impact of off farm income on food security and nutrition in nigeria abstract while the poverty implications of off farm income have been analyzed in different developing countries much less is known about the impact of off farm income on household food security and nutrition here this research gap is addressed by using farm survey data from nigeria econometric analyses are employed to examine the mechanisms through which off farm income affects household calorie and micronutrient supply dietary quality and child anthropometry we find that off farm income has a positive net effect on food security and nutrition the prevalence of child stunting underweight and wasting is lower in households with off farm income than in households without using a structural model we also show that off farm income contributes to higher food production and farm income by easing capital constraints thus improving household welfare in multiple ways

remittances and income diversification in bolivia s rural sector this article examines the role of remittances in income diversification strategies in bolivia s rural sector remittances can be consumed or invested by the recipient as an investment funds can be used for farming or to finance other nonfarm productions in this article we use a large and nationally representative survey to estimate the effect that remittances have on the probability of producing income from nonfarm activities diversification by using a bivariate probit model our evidence shows that remittances increase the probability that a rural family engages in nonfarm activities at least in some regions of bolivia we also find evidence that the sender s decision to remit and the recipient s decision to diversify may be jointly determined as such this suggests that remittances may serve as a mechanism to overcome localized failures in bolivia s capital markets

rural nonfarm employment and incomes in latin america overview and policy implications abstract rural nonfarm employment rnfe and incomes rnfi are crucial to latin american rural households the 11 rural household income studies in this volume reviewed in this paper use 1990s data and show that rnfi averages 40 of rural incomes rnfi and rnfe have grown quickly over the past three decades the review of evidence provided some surprising departures from traditional images of nonfarm activities of latin american rural households in terms of shares of rural incomes 1 nonfarm wage incomes exceed self employment incomes 2 rnfi far exceeds farm wage incomes 3 local rnfi far exceeds migration incomes 4 service sector rnfi far exceeds manufactures rnfi these findings suggest the need for more development program attention to wage employment in the service sector versus the traditional focus on small enterprise manufactures moreover poor households and zones tend to have higher shares in their incomes but lower absolute levels of rnfi as compared to richer households and zones the rnfe of the poor tend to be the low paid nonfarm equivalent of semi subsistence farming raising the capacity of the poor to participate in the better paid types of rnfe is crucial via employment skills training education infrastructure credit finally rnfe has grown fastest and been most poverty alleviating where there are dynamic growth motors in particular in the agricultural sector but also in tourism links to urban areas mining and forestry this means that developing rnf jobs cannot be done at the expense of programs promoting agricultural development

credit market constraints consumption smoothing and the accumulation of durable production assets in low income countries investments in bullocks in india in this paper we formulate and estimate a finite horizon structural dynamic model of agricultural investment behavior that incorporates the major features of low income agricultural environments income uncertainty constraints on borrowing and rental markets and the use of investment assets to generate income and smooth consumption the model is fit to longitudinal indian household data on farm profits bullock stocks and pump sets the estimated structural parameters are used to assess the effects on the life cycle accumulation of bullocks agricultural profits and welfare associated with complete markets and bullock liquidity and with second best policies that provide assured sources of income to farmers and weather insurance

the inexorable and mysterious tradeoff between inflation and unemployment this paper discusses the short run tradeoff between inflation and unemployment although this tradeoff remains a necessary building block of business cycle theory economists have yet to provide a completely satisfactory explanation for it according to the consensus view among central bankers and monetary economists a contractionary monetary shock raises unemployment at least temporarily and leads to a delayed and gradual fall in inflation standard dynamic models of price adjustment however cannot explain this pattern of responses reconciling the consensus view about the effects of monetary policy with models of price adjustment remains an outstanding puzzle for business cycle theorists several years ago i gave myself a peculiar assignment i decided to try to summarise all of economics in ten simply stated principles the purpose of this task was to introduce students to the economic way of thinking in the first chapter of my textbook principles of economics i figured if god could boil all of moral philosophy down to ten commandments i should be able to do much the same with economic science most of the ten principles i chose were microeconomic and hard to argue with they involved the importance of tradeoffs marginal analysis the benefits of trade market efficiency market failure and so on i allocated the last three principles to macroeconomics the first of these was a country s standard of living depends on its ability to produce goods and services which i viewed as the foundation of all growth theory the second was prices rise when the government prints too much money which i took to be the essence of classical monetary theory the last of my ten principles is the subject of today s lecture society faces a short run tradeoff between inflation and unemployment perhaps not surprisingly this statement turned out to be controversial when my publisher sent out the manuscript for review a few readers objected

