladesh we examine the short run economic impacts of recurrent flooding on bangladeshi households surveyed in 2000 2005 and 2010 in 2010 household income and expenditure survey hies households answered a set of questions on whether they were affected by flood and its likely impacts we identify two treatment affected groups by using the self reported data and historical rainfall data based flood risk index we estimate a difference indifference did model to quantify the impacts on income expenditure asset and labour market outcomes and further extend our analysis to different income and expenditure brackets overall we find robust evidence of negative impacts on agricultural income and expenditure intriguingly the extreme poor i e the bottom 15th quintile experience significant positive impacts on agricultural income in the self reported treatment case

input demand under yield and revenue insurance previous studies disagree on the effects of insurance on fertilizer application rates the effect of increased fertilizer on the probability of low yields primarily determines whether fertilizer and insurance are substitutes or complements we estimate conditional distributions of corn yields to determine if the technical relationship between yields and fertilizer supports the hypothesis that insurance increases optimal application rates our results indicate no support for this hypothesis at all nitrogen fertilizer rates and reasonable levels of risk aversion nitrogen fertilizer and insurance are substitutes suggesting that those who purchase insurance are likely to decrease nitrogen fertilizer applications

excess demand and capacity utilization an empirical analysis with swiss business survey data this paper presents an approach to the estimation of excess demand in the goods market on the basis of business survey data the model uses a normal density function to describe the distribution of demand supply ratios in the population of firms mean and variance of this distribution reflecting aggregate excess demand and the dispersion of excess demand across firms determine the average degree of capacity utilization and the proportion of firms facing excess demand this theoretical relationship can be used to infer the underlying distribution parameters mean and variance of excess demand from related survey data providing thus a measure of tension in the product market as perceived by firms additional parameters of the model account for the share of economically obsolete equipment in total capacities and the extra capacities held by firms to meet unanticipated fluctuations in demand application to quarterly swiss survey data 1967 1986 yields plausible parameter estimates

dynamic factor demand in a rationing model in this paper a dynamic decision model of the firm with a delayed adjustment of employment and investment is developed special attention is devoted to dynamic inefficiencies i e underutilizations of the capital stock and labour hoarding market disequilibrium is introduced by allowing for a sluggish adjustment of wages and prices the model of the firm is complemented by explicit aggregation and the aggregate model is estimated for the frg for the period 1960 to 1989 the empirical results reveal that dynamic adjustment constraints for employment and capital contributed to the persistence of unemployment in germany in the 1980s

a disequilibrium model with smooth regime transitions and a keynesian spillover for switzerland s labor market abstract this paper presents a disequilibrium labor market model in which aggregation over a continuum of micro markets with different demand supply ratios produces smooth macro relationships mapping aggregate demand and supply onto actual employment and regime proportions aggregate labor demand consists of a classical part derived on a putty clay assumption and a keynesian spillover from the goods market the specification of labor supply incorporates intertemporal substitution the degree of aggregate imbalances on labor and goods markets is measured by business survey data the estimated model indicates a growing mismatch between the micro structures of demand and supply of labor the short run fluctuations of employment are primarily traced back to the keynesian spillover classical determinants of labor demand are relevant as well but only in the medium term labor supply is rather inert and thus absorbs the swings of labor demand only partly

insurance moral hazard and chemical use in agriculture this paper examines how crop insurance affects corn farmers fertilizer and pesticide use in the u s midwest crop insurance might be expected to affect chemical use because of moral hazard insured farmers may undertake riskier production than do uninsured farmers results suggest that insurance exerts considerable influence on corn farmers chemical use decisions those purchasing insurance applied significantly more nitrogen per acre 19 spent more on pesticides 21 and treated more acreage with both herbicides and insecticides 7 and 63 than did those not purchasing insurance these results suggest that both fertilizer and pesticides may be risk increasing inputs

