the effective tax rate and the pretax rate of return abstract this paper presents new estimates of the taxes paid on nonfinancial corporate capital on the pretax rate of return to capital and on the effective tax rate the basic time series show that both the pretax rate of return and the effective tax rate have varied substantially in the past quarter century an explicit analysis indicates that after adjusting for different aspects of the business cycle pretax profitability was between one and 1 5 percentage points lower in the 1970s than in the 1960s the rate of profitability in the 1960s was also about one half of a percentage point greater than the profitability in the 7 years of the 1950s after the korean war changes in productivity growth in inflation in relative unit labor costs and in other variables are all associated with changes in profitability none of these variables however can explain the differences in profitability between the 1950s 1960s and 1970s looking at broad decade averages the effective tax rate and the pretax rate of return move in opposite directions lower pretax profits occuring when the tax rate is high there thus appears to have been no tendency for pretax profits to vary in a way that offsets differences in effective tax rates

is the united states really underinvesting in agricultural research comment the tax system may bias upward estimates of the rate of return to public agricultural research fox gives an example to illustrate the effect of failure to acknowledge the deadweight loss dwl of taxation by assuming a uniform stream of benefits the purpose of this note is a to show that fox s example overestimates the effect of dwl on the rate of return and b to use a more realistic stream of benefits to assess the effect of dwl

does globalization increase child labor abstract there is no empirical evidence that trade exposure per se increases child labor as trade theory and household economics lead us to expect the crosscountry evidence seems to indicate that trade reduces or at worst has no significant effect on child labor consistently with the theory a comparatively well educated labor force and active social policies appear to be conducive to a reduction in child labor for countries with a largely uneducated workforce the problem is not so much globalization as not being allowed to take part in it

is the united states really underinvesting in agricultural research that the level of public investment in u s agricultural research is too low is widely accepted this paper argues that there are two important limitations to the evidence assembled in support of the underinvestment hypothesis a many authors have compared the social rate of return to public investments with the private rate of return to private investments b costs of public expenditures on agricultural research have been underestimated by a failure to account for the marginal excess burden of the tax collection system taking these two factors into account evidence in support of the underinvestment hypothesis is weakened considerably

some neglected social costs of government spending in farm programs economic welfare analyses of farm programs typically assume that the direct social opportunity cost of subsidy payments is one dollar per dollar of government spending recent literature suggests that the marginal opportunity cost of a dollar of u s federal government spending is more likely to be in the range of 1 20 to 1 50 this implies that the net social costs of farm programs that involve government spending are significantly greater than the typical estimates in addition the normative efficiency ranking of alternative policies is sensitive to the marginal opportunity cost of government spending

in view of ratification governmental preferences and domestic constraints at the amsterdam intergovernmental conference the bargaining product of the amsterdam intergovernmental conference the amsterdam treaty dwindled down the draft proposal to a consensus set of all fifteen member states of the european union eu using the two level concept of international bargains we provide a thorough analysis of how this consensus set was reached by issue subtraction with respect to domestic ratification constraints drawing on data sets covering the positions of all negotiating actors and ratifying national political parties we first highlight the differences in the amsterdam ratification procedures in the fifteen member states of the eu this analysis allows us to compare the varying ratification difficulties in each country second our empirical analysis of the treaty negotiations shows that member states excluded half of the amsterdam bargaining issues to secure a smooth ratification because member states with higher domestic ratification constraints performed better in eliminating uncomfortable issues at the amsterdam intergovernmental conference issue subtraction can be explained by the extent to which the negotiators were constrained by domestic interests

managing domestic differences in international negotiations the strategic use of internal side payments when nations negotiate often the toughest bargaining is not between nations but within them the reason is simple proposed international agreements no matter how much in the national interest inevitably have differential effects on factional concerns threatening to make winners of some and losers of others potential losers often have the power to prevent agreements not to their liking thereby limiting what is possible in international negotiations this article uses a negotiation analytic framework to analyze the consequences of such limits it argues that limits need not be a liability for a divided country under some circumstances they may provide a bargaining advantage and demonstrates circumstances under which intracountry differences are desirable and undesirable from a national perspective more specifically the article shows that the effect of domestic differences on international negotiations depends on the configuration of domestic interests on the nature of domestic political processes and on characteristics of the international bargain it then explores a particular dimension of the domestic process the ability to link issues which allow factions to make internal side payments it demonstrates that internal issue linkage can have profound effects on the external bargain and explores the strategic implications of side payments for those who would manage domestic differences in international negotiations

