the political economy of agriculture for development today the small versus large scale debate revisited the role of agriculture in economic development and the development politics of promoting smallholder versus large scale agriculture have both been at the center of a long lasting and controversial debate using an innovative methodology which combines a value chain approach with input output analysis the growth multipliers and productivity of both farm types in guatemala are analyzed results show that smallholder agriculture has the same potential to stimulate output growth as large scale agriculture smallholder value chains include mainly informal sectors and create more jobs than commercial agriculture therefore a reorientation of agricultural and land policies toward small scale food producers and within a comprehensive policy of integrated rural development is not only necessary in terms of social equity but also for boosting economic development

pigou meets ramsey gender based taxation with non cooperative couples abstract this paper explores the implications of gender based income taxation in a non cooperative model of household behavior in a first step we show how gender based taxes can act as pigou taxes and correct the externality induced by a non cooperative household equilibrium we find that the first best pigou tax rules are solely determined by spouses relative marginal rates of substitution between the public household good and private consumption breaking down this general rule into the primitives of the model the spouse with a comparative advantage in home production should be taxed at a higher rate in a second step we embed our non cooperative framework in a standard second best planning problem in which taxes serve a revenue raising purpose in this case the optimal structure of differential taxation by gender is partly determined by a ramsey type inverse elasticity rule and partly by a pigouvian tax element we show that these two forces work in opposite directions in determining whether men or women should be taxed at a higher rate and that either one could be dominant depending on the revenue raising position of the government this result is robust to the introduction of two groups of households that differ in their mode of decision making which can be either cooperative or non cooperative

individual versus joint taxation in models with household production in a recent paper piggott and whalley 1996 challenge the conventional wisdom that says that the individual rather than the household should be the unit of taxation and argue instead for joint taxation their point of departure is a point well taken the literature on which this wisdom is based in particular boskin and sheshinski 1983 ignores the existence of household production the general argument is a nice one in the theory of the second best in the absence of taxation of market wage income the marginal rates of technical substitution between primary and secondary labor in market and in household production would be equal to each other and the marginal rate of substitution between the market and household good would be equal to the marginal rate of transformation between them thus achieving pareto efficiency introduction of income taxation leads to a distortion of the relation between the marginal rate of substitution and the marginal rate of transformation which is the focus of concern in the literature 2 and given the differing econo

the tax unit and household production under a progressive income tax conventional wisdom is that taxing individuals rather than households is preferred from an efficiency point of view the reason is that secondary workers whose labor supply elasticity is high will be taxed at a lower marginal rate than primary workers whose labor supply elasticity is low here we argue that once household production is taken into account things are more complicated since tax design should also not distort the input of family members time in household production factor input distortions as well as ramsey considerations thus need to enter the choice of the tax unit we provide a numerical example of an economy for which a move from an individual to a household basis in the income tax can be efficiency improving we then use a general equilibrium model parameterized using australian tax rates and data whose results clearly show that welfare gains can occur under changes from an individual to a household basis for an existing income tax our results th

poverty decline agricultural wages and non farm employment in rural india 1983 2004 the authors analyze five rounds of national sample survey data covering 1983 1987 8 1993 4 1999 0 and 2004 5 to explore the relationship between rural diversification and poverty poverty in rural india declined at a modest rate during this period the authors provide region level estimates that illustrate considerable geographic heterogeneity in this progress poverty estimates correlate well with region level data on changes in agricultural wage rates agricultural labor remains the preserve of the uneducated and also to a large extent of the scheduled castes and scheduled tribes although agricultural labor grew as a share of total economic activity over the first four rounds it had fallen back to the levels observed at the beginning of the survey period by 2004 this all india trajectory masks widely varying trends across states during this period the rural non farm sector grew modestly mainly between the last two survey rounds regular non farm employment remains largely associated with education levels and social status that are rare among the poor however casual labor and self employment in the non farm sector reveal greater involvement by disadvantaged groups in 2004 than in the preceding rounds the implication for poverty is not immediately clear the poor may be pushed into low return casual non farm activities due to lack of opportunities in the agricultural sector rather than being pulled by high returns offered by the non farm sector econometric estimates reveal that expansion of the non farm sector is associated with falling poverty via two routes a direct impact on poverty that is likely due to a pro poor marginal incidence of non farm employment expansion and an indirect impact attributable to the positive effect of non farm employment growth on agricultural wages the analysis also confirms the important contribution to rural poverty reduction from agricultural productivity availability of land and consumption levels in proximate urban areas

china s uneven progress against poverty while the incidence of extreme poverty in china fell dramatically over 1980 2001 progress was uneven over time and across provinces rural areas accounted for the bulk of the gains to the poor though migration to urban areas helped the pattern of growth mattered rural economic growth was far more important to national poverty reduction than urban economic growth agriculture played a far more important role than the secondary or tertiary sources of gross domestic product gdp rising inequality within the rural sector greatly slowed poverty reduction provinces starting with relatively high inequality saw slower progress against poverty due both to lower growth and a lower growth elasticity of poverty reduction taxation of farmers and inflation hurt the poor external trade had little short term impact