sudden stops and the mexican wave currency crises capital flow reversals and output loss in emerging markets sudden stops are the simultaneous occurrence of a currency balance of payments crisis with a reversal in capital flows we investigate whether sudden stop crises are a unique phenomenon and whether they entail an especially large and abrupt pattern of output collapse a bmexican waveq using a panel data set over 1975 1997 and covering 24 emerging market economies we distinguish between the output effects of currency crises capital inflow reversals and sudden stop crises sudden stop crises have a large negative but short lived impact on output growth over and above that found with currency crises a currency crisis typically reduces output by about 2 3 while a sudden stop reduces output by an additional 6 8 in the year of the crisis the cumulative output loss of a sudden stop is even larger around 13 15 over a 3 year period our model estimates correspond closely to the output dynamics of the dmexican wavet such as seen in mexico in 1995 turkey in 1994 and elsewhere and out of sample predictions of the model explain well the sudden and seemingly unexpected collapse in output associated with the 1997 1998 asian crisis d 2005 elsevier b v all rights reserved

the impacts of multiperil crop insurance on indonesian rice farmers and production this article analyzes the effect of multiperil crop insurance policy for risk averse indonesian rice farmers located in tuban and gresik regencies of the east java province based on the model comparative static analysis of a change in policy variables coverage levels and premium subsidies on input use through the coupling wealth and insurance effects are presented the comparative static results are largely ambiguous and left as empirical questions consequently the model is numerically simulated to quantify the effects of different coverage levels and subsidy rates on input use expected net insurance payments and certainty equivalents the empirical analysis shows that mpci crop insurance results in a decline in expected yield for coverage levels above about 82 5 for both regencies furthermore higher subsidy rates amplify the reduction in input use and yield therefore incomplete coverage with relatively low premium subsidies is the best policy to minimize the impact on input use and yield however from the farmers perspective the optimal policy combination results from the highest coverage level and subsidy which offer the largest expected net insurance payments and certainty equivalent

are external shocks responsible for the instability of output in low income countries external shocks such as commodity price fluctuations natural disasters and the role of the international economy are often blamed for the poor economic performance of low income countries the author quantifies the impact of these different external shocks using a panel vector autoregression var approach and compares their relative contributions to output volatility in low income countries vis a vis internal factors he finds that external shocks can only explain a small fraction of the output variance of a typical low income country internal factors are the main source of fluctuations from a quantitative perspective the output effect of external shocks is typically small in absolute terms but significant relative to the historic performance of these countries

corporate borrowing and credit constraints structural disequilibrium estimates for the u k this paper develops a structural model of the market for corporate borrowing in the united kingdom the authors allow trade to be dispersed across a number of submarkets and suppose that disequilibrium operates at this disaggregated level solving for the level of aggregate trade they can estimate nonlinear equations for the demand and supply of borrowing and for the associated interest rate the authors use survey data to measure the strength of spillover from other markets the estimates reveal that disequilibrium has had substantial effects the authors also obtain interesting and plausible estimates for the parameters of the behavioral equations copyright 1990 by mit press

remaining puzzles and neglected issues in macroeconomics this paper analyses the chain of transmission mechanisms of economic policy actions to financial markets output and employment and finally unemployment in an attempt to identify remaining puzzles and neglected issues in macroeconomics the paper emphasizes the consequences of fiscal and monetary policy actions on real variables including real interest rates and real exchange rates an attempt is made to explain why product demand shocks often tend to have faster effects on output and employment than on prices the paper also discusses why demand induced increases in output and employment are not systematically connected with a reduction in the product wage rate the paper ends with a discussion of various supply side considerations in macroeconomics

sudden stops banking crises and investment collapses in emerging markets abstract we evaluate whether financial openness leaves emerging market economies vulnerable to the adverse effects of capital reversals sudden stops on domestic investment we investigate this claim in a broad sample of emerging markets during the period 1976 2002 if the banking sector does not experience a systemic crisis sudden stop events fail to have a significant impact on investment bank crises on the other hand have a significant negative effect on investment even in the absence of a contemporaneous sudden stop crisis we also find that openness to capital flows worsens the adverse impact of banking crises on investment our results provide statistical support for the policy view that a strong banking sector which can withstand the negative fallout of capital flight is essential for countries that open their economies to international financial flows