bureaucratic productivity the case of agricultural research revisited two questions related to the financing of agricultural research merit further study first to the extent that selective access to agricultural research is possible there is no presumption that research results should be distributed in a way which gives everyone equal access moreover the returns for a large part of agricultural research can be appropriated by the developer through patents copyrights and other means thus there is no presumption that publicly financed research services should be equally available to everyone since in general equal access to government services is neither necessary nor efficient goldin 1977 54 more attention should be devoted to the method of financing agricultural research i e by taxation versus market prices

persistent underinvestment in public agricultural research abstract it is often argued that public support of agricultural research is inadequate however the empirical papers that support this hypothesis rarely reflect formal behavioral theory capable of explaining this phenomenon this paper presents a theory that explains underfunding namely that funding agencies respond too slowly to secular changes in the value of research a model of farmer and funding agency behavior is presented and shown to imply that actual research funding will be consistently smaller than optimal funding the assumptions and results of the model are explained in terms of the institutional literature on public agricultural research agencies

canadian dairy policy and the returns to federal dairy cattle research abstract the economic surplus approach is used to estimate the returns to federal investments in dairy cattle research in canada a national supply function is estimated using time series data lagged research expenditures are included as explanatory variables in the model facilitating the calculation of marginal as well as average benefits from research simulation analysis is used to study the effects of product market distortions associated with canadian dairy policy as well as of the marginal excess burden on the rates of return to research and on the distribution of research benefits returns were found to be high at the margin distortions in the product market had a small effect on the overall returns to dairy cattle research but had a large impact on the distribution of research benefits rate of return estimates were found to be indicative of underinvestment even when the marginal excess burden was taken into account

patently misleading partial implementation and bargaining leverage in sino american negotiations on intellectual property rights we develop a model of international negotiation in which states antici pate that the agreements they sign will only be partly implemented the results dif fer significantly from theories of domestic ratification that have previously been applied to this problem negotiators do not try to satisfy the implementer and may even choose agreements that the implementer would explicitly reject in a ratification model par tial implementation also makes it possible for two negotiators to reach agreements outside their usual win set this situation may allow one country to make extra ordinary concessions knowing that some provisions will never be fully imple mented we apply these claims to sino american negotiations over intellectual property rights where implementation has been a recurrent issue the theory enriches the theory of two level games which has focused much too narrowly on formal rati fication without amendment as the canonical case of domestic influence over inter national bargaining

an estimable dynamic stochastic model of fertility and child mortality this paper develops a finite horizon dynamic stochastic model of discrete choice with respect to life cycle fertility within an environment where infant survival is uncertain the model yields implications for the number timing and spacing of children a tractable estimation method is developed for the linear constraint quadratic utility case that is intimately tied to the dynamic optimization problem and the method is applied to malaysian household data estimation is based on integrating the numerical solution of the dynamic programming model of behavior with a maximum likelihood procedure

peasant household behaviour with missing markets some paradoxes explained a model of peasant household behavior under varying degrees of household specific food and labor market failures is constructed to show that these structural features can explain several well known patterns of peasant response which have often been attributed to peculiar motives presumed specific to peasants the model explains sluggish response to cash crops prices and high instability in perceived food and labor scarcities the key role of manufactured consumer goods prices in stimulating peasants effort in cash crops production the effectiveness of taxation as opposed to incentives in stimulating cash crops production and the key role of technological change in food production to enhance cash crop production results are obtained analytically in the case of one market failure and by numerical simulation with more than one

delegation ratification and u s trade policy why divided government causes lower tariffs recent research on executive legislative relations concludes that divided government causes higher tariffs and inhibits international cooperation i find that divided government leads to lower u s