real rigidities and the non neutrality of money rigidities in real prices are not sufficient to create rigidities in nominal prices and real effects of nominal shocks and by themselves small frictions in nominal adjustment such as costs of changing prices create only small non neutralities but this paper shows that substantial nominal rigidity can arise from a combination of real rigidities and small nominal frictions the paper shows the connection between real and nominal rigidity given the presence of nominal frictions both in general and for two specific sources of real rigidity one arising from goods market imperfections and the other from labour market imperfections

entrepreneurship selection and performance a meta analysis of the impact of education in developing economies this meta analytical review of empirical studies of the impact of schooling on entrepreneurship in selection and performance in developing economies looks at variations impact across specific characteristics of the studies a marginal year of schooling in developing economies raises enterprise income by an average of 5 5 percent which is close to the average return in industrial countries the return varies however by gender rural or urban residence and the share of agriculture in the economy furthermore more educated workers typically end up in wage employment and prefer nonfarm entrepreneurship to farming the education effect that separates workers into self employment and wage employment is stronger for women possibly stronger in urban areas and also stronger in the least developed economies where agriculture is more dominant and literacy rates are lower

a cross country comparison of rural income generating activities summary this paper uses a newly constructed cross country database composed of comparable income aggregates to examine the full range of income generating activities carried out by rural households the analysis paints a clear picture of multiple activities across rural space in countries on all four continents though less so in the included african countries for most countries the largest share of income stems from off farm activities and the largest share of households has diversified sources of income diversification not specialization is the norm nevertheless agricultural sources of income remain critically important for rural livelihoods in all countries

sticky information phillips curves european evidence we estimate the sticky information phillips curve model of mankiw and reis 2002 using survey expectations of professional forecasters from four major european economies our estimates imply that in ation expectations in france germany and the united kingdom are updated about once a year in italy about once each six months

accounting for persistence and volatility of good level real exchange rates the role of sticky information abstract volatile and persistent real exchange rates are observed not only in aggregate series but also in micro price data at the retail level kehoe and midrigan 2007 recently showed that under a standard assumption on nominal price stickiness empirical frequencies of micro price adjustment cannot replicate the time series properties of the law of one price lop deviations we extend their sticky price model by combining good specific price adjustment with information stickiness in the sense of mankiw and reis 2002 our framework allows for multiple cities within a country using a panel of u s canadian city pairs we estimate a dynamic price adjustment process for 165 individual goods under a reasonable assumption on the money growth process we show that the model matches the persistence of the lop deviation for the median good and accounts for the majority of its volatility when information updates occur every 12 months

impact of off farm labor supply on food expenditures of the farm household abstract farm households diversify their income sources by working off the farm this is a risk management strategy that is used by farm households in both developed and developing countries income diversification via off farm work is associated with higher incomes and food consumption however little is known about the association between off farm work and farm household food expenditures in an effort to bridge this gap this study attempts to assess the impact of off farm work decisions by the operator and or the spouse on the food expenditures of the farm household using a nationwide farm household survey in the united states and new econometric method we find that the decisions of the operator and or the spouse to work off the farm are significantly interrelated 29 however these two decisions affect food expenditures in different ways the operator s off farm work decision is positively related to food expenditures while the spouse s decision is negatively associated with expenditures on food by the farm household