urban growth and transportation we estimate the effects of interstate highways on the growth of u s cities between 1983 and 2003 we find that a 10 increase in a city s initial stock of highways causes about a 1 5 increase in its employment over this 20 year period to estimate a structural model of urban growth and transportation we rely on an instrumental variables estimation that uses a 1947 plan of the interstate highway system an 1898 map of railroads and maps of the early explorations of the u s as instruments for 1983 highways we investigate the role of interstate highways in the growth of u s cities our investigation is in three parts in the first we develop a simple structural model describing the joint evolution of highways and employment in cities in the second we develop an instrumental variables strategy that allows us to identify key parameters of our structural model we are also able to provide out of sample evidence for the validity of our estimates and for the central assumptions of our model in the third we use our estimates to assess counterfactual transportation policies we find that a 10 increase in a city s stock of interstate highways causes about a 1 5 increase in its employment over 20 years and that an additional kilometre of highway allocated to a city at random is associated with a larger increase in employment or population than is a road assigned to a city by the prevailing political process our results also suggest that too many new highways were built between 1983 and 2003 these findings are important for three reasons first transportation generally and infrastruc ture in particular are large segments of the economy the median u s household devotes about 18 of its income to road transportation while all levels of government together spend another 200 billion dollars annually overall the value of capital stock associated with road transporta tion in the u s tops 5 trillion dollars united states bureau of transportation statistics 2007 2010 given the magnitude of transportation expenditures it is important that the impact of these expenditures on economic growth be carefully evaluated and not assessed on the basis of the claims of advocacy groups our analysis provides a basis for assessing whether these resources are well allocated our results also provide useful guidance to policy makers charged with planning cities since changes in a city s transportation infrastructure cause changes to the city s employment new transportation infrastructure causes complementary changes in the demand for public utilities and schools our results provide a basis for estimating the magnitude of such changes finally this research is important to furthering our understanding of how cities operate and grow transportation costs are among the most fundamental quantities in theoretical models

structural unemployment and disequilibrium abstract in this paper we present a disequilibrium model of the labor market which allows us to distinguish cyclical unemployment due to wage rigidity from structural unemployment this is done through the insertion in the exchange condition of an aggregate disequilibrium model of variables measuring mismatch between disaggregated labor supplies and labor demands such a model also allows unemployment and job vacancies to coexist the model is estimated using canadian quarterly data from 1966 to 1983 our results imply that structural unemployment due to inter industrial shocks while significant is fairly small

climate change green growth and aid allocation to poor countries with serious impacts of climate change looming in a few decades but current poverty still high in the developing world we ask how to spend development aid earmarked for the poor poverty reduction tends to be strongly linked to economic growth but growth impacts the environment and increases co2 emissions so can greener growth that is more climate resilient and less environmentally damaging deliver large scale poverty reduction can aid be used for effective poverty reduction now without affecting carbon emissions substantially we argue that there are bound to be trade offs between emissions reductions and a greener growth on the one hand and growth that is most effective in poverty reduction we argue that development aid earmarked for the poorest countries should only selectively pay attention to climate change and remain focused on fighting current poverty reduction including via economic growth not least as future resilience of these countries and their population will depend on their ability to create wealth and build up human capital now the only use for development aid within the poorest countries for explicit climate related investment ought to be when the investments also contribute to poverty reduction now including for increasing resilience to current impacts of environmental shocks or when the investments done now have serious intertemporal lock in problems so that they have implications also for when climate change bites by 2050 in our conclusions we offer a series of concrete principles to judge development spending