the political economy of public research investment and commodity policies in agriculture an empirical study the paper tests a political economy theory of simultaneous government decision making on income redistribution through commodity policies and on public research investment in agriculture we use data from 37 countries on agricultural protection and public agricultural research expenditures pari the empirical results are consistent with the political economy hypotheses the analysis suggest that structural changes in the economy have important effects on the political incentives for governments not only to subsidize or tax farmers but also to invest in public agricultural research furthermore the analysis supports the hypotheses that the impact of such structural changes on government decision making on pari is non linear and conditional on other factors regarding the impact of political institutions the results suggest that more democracy neither leads to more distortionary transfers agricultural protection nor to lower investment in public goods pari

a test of the underinvestment myopia and commodity bias hypotheses for u s agricultural research abstract analysts of agricultural research policy in the united states of america have claimed that the over all level of public investment in agricultural research is less than what would be socially optimal that the present composition of public research investment is excessively myopic in that too little basic research is performed relative to the level of applied research and that the allocation of research resources among commodities is inconsistent with economic efficiency a non linear optimal growth model of the u s economy was developed to analyse these propositions strong support was found for the claim that the overall level of investment has been inadequate no support was found for the contention that basic research has been relatively underfunded compared to applied research weak support was found for the view that crop research has suffered from more acute underfunding than has livestock research

domestic opposition and signaling in international crises this article explores the effect of domestic political competition on the escalation of international crises it combines an incomplete information model of crisis bargaining with a simple model of two party electoral choice one state has two strategic actors a government and an opposition party both of which declare openly whether they support the use of force to alter the status quo the rival state updates its beliefs and selects its strategy in response to both signals the parties payoffs depend upon a retrospective evaluation by the domestic electorate the model shows that the inclusion of a strategic opposition party decreases the ex ante probability of war by helping to reveal information about the state s preferences this finding has important implications for research on democracy and international conflict since it suggests a mechanism through which democratic states can overcome informational asymmetries which have been identified as a central obstacle to negotiation

re examining the reported rates of return to food and agricultural research and development reply hurley rao and pardey 2014 analytically and empirically evaluate the internal rate of return irr vis a vis the modified internal rate of return mirr for investments in agricultural research and development r d they find that estimates of the irr are 2 5 to 5 times larger than the mirr for a wide range of assumptions leading them to question the value of the irr as a metric to represent the rate of return to agricultural r d oehmke 2016 defends the irr by arguing that it has important properties that the mirr does not possess in this article we critically examine these properties demonstrating that some are not inherent to the mirr for other properties we simply disagree with oehmke s assessment of their desirability therefore we are not compelled to change our original recommendation

economies of scale household size and the demand for food household scale economies are plausibly attributed to shared household public goods that make larger households better off at the same level of per capita resources larger households should therefore have higher per capita consumption of private goods such as food provided that they do not substitute too much toward the effectively cheaper public goods the evidence shows exactly the opposite data from rich and poor countries indicate that at constant per capita total expenditure the per capita demand for food decreases with household size and that it does so most in the poorest countries where substitution should be the least

replication realism and robustness analyzing political regimes and international trade makers who formulate trade policy we show that dai fails to accurately replicate our model and hence erroneously claims that the new equilibria she deduces are consistent with it in addition we demonstrate that in altering one of our assumptions dai offers a model that is less realistic as well as inconsistent with the substantive literature on international bargaining finally we question the robustness of her approach due to these problems of replication realism and robustness we conclude that dai s model is of limited utility ur article established that pairs of democracies trade more freely than mixed country pairs composed of a democracy and an autocracy mansfield milner and rosendorff 2000 hereafter mmr xinyuan dai 2002 asserts that our conclusion depends on the preferences of the decision makers who formulate trade policy dai is incorrect her results differ from ours solely because she has changed a key assumption of the model given the stated assumptions of our model each player s behavior in equilibrium is optimal and is a best reply it is often useful to debate the merits of a model s assumptions and it is not surprising that altering the assumptions can affect a model s results dai however ignores one of our explicitly stated assumptions and fails to acknowledge that her results differ from ours as a consequence moreover she never touches upon the relative merits of her assumption but when choosing a modeling strategy it is important to be attentive to the assumptions one uses preferring those that are more realistic and result in more general conclusions dai s model suffers from serious problems in this regard particularly because of its unrealistic assumptions about international economic negotiations furthermore dai offers no evidence about the robustness of her claims in contrast to our model finally the empirical record lends greater support to our argument than dai s since we found strong evidence that democratic pairs have had more open trade relations than mixed pairs irrespective of policy makers preferences in the following sections we elaborate on these problems of replication realism and robustness first we show that dai fails to replicate our model faithfully and hence erroneously claims that the new equilibria she deduces are consistent with it second we show that altering our assumption as dai does yields a model that is less realistic and less consistent with the substantive literature on international bargaining third we question the robustness of her approach we conclude that her model is of limited utility not only does our model capture an important element of international economic negotiations missing in dai s approach but also it yields results that are robust and have empirical support