inefficient households and the mix of government spending a model is presented in which individuals can vote over government subsidies to a private good and over redistributive taxation the subsidized good is purchased and shared by couples who act noncooperatively while possibly being altruistic towards each other the framework allows a separation of the subsidy policy from redistributive policy in a majority voting equilibrium the subsidy is used exclusively to correct the individuals spending pattern the results suggest that spending on private goods should be an important item in government expenditures when there is strong positive income bias in the political process and or when household decisions are relatively inefficient

optimal tax treatment of the family married couples abstract this paper examines the appropriate tax treatment of the family in a series of analytical models and numerical examples for a population of taxpaying couples which differ in earning capacity we drive the optimal tax rates for each potential earner these rates depend crucially upon own and cross labor supply elasticities and the joint distribution of wage rates our results suggest that the current system of income splitting in the united states under which husbands and wives face equal marginal tax rates is nonoptimal using results from recent econometric studies and allowing for a sensitivity analysis the optimal tax rates on secondary workers in the family are much lower than those on primary earners indeed our best estimate is that the secondary earner would face tax rates only one half as high as primary earners

the global food crisis and guatemala what crisis and for whom summary international food prices rose sharply during 2006 08 precipitating the global food crisis we analyze the welfare effects of changes in prices over categories of households in guatemala and find three surprising results the first is that the transmission of international into domestic prices was quite modest the second is that most farm households are net buyers of food implying that they lost from rising prices the third is that farm households represent two thirds of all poor households losing from rising food prices stressing the importance of production for home consumption in sheltering the poor from the crisis

income splitting specialization and intra family distribution income splitting for tax purposes results in more specialization of wives but does this in turn generate more gender inequality in my dynamic bargaining model with a divorce threatpoint i find that who controls the couple s labour supply plays a crucial role in establishing this link if spouses choose their labour supply non cooperatively only the husband s increase but not her own decrease in labour supply introduces a negative term in the wife s change in welfare if the wife does not control her own labour supply a decrease in her own labour supply introduces an additional negative term la fragmentation du revenu aux fins d impot resulte en une plus grande specialisation des epouses mais est ce que cela engendre davantage d inegalite entre genres dans un modele de marchandage dynamique avec menace de divorce a la cle on decouvre que la personne qui controle l offre de travail du couple joue un role crucial dans la reponse a cette question si les epoux choisissent leurs offres de travail de maniere non cooperative seul l accroissement de l offre de travail de l epoux et non le declin de l offre de travail de l epouse introduit un terme negatif dans le changement de niveau de bien etre de l epouse si l epouse ne controle pas sa propre offre de travail un declin dans son offre de travail introduit un element negatif additionnel

anchoring inflation expectations in the face of oil shocks in the proximity of zlb a tale of two targeters this paper applies a n ardl framework to two longstanding inflation targeting policy regimes in order to assess the relation between oil prices dynamics and inflation expectations and the further consequences created by a proximal zlb situation the application is based on data from january 1994 to june 2018 for new zealand and the uk we focus on oil price shocks as a variable of interest and this was found to have an asymmetric effect on inflation expectations one further key finding is that the real effective exchange rate has significant impacts on inflation expectations and this is indicative of an exchange rate pass through to inflation via an inflation expectations channel in general we find that inflation exchange rate money supply output growth unemployment and fiscal deficit surplus have significant implications for inflation expectations inflation expectations are also influenced by their past behaviour indicating adaptive inflation expectations this study contributes to the debate on the inflation targeting at zlb

agriculture for development new paradigm and options for success the role of agriculture as an instrument for industrialization had been rigorously conceptualized in the 1960s and 1970s under theclassicalparadigmofdevelopmenteconomics aftermanyimplementationfailuresunderimportsubstitutionindustrialization policies and protracted neglect of agriculture under the policies of the washington consensus that followed the debt crisis agriculture has gradually returned in the development agenda especially with the food crisis we argue in this article that a new paradigm has started to emerge as to how to use agriculture for development pursuing a broadened development agenda we explore the specifications of this paradigm and discuss conditions for successful implementation jel classifications b20 o13 q18

on the taxation of trade within and between households abstract tax reform proposals affect individual welfares in ways which strongly depend on the nature of specialisation in household production and the pattern of trade within households variation in the degree of specialisation in domestic production across households strongly influences the impacts on individual tax burdens of a given tax reform the standard models of the economics literature cannot be used to analyse these issues because they ignore the two person nature of households and the existence of household production and trade this paper proposes a simple and tractable model to remedy this and uses it to analyse the impacts of the types of tax reform that have been the subject of recent policy debate