crop insurance acreage decisions and nonpoint source pollution the redirection of farm policy in the 1996 farm bill has generated much interest in seeking environmentally friendly and economically viable ways to protect farm income agricultural insurance has been suggested as such an instrument this article estimates the effect of crop insurance on crop mix and the resulting change in chemical use in the central nebraska basin providing corn insurance will shift land from hay and pasture to corn which will increase chemical use at the extensive margin this extensive margin effect dominates the effect of crop insurance on the application rate leading to an increase in total chemical use

how bad are twins output costs of currency and banking crises we investigate the output effects of banking and currency crises in emerging markets focusing on whether twin crises entail especially large losses recent literature emphasizes the costs of financial crises and suggests that twin crises are particularly damaging to the real economy using a panel data set for 1975 97 we find that currency banking crises are very costly reducing output by about 5 8 8 10 over a 2 4 year period the cumulative loss of both types of crises is therefore very large we do not find however additional feedbacks or interactive effects associated with twin crises further damaging the economy

school decentralization helping the good get better but leaving the poor behind abstract the decentralization of public services is a major feature of institutional innovation the main argument in support of decentralization is that it brings decisions closer to the people thereby alleviating information asymmetries and improving accountability however decentralization can also degrade service provision in poor communities that lack the ability to voice and defend their preferences in this paper we analyze the average and distributional effects of school decentralization on educational quality in argentina we find that decentralization had an overall positive impact on student test scores the decentralization gains however did not reach the poor thus although bringing decisions closer to the people may help the good get better the already disadvantaged may not receive these benefits

regional disparities and national similarities in spanish unemployment a case of seasonal cointegration short run fluctuations in unemployment could be interpreted as transitory movements away from a hypothetical equilibrium the problem apart from the existence of such equilibrium is the existence of an adjustment mechanism that ensures the convergence of the short towards the long run with quarterly data from the spanish labour market since 1975 we have estimated a vectorial error correction model that allows for precisely this convergence the objective was to investigate the variables that explain the two distinctive features of spanish unemployment its size and its persistence we have found that there is a cointegration relationship between unemployment and production proxied by several variables for this reason rather than hysteresis we have found a high persistence in spanish unemployment this persistence could be explained by regional mismatch that is lack of adjustment between demand and supply of labour in some spanish regions we have used regional data to find those common trends i

does the exchange rate regime matter for real shocks evidence from windstorms and earthquakes abstract does the choice of exchange rate regime affect an economy s adjustment to real shocks exploiting the unpredictability and economic exogeniety of windstorms hurricanes and typhoons and earthquakes this paper assesses the often contrasting answers found in the theoretical literature there is robust evidence that exchange rate flexibility helps an economy better adjust to real shocks and consistent with the channels emphasized in the classic literature on exchange rates and shocks differences in the behavior of the export sector help explain the different reactions between the two regimes

an empirical analysis of acreage effects of participation in the federal crop insurance program the extent to which crop insurance programs have resulted in additional land being brought into production has been a topic of considerable debate we consider multiequation structural models of acreage response insurance participation crp enrollment and input usage our analysis focuses on corn and soybean production in the corn belt and wheat and barley production in the upper great plains our results confirm that increased participation in insurance programs provokes statistically significant acreage responses in some cases though the response is very modest in every case in the most extreme cases 30 decreases in premiums as a result of increased subsidies provoke acreage increases ranging from 0 2 to 1 1 a number of policy simulations involving increases in premium subsidies are considered

labor utilization and nonwage labor costs in a disequilibrium macro framework the literature on labor utilization and nonwage labor costs is extended to incorporate recent approaches to macroeconomic disequilibrium modeling based on the smoothing by aggregation principle this leads to a reformulation of the basic sneessens dreze type model by treating employment and working hours as separate inputs the inclusion of nonwage labor costs serves a double purpose first they represent a restriction in the profit maximizing process and second they serve as a proxy for the fixity of labor the results differ substantially from simulation studies that disregard the utilization of labor and the nonlinear structure of labor costs