impact of off farm income on food expenditures in rural bangladesh an unconditional quantile regression approach this study examines the effects of off farm income on food expenditures of rural bangladeshi households our analysis yields unbiased estimates of the unconditional impact of off farm income on food expenditures and reveals the heterogeneous effects that occur across the distribution of total food consumption expenditures the findings suggest that the impacts of off farm income are uniformly positive across the unconditional quantile regression and significantly increase food consumption expenditures for all quantiles except for the 25th quantile in addition we found that schooling experience and location of the household increase the food expenditures of rural households most importantly this article argues that female headed rural households in which the female works off the farm tend to have significantly lower food expenditures

estimates of the sticky information phillips curve for the united states mankiw and reis 2002 have proposed a sticky information based phillips curve sipc to address some of the concerns with the sticky price based new keynesian phillips curve in this paper we present a methodology to empirically implement the sipc and estimate its key structural parameter the degree of information stickiness for the united states using this methodology we estimate average durations of information stickiness that range from three quarters on the low side to over seven quarters on the high side

predetermined prices and the persistent effects of money on output this note illustrates a model of predetermined pricing where firms set a fixed schedule of nominal prices at the time of price readjustment based on the work of fischer 1977 this contrasts with the model of fixed pricing the specification underlying most recent dynamic sticky price models it is well known that predetermined pricing cannot generate substantial persistence in the real effects of monetary shocks when prices are set via fixed duration contracts unless the contracts are of long duration however we show that with a probabilistic model of price adjustment a predetermined pricing specification can produce almost as much persistence as the more conventional model of fixed prices without the assumption of long average contract duration

information rigidity and the expectations formation process a simple framework and new facts we propose a new approach to test the full information rational expectations hypothesis which can identify whether rejections of the null arise from irrationality or limited information this approach quantifies the economic significance of departures from the null by quantifying the underlying degree of information rigidity applying this approach to u s and international data of professional forecasters and other agents yields pervasive evidence consistent with models of imperfect information furthermore the proposed approach sheds new light on policies such as inflation targeting and those leading to the great moderation affecting expectations finally we document evidence of state dependence in the expectations formation process

using evidence of household income diversification to inform study of the rural nonfarm labor market in africa abstract the labor market literature in developing countries has seldom drawn on the studies of rural household income diversification this paper draws on such studies to inform future study of the rural nonfarm labor market in africa the review of evidence provides some surprising departures from traditional images of nonfarm activities of rural households among the most striking is the dominant importance in the majority of case study areas of nonfarm wage labor as compared to self employment of nonfarm sector earnings as compared to farm sector wage earnings and of local nonfarm earnings as compared to migration earnings the most worrying finding was the poor distribution of nonfarm earnings in rural areas despite the importance of these earnings to food security and farm investments this poor distribution implies significant entry barriers and market segmentation it is probable that this will lead over time to an increasingly skewed distribution of land and other assets in rural africa

a quantitative comparison of sticky price and sticky information models of price setting i estimate sticky price and sticky information models of price setting for the united states via maximum likelihood techniques reaching several conclusions first the sticky price model fits best and captures inflation dynamics as well as reduced form equations once hybrid behavior is allowed second the importance of hybrid behavior in sticky price models is potentially consistent with a role for some information imperfections such as sticky information as a complement to nominal price rigidities finally the favorable results herein for the hybrid sticky price model when evaluated by statistics that summarize the relative fit of different models is consistent with the existing literature that is both supportive and dismissive of such models as this literature has largely ignored fit in evaluating such models many previous studies have focused on ancillary issues such as the standard errors associated with certain parameters or granger causality tests that may not provide much information about sticky price models