the rate of return to public sector agricultural r d in the uk 1965 80 1989 the rate of return to public sector agricultural r d in the uk 1965 80 applied economics vol 21 no 8 pp 1063 1086

re examining the reported rates of return to food and agricultural research and development comment hurley rao and pardey 2014 argue to replace the internal rate of return with the modified internal rate of return for the evaluation of public research investment the crux of their argument is that the internal rate of return assumes intermediate cash flows can be reinvested or borrowed at same return as the initial investment which is generally not correct or reasonable page 1492 this article first demonstrates that reinvestment decisions are embodied in the project specification and that the internal rate of return makes no inherent reinvestment assumption the article then clarifies the algebraic properties of the marginal internal rate of return and the reinvestment implications of the internal rate of return and modified internal rate of return within the context of public agricultural research evaluation

domestic institutions and international bargaining the role of agent veto in two level games putnam s 1988 conjecture that negotiators can benefit from their domestic constraints implies that they may want to impose domestic constraints on themselves by granting veto power to an agent i show that a negotiator s decision to employ an agent as veto player depends on the kinds of information available to the foreign country and the alignment of preferences between the negotiator and the agent when the foreign country has incomplete information about the negotiator s preferences and the negotiator has preferences too divergent from those of the agent the negotiator will not give veto power to the agent however this applies only to an agent with extreme preferences and a surprisingly large number of agent types will receive veto power the attractiveness of the agent veto to the negotiator is in part due to its informational effect by granting veto power to an agent the negotiator can transmit more information to the foreign country and capture informational gains that would be lost in the absence of the agent veto

child labor urban proximity and household composition using detailed survey data from nepal this paper examines the determinants of child labor with a special emphasis on urban proximity we find that children residing in or near urban centers attend school more and work less in total but are more likely to be involved in wage work or in a small business the larger the urban center the stronger the effect is urban proximity is found to reduce the workload of children and improve school attendance up to 3 h of travel time from the city in areas of commercialized agriculture located 3 to 7 h from the city children do more farm work urban proximity effects are accounted for by a combination of local labor supply and demand conditions most notably the local importance of agriculture the education level of the parents and the local wage rate child servants which represent a small proportion of all children work much harder than other children and appear particularly at risk

from unanimity to consensus an analysis of the negotiations at the eu s constitutional convention disputes filed at the world trade organization wto are attracting a growing number of third parties most observers argue that their participation influences the institution s rulings the authors argue that third parties undermine pretrial negotiations their influence on rulings is conditioned by this selection effect they test their hypotheses along with the conventional wisdom using a data set of wto disputes initiated through 2002 consistent with the authors argument they find that third party participation lowers the prospects for early settlement controlling for this selection effect the evidence also suggests that third party support increases the chances of a legal victory at the wto