roads to prosperity assessing the link between public capital and productivity does the positive correlation between infrastructure and productivity reflect causation if so in which direction the author finds that when growth in roads the largest component of infrastructure changes productivity growth changes disproportionately in u s industries with more vehicles that vehicle intensive industries benefit more from road building suggests that roads are productive at the margin however road investments do not appear unusually productive intuitively the interstate system was highly productive but a second one would not be road building thus explains much of the productivity slowdown through a one time unrepeatable productivity boost in the 1950s and 1960s

domestic road infrastructure and international trade evidence from turkey poor domestic transportation infrastructure in developing countries is often cited as an important impediment for accessing international markets yet evidence on how transportation infrastructure improvements affect the volume and composition of exports is scarce drawing on the large scale public investment in expressways undertaken in turkey during the 2000s this paper contributes to our understanding of how internal trade costs affect regional exports and specialization two results emerge first we estimate that this road infrastructure project accounts for 15 percent of the export increase from interior regions generating a 10 year discounted stream of additional export revenues that amount to between 9 and 14 percent of the value of the investment second while the exports of all industries within a given region increase in response to improvements in connectivity to the international gateways of the country the magnitude of this increase is larger the more time sensitive an industry is accordingly we also observe an increase in the regional employment and revenue shares of such industries our results support the hypothesis that internal trade costs can be a determinant of international specialization and comparative advantage

migration risk and liquidity constraints in el salvador abstract this article utilizes panel data from el salvador to investigate the use of transnational migration as an ex post risk management strategy i show that adverse agricultural conditions in el salvador increase both migration to the united states and remittances sent back to el salvador i show that in the absence of any agricultural shocks the probability that a household sent members to the united states would have decreased on average by 24 26 i also show that the 2001 earthquakes reduced net migration to the united states a one standard deviation increase in earthquake damage reduced the average probability of northward migration by 37 11 the evidence suggests that the effects of the earthquakes had more to do with households retaining labor at home to cope with the effects of the disaster than with the earthquakes disrupting migration financing

the macroeconomic consequences of disasters abstract natural disasters have a statistically observable adverse impact on the macro economy in the short run and costlier events lead to more pronounced slowdowns in production yet interestingly developing countries and smaller economies face much larger output declines following a disaster of similar relative magnitude than do developed countries or bigger economies a close study of the determinants of these adverse macroeconomic output costs reveals several interesting patterns countries with a higher literacy rate better institutions higher per capita income higher degree of openness to trade and higher levels of government spending are better able to withstand the initial disaster shock and prevent further spillovers into the macro economy these all suggest an increased ability to mobilize resources for reconstruction financial conditions also seem to be of importance countries with more foreign exchange reserves and higher levels of domestic credit but with less open capital accounts appear more robust and better able to endure natural disasters with less adverse spillover into domestic production

natural disasters and countries exports new insights from a new and an old database this paper is the first to uncover in details the impact of different families of disasters on exports from 1979 to 2000 storms floods earthquakes and changes in temperatures besides our paper is the first to compare in a quasi systematic way the results across the two data sets at hand the standard em dat data and geomet data a newly available data set based on geophysical and meteorological data european economic review 2013 58 18 journal of development economics 2014 111 92 we run series of regressions while accounting progressively for the characteristics of products all traded goods v s agriculture ones the characteristics of the country size level of development and the intensity of the catastrophes when pooling all countries and all types of disasters we do not find any statistical impact on exports but when focusing on each of them separately and on agricultural goods the occurrence of an earthquake appears to reduce exports of about 3 regardless of its location a windstorm shock even when it happens to be very severe has hardly any impact a flood on its side is estimated to reduce export flows of a small country by nearly 3 the effect of changes in temperatures is ambiguous all in all except for temperature related disasters the results are consistent across both data sets em dat and geomet although they appear to be slightly more in line with our expectations in the case of geomet