rural nonfarm income and its impact on agriculture evidence from albania using data from the 2005 albania living standards measurement study alsms05 survey this article analyzes the overall impact of household nonfarm income generating activities riga on agricultural expenditures as well as technical efficiency of rural farm households we also differentiate the impact for subsistence and commercial farmers who are in the top 25 of the distribution of value of annual agricultural sales our results show that on the whole albanian rural households utilize their nonfarm earnings not to invest in time saving efficiency increasing technologies but to move out of crop production we derive similar findings when we try to estimate the same relation separately for commercial and subsistence farmers however for commercial farmers we find a positive impact of household nonfarm earnings on livestock expenditures

does nonagricultural labor relax farmers credit constraints evidence from longitudinal data for vietnam we examine the relationship between participation in nonagricultural labor activities and farming production decisions focusing on the use of inputs using longitudinal data for vietnam from 1993 to 1998 we find that households engaged in nonagricultural labor spend significantly more on seeds services hired labor and livestock inputs this is consistent with the hypothesis that nonagricultural labor income relaxes credit constraints to farming

wage labour activities by agricultural households in nicaragua this article considers wage labour activities by agricultural households in nicaragua it analyses the role of 1 comparative advantage as determined by individual and household characteristics and 2 agricultural conditions and market imperfections in shaping wage labour supply an econometric specification is developed which allows for random household specific effects results reveal that non agricultural wage work is largely determined by comparative advantages whereas agricultural wage work is used to deal with a number of agricultural conditions and market imperfections

gasoline prices fuel economy and the energy paradox abstract policymakers often assert that consumers undervalue future gasoline costs when they buy automobiles we test this by measuring whether relative prices of vehicles with different fuel economy ratings fully adjust to variation in gasoline prices vehicle prices move as if consumers are indifferent between 1 00 in discounted future gas cost and 0 76 in vehicle purchase price we show how corrections for endogenous market shares and utilization measurement error and different gasoline price forecasts affect the results we also provide unique evidence of sticky information vehicle markets respond to changes in gasoline prices with up to a six month delay

international evidence on the efficacy of new keynesian models of inflation persistence in this paper we take an agnostic view of the phillips curve debate and carry out an empirical investigation of the relative and absolute efficacy of calvo sticky price sp sticky information si and sticky price with indexation models spi with emphasis on their ability to mimic inflationary dynamics in particular we look at evidence for a group of 13 oecd countries and we consider three alternative measures of inflationary pressure including the output gap labor share and unemployment we find that the calvo sp and the si models essentially perform no better than a strawman constant inflation model when used to explain inflation persistence indeed virtually all inflationary dynamics end up being captured by the residuals of the estimated versions of these models we find that spi model is preferable because it captures the type of strong inflationary persistence that has in the past characterized the economies of the countries in our sample however two caveats to this conclusion are that improvement in performance is driven mostly by the time series part of the model i e lagged inflation and that the spi model overemphasizes inflationary persistence thus there appears to be room for improvement via either modified versions of the above models or via development of new models that better track inflation persistence

does the nonfarm economy offer pathways for upward mobility evidence from a panel data study in ethiopia summary empirical studies across many developing countries routinely document a positive correlation between participation in rural nonfarm employment and households wealth or income this paper explores whether nonfarm employment leads to higher consumption expenditure growth in ethiopia we find that 1 households consumption expenditure growth is positively correlated with the initial share of nonfarm income 2 the growth elasticity of nonfarm income share is higher for wealthier households and 3 the main source of growth for nonfarm participants comes from the higher rates of return participants enjoy on their human and physical capital

modelling the general public s inflation expectations using the michigan survey data in this article we discuss a few models developed to explain the general public s inflation expectations formation and provide some relevant estimation results furthermore we suggest a simple bayesian learning model which could explain the expectations formation process on the individual level when the model is aggregated to the population level it could explain not only the mean values but also the variance of the public s inflation expectations the estimation results of the mean and variance equations seem to be consistent with the results of the questionnaire studies in which the respondents were asked to report their thoughts and opinions about inflation