structure of public support for national agricultural research systems a political economy perspective abstract this paper initiates development of a set of stylized facts concerning the structure of public support for national agricultural research systems nars within a neoclassical political economy framework the aim is to place public funding of nars in the broader context of the overall level of direct government assistance to agriculture using a newly constructed data set on nars expenditures over the 1970 1985 period we observe a growing disparity in agricultural research intensity ratios which measure the level of public support for nars in relation to agricultural gross domestic production aggdp between low and high income countries this growing disparity appears to be driven by much larger increases in support for agricultural research by high income countries coupled with a significantly slower growth in the size of their agricultural sector despite the propensity of low and middle income countries to increase real support to agricultural research as per capita incomes rise the public agricultural expenditure ratio which measures public expenditures on agriculture relative to the size of the agricultural sector aggdp increases substantially public expenditures on agriculture were indexed on agricultural and non agricultural populations to give a rough indication of the increasing incentives for rural distributional coalitions to seek a redistribution of public expenditures in their favor a relative research expenditure rre ratio is developed which measures the proportion of total public expenditure on agriculture spent on agricultural research it provides an indication of the relative importance given to research on agriculture within the constraints imposed by overall public spending on agriculture in contrast to the agricultural research intensity ratios the rre ratios suggest that agricultural research appears to command as large a share of the public purse devoted to agriculture in low and middle income countries as it does in high income countries expectations derived from the neoclassical political economy literature that research may have fared relatively better in high compared with low income countries were not supported by the data

potential benefits of agricultural research and extension in peru the benefits of agricultural research and extension are examined in an ex ante consumer producer surplus framework for five commodities in peru the effects of demand shifts over time and government pricing policies on research and extension benefits are considered data for the analysis include the results of research and extension questionnaires administered at seven sites in peru the projected rates of return to research and extension indicate substantial returns to public investments

international and institutional r d spillovers attribution of benefits among sources for brazil s new crop varieties reported rates of return to agricultural r d are generally high but they are likely to be biased particularly because of attribution problems mismatching research benefits with costs the importance of attribution biases is illustrated here with new evidence for brazil during 1981 2003 varietal improvements in upland rice edible beans and soybeans yielded benefits of 14 8 billion in present value 1999 prices terms attributing all of the benefits to embrapa a public research corporation accounting for more than half of brazil s agricultural r d spending the benefit cost ratio would be 78 1 under alternative attribution rules the ratio drops to 16 1

is livestock research unproductive separating health maintenance from improvement research studies of the rates of return to research have usually been based on the implicit assumption that if there were no research then there would be neither growth nor decline in output or productivity in the case of livestock particularly in southern africa which has a sub tropical disease ecology and a long history of disastrous losses due to disease the assumption is especially unreasonable it ignores the losses that would have occurred in the absence of livestock health research resulting in underestimation of rates of return this study draws on data from south africa to illustrate the magnitude of the error by separating the maintenance effects of animal health research from output increases due to animal improvement research this is possible because health and improvements research are conducted at separate research institutes and there are data on cattle deaths due to disease which allows the effects of health expenditures to be calculated explicitly taking the negative effect of diseases into account considerably increases the returns to the livestock research of the south african agricultural research council saarc instead of a ror of 18 for animal research in total the result is a ror of at least 35 for animal health research and 27 for improvements research suggesting a minimum underestimation of about 50 these results suggest that livestock research is productive once it is properly decomposed the implication is that all ror estimates that implicitly assume that with no research there would be no change in output or productivity must be severely biased downwards

financing agricultural research international investment patterns and policy perspectives abstract for much of the post wwii period governments in rich and poor countries alike have increased public spending on and performance of agricultural research the public involvement in and policies toward agricultural research and development r d have undergone a sea of change in more recent years in this article we document these changes focusing on the public and rapidly evolving private roles in financing agricultural r d and the international dimensions of these funding and policy issues we restate the principles for government intervention in research and highlight the financing aspects of these interventions before concluding the paper with some reflections on the implications of all these changes for internationally conceived and funded public agricultural r d

the politics of underinvestment in agricultural research this paper develops a political economy framework that determines the factors causing underinvestment in public research expenditures governments are unable to fully compensate for unequal income distribution effects of research because of either their inability to make credible commitments or ofdeadweight costs associated with compensation

uncertainty and ratification failure i study a game where two agents bargain on an agreement to replace the status quo for their agreement to come into effect they need the approval of a third agent the preferences of this third agent is private information but there is communication among agents i study this game in the context of international agreements to provide an explanation for involuntary ratification failures i show that under certain assumptions the informational deficiency is incurable due to incentives to misrepresent preferences and that a parliament whose majority is more hawkish than their executive prefers the executive to be risk averse