natural disasters growth and institutions a tale of two earthquakes abstract we examine the impact of natural disasters on gdp per capita by applying the synthetic control approach and using a within country perspective our analysis encompasses two large scale earthquakes that occurred in two different italian regions in 1976 and 1980 we show that the short term effects are negligible in both regions though they become negative if we simulate the gdp that would have been observed in absence of financial aid in the long term our findings indicate a positive effect in one case and a negative effect in the other largely reflecting divergent patterns of the tfp consistent with these findings we offer further evidence suggesting that a quake and related financial aid might either increase technical efficiency via a disruptive creation mechanism or reduce it by stimulating corruption distorting the markets and deteriorating social capital finally we show that the bad outcome is more likely to occur in regions with lower pre quake institutional quality as a result our evidence suggests that unanticipated local shocks are likely to change long run growth rates exacerbating territorial disparities

the real debt resistance hypothesis and persistence of unemployment in the oecd countries according to friedman 1968 p 10 unemployment above the natural rate should sooner or later lead to deflation and an accelerating deflation at that as table 1 shows until the mid 1980s the course of movement of the rate of unemployment and inflation in the oecd countries is in conformity with this hypothesis however since the mid 1980s and in spite of continuing high unemployment the rate of inflation remained at a significantly positive level there is certainly not evidence of accelerated deflation as predicted by friedman the most popular explanation offered is the possibility of presence of the hysteretic tendencies in the nairu three famous models in this respect are the insider outsider hypothesis of blanchard and summers 1986 the capacity constraint hypothesis of sneessens and dreze 1986 and the declining search effectiveness long term unemployment hypothesis of layard nickell and jackman 1991 all these explanations rely on the real wage rigidity as table 1 shows however the rigidity of real wages seems to be more due to the downward rigidity of the rate of growth of nominal wages and prices for example the average weekly earnings of the production workers in the us manufacturing sector has steadily increased since 1946 1 thus contrary to the dominant view in the new keynesian school see gordon 1990 what needs to be explained is the long term downward rigidity of nominal wages

using weather variability to estimate the response of savings to transitory income in thailand this paper measures the extent to which farmers are able to use savings and dissavings to smooth consumption in response to unexpected shocks to income time series information on regional rainfall is used to construct estimates of transitory income due to rainfall shocks the relationship between these measures of transitory income and savings indicates that farm households save a significantly higher fraction of transitory income than nontransitory income jel d91 016 the incomes of farm households in developing countries are notorious for being both low and uncertain policies that increase the incomes of farmers may well be different

a discussion of belgian unemployment combining traditional concepts and disequilibrium econometrics with a gdp of less than 100 billion and exports of more than 60 billion belgium comes perhaps closer than any other country to being a small open economy consequently trends in world trade and export performance have a major impact on domestic activity whereas the impact of domestic fiscal policy is damped by import leakages table 1 presents a few figures confirming these observations

input use under cost of production crop insurance theory and evidence there have been a number of previous studies that examined the effects of yield or revenue based crop insurance products on input use of farmers however no study has specifically investigated the input use impacts of a cost of production cop crop insurance policy even though this type of crop insurance is the predominant one used in several other countries outside of the united states such as the philippines and china this article aims to theoretically and empirically examine the effect of a cop crop insurance product on farmers chemical input use our theoretical model suggests that the effect of cop insurance on input use can either be positive or negative with the resulting impact depending on the strengths of a the traditional moral hazard effect of insurance i e an input use decreasing effect versus b the marginal incentives to apply more inputs due to input levels being the main determinant for expected indemnity amounts in this type of insurance i e an input use increasing effect a survey data set from corn farmers in the philippines is then used to empirically illustrate how a particular cop insurance product influences input use in a real life context in this case we find that cop insurance increases the use of chemical inputs e g fertilizers and total chemical expenditure implying that the positive marginal incentive to apply more inputs dominates the negative moral hazard effect