a naive sticky information model of households inflation expectations this paper provides a simple epidemiology model where households when forming their inflation expectations rationally adopt the past release of inflation with certain probability rather than the forward looking newspaper forecast as suggested in carroll 2003 macroeconomic expectations of households and professional forecasters quarterly journal of economics 118 269 298 the posterior model probabilities based on the michigan survey data strongly support the proposed model we also extend the agent based epidemiology model by deriving for it a simple adaptation which is suitable for estimation our results show that this model is able to capture the heterogeneity in households expectations very well

monetary neutrality under evolutionary dominance of bounded rationality i introduction a key property of the dynamic relationship between money and output is that due to price stickiness monetary shocks have persistent although not permanent impacts on the real output see e g christiano eichenbaum and evans 1999 the nominal adjustment of the aggregate price level in response to a monetary shock is therefore temporarily incomplete and considerable supporting empirical evidence for price rigidity has been found in several microprice studies see e g nakamura and steinsson 2013 and klenow and malin 2011 for comprehensive discussions of these studies mankiw and reis 2002 develop a novel model of temporarily incomplete nominal adjustment based on the assumption that costly information disseminates slowly in each period a random fraction of the price setters updates itself on the state of the economy so as to compute and set the optimal price while the remaining fraction keeps setting prices based on outdated information they admit that micro foundations for price stickiness may require a better understanding of bounded rationality and that information processing is more complex than the time contingent adjustment assumed in their paper in fact as added in mankiw and reis 2011 while the cost of acquiring information may be small and may even have fallen in this information age the costs of absorbing and processing information may be rather large and actually higher today than those in the past this paper contributes to the intuition on price setting under bounded rationality by developing a model in which the share of firms that have up to date information on relative prices to establish the optimal price follows evolutionary dynamics with and without mutation and not a random dynamics a la calvo 1983 as in mankiw and reis 2002 and the related literature our aim is to devise evolutionary game theoretic dynamics to provide alternative microfoundations for a temporarily incomplete nominal adjustment following a monetary shock we investigate the behavior of the general price level in an economy in which an individual firm can either pay a cost featuring a random component to update its information set and establish the optimal price nash strategy or freely use full information from the previous period and set a one period lagged optimal price bounded rationality strategy indeed detailed empirical studies such as the investigation for the euro zone by alvarez et al 2006 have found persistent coexistence of forward looking and backward looking price setting behavior and there is also robust empirical evidence showing persistent and time varying heterogeneity both in the frequency and in the extent of information updating see e g branch 2007 coibion and gorodnichenko 2012 we then devise evolutionary game theoretic microdynamics in discrete time that by interacting with the dynamics of the macroeconomic variables affects the coevolution of the frequency distribution of information updating strategies across firms and the completeness of the nominal adjustment of the general price level to a monetary shock our model economy is composed of monopolistically competitive firms whose individual optimal price depends positively upon the prices set by others implying the existence of strategic complementarity in a given period there is a fraction of firms that set prices without perfect knowledge of the structure of relative prices and hence of the prices that other firms will be setting as they decide not to pay the information cost involved in knowing it we refer to these firms as boundedly rational firms the remaining fraction is composed of firms that decide to incur the information updating cost to obtain that perfect knowledge and we follow droste hommes and tuinstra 2002 in referring to them as nash firms as they become perfect foresight firms meanwhile the optimal price is assumed to be given as in ball and romer 1991 varying positively with the actual general price level and nominal stock of money which is publicly known

how well does sticky information explain the dynamics of inflation output and real wages abstract this paper finds that a model with sticky information is less successful than a standard model featuring nominal rigidities inflation indexation and habits in generating the dynamics triggered by technology shocks as estimated by a vector autoregression using u s macroeconomic data the real wage responses after a permanent increase in productivity clearly favor the standard model the sticky information model fails to replicate the observed inertial response in the real wage whereas the standard model relies on inflation indexation in wage setting to achieve a better fit the two models are however statistically equivalent after a shock in monetary policy

what can survey forecasts tell us about information rigidities a lot we derive common and conflicting predictions from models in which agents face information constraints and then assess their validity using surveys of consumers firms central bankers and professional forecasters we document that mean forecasts fail to completely adjust on impact to shocks leading to statistically and economically significant deviations from the null of full information the dynamics of forecast errors after shocks are consistent with the predictions of models with information rigidities the conditional responses of forecast errors and disagreement among agents can also be used to differentiate between some of the most prominent models of information rigidities

nonfarm employment and poverty alleviation of rural farm households in honduras abstract this paper analyzes the role of nonfarm income of rural farm households in honduras it uses the national income and expenditure survey from 1993 to 1994 income from nonfarm wage and self employment represents 16 25 of farm household income and is especially important for middle and higher income strata nonfarm wage labor is geographically concentrated in small rural towns and in the industrial free zones located in the northern region while self employment is particularly developed in the southern region access to nonfarm wage employment is confined to educated individuals that belong to large households while female members of wealthier households are mainly involved in self employment food security is strongly enhanced through the engagement in nonfarm activities moreover nonfarm income enables farmers to purchase external inputs for improving yields and labor productivity suitable policies to enhance nonfarm employment include education training and technical assistance to reduce labor intensity in agricultural production as well as public investment and credit services to improve access to nonfarm activities

testing the sticky information phillips curve abstract i consider the empirical evidence for the sticky information model relative to the basic sticky price model conditional on historical measures of inflation forecasts the estimated structural parameters are inconsistent with an underlying sticky information model and the sticky information phillips curve is statistically dominated by the new keynesian phillips curve i find that the poor performance of the sticky information approach is driven by two key elements first the sticky information model underestimates inflation in the 1970s and overestimates inflation since the 1980s second predicted inflation from the sticky information model is excessively smooth

a tale of two rigidities sticky prices in a sticky information environment macroeconomic models with microeconomic foundations allow for comparisons with macro and micro empirical evidence this paper proposes a model wherein firms i acquire information infrequently generating sticky information mankiw and reis 2002 and ii face menu costs producing state dependent sticky prices i estimate parameters via indirect inference and show that under considerable real rigidity sticky prices in a sticky information environment are consistent with micro and macro evidence sticky prices not only help match micro data on price changes size and durations between adjustments they also improve the model s fit with the macro data as embodied in an empirical phillips curve

links between nonfarm income and farm investment in african households adding the capital market perspective farm household surveys in the 1970s and 1980s showed that nonfarm activities provide an important share of household income contrasting with the conventional image of rural african households as deriving their food entitlement almost exclusively from the land e g matlon collier and lal low reardon et al haggblade hazell and brown much of the literature on nonfarm income has concentrated

off farm labour allocation decisions in small scale rural households in zimbabwe the double hurdle model is used to analyse the off farm labour decisions of small scale agricultural household members in the shamva district of zimbabwe the approach permits the joint modelling of the decision to participate in the labour market and the decision regarding the amount of time allocated to work results indicate that a number of variables notably gender education and assets indeed have effects which are qualitatively and quantitatively different in terms of participation and hours worked overall the empirical analysis confirms the importance of individual characteristics such as gender and education and household farm characteristics e g land area accessible to the household productive assets remittances and the agricultural terms of trade in influencing the labour market decisions of rural household members

income and substitution effects for mean preserving spreads a sandmo has ascribed the indeterminancy of the comparative static result for a mean preserving spread to the presence of both an income and a substitution effect in this note the compensation method needed to isolate the substitution effect identified by sandmo is made precise the compensation method is derived from a model that is sufficiently general to include many important applications of the theory of uncertainty the method is used to identify the substitution effect in sandmo s model of the competitive firm under output price uncertainty copyright 1989 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