accounting for unemployment a labour market perspective i examine whether prolonged high unemployment in canada can be attributed to various structural causes rather than to demand deficiency as found by macro econometric models the answer is largely negative neither the dispersion of sectoral growth rates nor excessive and rigid real wages can convincingly account for most unemployment contentions to the contrary are based upon inappropriately partial analyses enduring shifts in industrial structure have if anything been declining labour mobility is high much unemployment lasts too long to be frictional fuller quantitative understanding of the nature of unemployment can be achieved only in a more general framework

economic development and the impacts of natural disasters abstract we use disaster impact data over time to examine the degree to which the human and economic losses from natural disasters are reduced as economies develop we find that countries with higher income higher educational attainment greater openness more complete financial systems and smaller government experience fewer losses

cluster sample methods in applied econometrics inference methods that recognize the clustering of individual observations have been available for more than 25 years brent moulton 1990 caught the attention of economists when he demonstrated the serious biases that can result in estimating the effects of aggregate explanatory variables on individual specific response variables the source of the downward bias in the usual ordinary least squares ols standard errors is the presence of an unobserved state level effect in the error term more recently john pepper 2002 showed how accounting for multi level clustering can have dramatic effects on t statistics while adjusting for clustering is much more common than it was 10 years ago inference methods robust to cluster correlation are not used routinely across all relevant settings in this paper i provide an overview of applications of cluster sample methods both to cluster samples and to panel data sets

capital accumulation and unemployment a tale of two continents in contrast to much recent work regarding the causes of european unemployment in this paper we emphasize the importance of capital accumulation but unlike the few previous studies which have examined the relationship between capital accumulation and unemployment we argue that what matters for the evolution of employment and the unemployment rate is not the absolute growth rate of a country s capital stock but its evolution relative to other countries capital stock the empirical validity of the above statement is demonstrated for almost all oecd countries using quarterly time series data for the period 1961 1995 more detailed evidence is also presented for germany japan and the united kingdom

roadways input sourcing and patterns of specialization abstract we propose a model where the internal transport network facilitates the sourcing of intermediate goods from geographically diffuse locations a denser internal transport network promotes thus the growth of industries that rely on a large variety of inputs the model shows that heterogeneities in internal transport infrastructures can become a key factor in shaping comparative advantage and specialization evidence based on industry level trade data grants support to the main prediction of the model countries with denser road networks export relatively more in industries that exhibit broader input bases we show that this correlation is robust to several possible confounding effects proposed by the literature such as the impact of institutions on specialization in complex goods furthermore we show that a similar correlation arises as well when the density of the local transport network is measured by the density of their internal waterways and also when road density is instrumented with measures of terrain roughness

on the alternative explanations of persistence of unemployment in the oecd countries this paper begins with a summary statement of a few relevant facts about the worsening state of unemployment since the mid 1970s in the oecd countries a joint statistical test of the hypotheses of the natural rate hysteresis and the persistence is conducted by pooling annual data 1963 93 from up to 16 oecd countries the results provide strong evidence in support of the persistence hypothesis and the non linearity of the phillips curve while concurrently rejecting the other two alternative explanations

armod a small numerical macroeconomic world model with non clearing markets the purpose of this paper is to demonstrate the usefulness of a non walrasian numerical modeling approach to current macroeconomic problems of excessive unemployment and trade imbalances in the oecd area the model which consists of five world regions generates a sequence of short run equilibria the model captures international transmission mechanisms of business cycle impulses and of the effects of monetary and fiscal policy assuming flexible interest and exchange rates full capital mobility and adaptive expectations a scenario with successful international policy coordin ation illustrates how the model works copyright 1987 by the editors of the scandinavian journal of economics

corporatism run amok job stability and industrial policy in belgium and the united states corporatism jonathan s leonard and marc van audenrode in explaining high and persistent unemployment in western europe as compared to the united states this article shifts the emphasis away from the now familiar institutions and policies directly related to the labour market instead it focuses on the active and pervasive industrial policies which distinguish many european countries from the united states during the seventies and eighties a large share of european countries industrial policy has been directed towards schemes to help declining firms and industries using the example of belgium we show that this policy of supporting declining industries has actually contributed to higher unemployment through two channels first the subsidization of failing firms has imposed a tax on growing firms which has contributed to the freezing of the labour market and to low levels of job creation second by partially insuring against the threat of business failure the policy has contributed to the rapid growth of real wages