bootstrap inference in econometrics the astonishing increase in computer performance over the past two decades has made it possible for economists to base many statistical inferences on simulated or bootstrap distributions rather than on distributions obtained from asymptotic theory in this paper i review some of the basic ideas of bootstrap inference the paper discusses monte carlo tests several types of bootstrap test and bootstrap confidence intervals although bootstrapping often works well it does not do so in every case

implications of non farm work to vulnerability to food poverty recent evidence from northern ghana summary using survey data from northern ghana this study seeks to establish the impact of participation in non farm work on the vulnerability of resource poor households to food poverty vulnerability to food poverty is assessed based on expected future food expenditure of households the potential endogeneity problem associated with participation in non farm work by households is overcome using a novel instrumental variable approach analysis of the determinants of expected future food expenditure is done using a standard feasible generalized least squares fgls method demographic and socioeconomic variables location variables and household facilities are included in the model as control variables our study finds that participation in non farm work significantly increased the future expected food consumption thereby alleviating the vulnerability of households to food poverty our study also confirms that current food poverty and future food poverty i e vulnerability to food poverty are not independent from each other non farm work plays a crucial role in providing the means to overcome the risk of food poverty in these resource poor households policies that promote off farm income generating activities such as small businesses and self employment as well as the creation and support of businesses that absorb extra labor from the farm should be encouraged in the study region because households in the study region are exposed to above average levels of hunger and food poverty the study recommends the government of ghana and development partners to take measures that enhance the resilience of these resource poor households

global value chains large scale farming and poverty long term effects in senegal this paper presents panel data evidence on the impact of expansion of global value chains and large scale export oriented farms in developing countries over almost a decade we estimate the income effects of wage employment on large scale farms in the horticultural export sector in senegal using data from two survey rounds covering a seven years period of rapid expansion of the sector we estimate average income effects as well as heterogeneous income effects using fixed effects and quantile fixed effects regressions we find that poverty and inequality reduced much faster in the research area than elsewhere in senegal employment in the horticultural export sector is associated with higher household income and the income effect is strongest for the poorest households expansion of the horticultural export sector in senegal has been particularly pro poor through creating employment that is accessible and creates substantial income gains for the poorest half of the rural population these pro poor employment effects contrast with insights in the literature on increased inequality from rural wage employment

macroeconomic expectations of households and professional forecasters economists have long emphasized the importance of expectations in determining macroeconomic outcomes yet there has been almost no recent effort to model actual empirical expectations data instead m acroeconomists usually simply assume that expectations are rational this paper shows that while empirical household expectations are not rational in the usual sense expectational dynamics are well captured by a model in which households views derive from news reports of the views of professional forecasters which in turn may be rational the model s estimates imply that people only occasionally pay attention to news reports this inattention generates stickyness in aggregate expectations with important macroeconomic consequences

shadow wages and peasant family labour supply an econometric application to the peruvian sierra a striking feature of developing economies is the large proportion of the work force that is self employed lack of widespread labor market participation in the agricultural sector can pose a major obstacle to the empirical implementation of economic models of the peasant household whether because wage data are simply not available or because the assumptions required to make use of wage data stretch the bounds of credulity this paper develops a methodology for estimating a structural labor supply model for primarily self employed peasant households which holds under a general agricultural technology and set of labor market conditions the unique feature of the approach is that the opportunity cost of time or shadow wage of household workers is explicitly estimated from an agricultural production function and is subsequently used to identify a set of structural labor supply parameters recent household survey data from rural peru is employed to estimate and perform various diagnostic tests on the model the empirical findings lend support to the hypothesis that peasant households allocate their members time as if to maximize a family utility function and moreover demonstrate the tractability of the shadow wage methodology and its usefulness in estimating more elaborate time allocation models

off farm labor supply and correlated shocks new theoretical insights and evidence from malawi abstractwe offer new conceptual insights into the understanding of occupational choice in uncertain rural environments with a focus on its ex ante before a shock and ex post after a shock consequences for farmers belonging to different portions of the asset distribution we model theoretically the choice between relatively safe subsistence farming higher return but higher risk cash crop activities and off farm labor conditional on preexisting asset allocation and look at the general equilibrium labor market implications of correlated shocks our results backed by evidence from malawi challenge some stylized perceptions in the literature on consumption smoothing via off farm labor supply

does self fulfilment of the inflation expectation exist abstractthis study examines the causal relationship between the actual and expected inflation in the u s using the bootstrap granger full sample causality test and sub sample rolling window estimation test to illustrate the self fulfilment of inflation expectations the full sample result indicates that there is a bidirectional causality between the actual and expected inflation showing the possibility of self fulfilment of inflation expectations which illustrates that inflation is driven by inflation expectation however considering structural changes in two series we find that the short run causal nexus between the actual and expected inflation using full sample data are fraudulent by adopting a time varying rolling window approach to revisiting the dynamic causal relationships this article identifies that the actual inflation has both positive and negative impacts on the expected inflation in distinct sub periods nevertheless inflation expectation exerts only negative effects on the actual inf

integrating sticky prices and sticky information abstract understanding the relationship between nominal and real variables most notably inflation and cyclical output is one of the fundamental questions of economics toward this understanding we develop a model that integrates sticky prices and sticky information a dual stickiness model we find that both rigidities are present in u s data we also show that the dual stickiness model s closest competitor is the hybrid new keynesian model for both models current inflation depends in part on last period s inflation the former model achieves this dependence endogenously through the interaction of the two rigidities rather than through backward looking behavior u s data support the dual stickiness model over the hybrid model because lagged expectations terms appear in the former s inflation euler equation finally we show that it is quantitatively important to distinguish between the two by simulating a dynamic equilibrium model under each of the two inflation equations

non farm activity household expenditure and poverty reduction in rural vietnam 2002 2008 summary diversifying into non farm activities has been suggested as an effective way out of poverty for rural households in developing countries using the vietnamese household living standards surveys of 2002 2004 2006 and 2008 we test this claim and investigate the effect of non farm sector involvement on poverty and expenditure growth our endogeneity corrected estimates show that an additional household member involved with non farm activity reduces the probability of poverty by 7 12 and increases the household expenditure by 14 over a two year period our findings also indicate that non farm involvement reduces the hours worked on farm but not the household agricultural income

on inflation and output with costly price changes a simple unifying result this paper determines the real effects of credible disinflation when price setting is staggered the results are surprising a fairly quick disinflation causes a boom this finding suggests that nominal price rigidity alone does not explain why disinflation is costly in actual economies this abstract was borrowed from another version of this item

strategic interaction among heterogeneous price setters in an estimated dsge model abstract we consider a dynamic stochastic general equilibrium model dsge in which firms follow one of four price setting regimes sticky prices sticky information rule of thumb or full information flexible prices the parameters of the model including the fraction of each type of firm are estimated by matching the moments of the observed variables of the model to those found in the data we find that sticky price firms and sticky information firms jointly account for over 80 of firms in the model we compare the performance of our hybrid model to pure sticky price and sticky information models along various dimensions including monetary policy implications

implications of rational inattention abstract a constraint that actions can depend on observations only through a communication channel with finite shannon capacity is shown to be able to play a role very similar to that of a signal extraction problem or an adjustment cost in standard control problems the resulting theory looks enough like familiar dynamic rational expectations theories to suggest that it might be useful and practical while the implications for policy are different enough to be interesting

assets activities and rural income generation evidence from a multicountry analysis summary this paper examines the links between the assets and the economic activities of rural households in developing countries to provide insight into how the promotion of certain key assets particularly education land and infrastructure influences the economic choices of these households nationally representative data from 15 countries which form part of the rural income generating activities riga database are used in the analysis the results indicate that improved land access is linked to agricultural production and thus will lead households to take on average this path for improving household welfare higher levels of education and greater access to infrastructure appear to be most closely linked to non agricultural wage employment