ex post moral hazard in prevented planting this article analyzes the existence of moral hazard in prevented planting pp in the united states the pp provision is defined as the failure to plant an insured crop by the final planting date due to adverse events if the farmer decides not to plant a crop the farmer receives a pp indemnity late planting lp is an option for farmers to plant a crop while maintaining crop insurance after the final planting date crop insurance may alter farmers behavior in selecting pp or lp and could increase the likelihood of pp claims even though farmers can choose lp this study finds evidence that a farmer with higher insurance coverage tends to choose pp more often ex post moral hazard spatial panel models attest to the existence of the ex post moral hazard in pp empirically empirical results show that the pp ratio has a positive relationship with insurance coverage in the case of corn production

natural disasters and labor markets abstract while it is clear that natural disasters have serious welfare consequences for affected populations less is known about how local labor markets in low income countries adjust to such large shocks combining data from the indonesia family life survey the desinventar database the u s geological survey and district level employment indicators this paper explores how a large earthquake in indonesia affected labor market outcomes in particular the evolution of wages across sectors i find that the earthquake had a positive effect on wage growth for workers who were employed in the agricultural sector at baseline i propose two mechanisms for this result a higher growth rate of the price of rice and a downward shift in the supply of workers in the agricultural sector i show that evidence mainly supports the latter labor shifted out of the agricultural sector into the construction sector raising the marginal product of labor in agriculture

european unemployment lessons from a multi country econometric study the paper summarizes the principal empirical findings of the european unemployment program it draws on 10 country studies which utilize the macroeconomic framework set out by sneessens and dreze 1986 the main conclusions are as follows i a major problem in europe is that productivity gains are quickly absorbed into wages and the effect of unemployment on wage settlements is generally weak ii a wage price productivity spiral means the european economies are inflation prone iii demand pressures spill over into the balance of payments rather than leading to price increases iv the major proximate determinant of employment in the 1 980s is the level of effective demand

a macroeconomic rationing model of the belgian economy despite a wide recognition of the possible theoretical fruitfulness of the quantity rationing approach there prevails an equally wide suspicion as to the possibility of getting sensible econometric results out of this type of specification our aim in the following will be to show that sensible results can indeed be obtained we shall consider for that purpose the belgian goods and labor markets over the years 1953 1978 and specify the econometric model along the lines suggested in the previous chapter

effective demand and spillovers when individuals face rationing on a particular market they will seek to amend their trade offer on this and other markets to account for the extra constraint on their behaviour empirical researchers must attempt to mimic this behaviour by specifying effective demand functions there is no consensus however about how this should be done the development of applied multi market disequilibrium modelling has given this problem an immediate practical relevance moreover aggregation and computational considerations further complicate the problem of specifying theoretically consistent yet tractable effective demands this paper explores theoretical aspects of empirical effective demand functions and in this light reviews the existing empirical literature we stress the practical nature of the problems encountered in applied work and the limited guidance that theory provides the initial systematic discussion of the problems involved in specifying empirical effective demand functions in portes 1977 has been supplemented by gourieroux laffont and monfort 1980 ito 1980 sneessens 1981 and lee 1986 our paper is partly an update of this work there are three main candidates differing according to both the measurement of excess demand on other markets and how individuals are assumed to respond to this using linear forms for the effective demands portes showed how the three candidates are observationally equivalent in that they all imply the same level of trade perhaps because of this we find a wide range of effective demand concepts used in existing empirical applications we then consider the implications for empirical effective demand functions of allowing rationing to operate at a disaggregated level these smoothing by aggregation models have been the most significant