a cournot nash model of family decision making this paper models a two person family each family member is utility maximising yet family members are interdependent because of caring and public goods within the family the two family members interdependent utility maximisation problems are first solved using a non cooperative or cournot nash game theoretic framework the cournot nash equilibrium is then used as a threat point in a bargaining game the paper provides a rigorous derivation of the properties of household demands a full analysis of the determinants of intra household resource allocation including the effect of varying household bargaining power and consideration of policy implications

family specific investments and divorce with dynamically inconsistent households marital contracts and policy abstract this paper bridges two distinct areas of inquiry the economic theory of the family and behavioral research on time inconsistent preferences motivated by anecdotal and survey evidence suggesting that present bias plays a role in intra household decision making we propose a model in which hyperbolic discounting couples engage in home production activities thereby accumulating family specific capital over time at any given point in time the gains to continued marriage depend on the accumulated stock of this capital and a temporary random shock to match quality couples whose match quality deteriorates may choose to divorce and this is more likely to happen if past investments in family specific capital have been low we obtain three main sets of results first present biased preferences induce couples to underinvest in family specific capital and to overdivorce second sophisticated couples but not naive ones may choose to enter marriage on terms which make divorce more costly to obtain third the inefficiencies in the behavior of time inconsistent couples can be completely undone by means of earnings and divorce taxes that vary over the marital life cycle

monetary policy and macroeconomic stability in latin america the cases of brazil chile colombia and mexico abstract in 1999 new monetary policy regimes were adopted in brazil chile colombia and mexico combining inflation targeting with floating exchange rates these regime changes have been accompanied by lower volatility in the monetary stance in brazil colombia and mexico despite higher inflation volatility in brazil and colombia this paper estimates a conventional new keynesian model for these four countries and shows that i the post 1999 regime has been associated with greater responsiveness by the monetary authority to changes in expected inflation in brazil and chile while in colombia and mexico monetary policy has become less counter cyclical ii lower interest rate volatility in the post 1999 period owes more to a benign economic environment than to a change in the policy setting and iii the change in the monetary regime has not yet resulted in a reduction in output volatility in these countries

the optimal income taxation of couples this paper analyzes the general nonlinear optimal income tax for couples a multidimensional screening problem each couple consists of a primary earner who always participates in the labor market but makes an hours of work choice and a secondary earner who chooses whether or not to work if second earner participation is a signal of the couple being better worse off we prove that optimal tax schemes display a positive tax subsidy on secondary earnings and that the tax subsidy on secondary earnings decreases with primary earnings and converges to zero asymptotically we present calibrated microsimulations for the united kingdom showing that decreasing tax rates on secondary earnings is quantitatively significant and consistent with actual income tax and transfer programs

distinguished lecture on economics in government exchange rate regimes is the bipolar view correct the choice of appropriate exchange rate regime which for economies with access to international capital markets increasingly means a move away from the middle ground of pegged but adjustable fixed exchange rates towards the two corner regimes of either flexible exchange rates or a fixed exchange rate supported if necessary by a commitment to give up altogether an independent monetary policy lawrence h summers 2000 p 8

the concept of the agricultural surplus abstract the concept of the agricultural surplus has occupied a central place in the history of economic thought and has been used in a variety of different senses the major objective of this paper is to offer a rigorous definition of the agricultural surplus based on the social accounting matrix sam framework a sam for indonesia distinguishing between agriculture and non agriculture is used to estimate quantitatively the magnitude of the agricultural surplus and its various components finally the various meanings which have been assigned to this concept in the literature are reviewed and confronted with the definition which we derived

sticky price and limited participation models of money a comparison abstract we provide new evidence that models of the monetary transmission mechanism should be consistent with at least the following facts after a contractionary monetary policy shock the aggregate price level responds very little aggregate output falls interest rates initially rise real wages decline by a modest amount and profits fall we compare the ability of sticky price and limited participation models with frictionless labor markets to account for these facts the key failing of the sticky price model lies in its counterfactual implications for profits the limited participation model can account for all the above facts but only if one is willing to assume a high labor supply elasticity 2 percent and a high markup 40 percent the shortcomings of both models reflect the absence of labor market frictions such as wage contracts or factor hoarding which dampen movements in the marginal cost of production after a monetary policy shock 1997 elsevier science b v

beyond export led growth abstract in light of the adverse conditions in the current international economic environment this paper reassesses the feasibility of continuing to rely on manufacturing export led growth as the major development dynamic for most ldcs during the next decade this paper argues that after the initial stages of industrial development the emphasis in policy toward agriculture should shift from surplus extraction to surplus creation and to the generation of demand linkages with the rest of the economy the author compares the relative merits of two alternative open development strategies export led industrialization and agricultural demand led industrialization adli by means of several simulation experiments the experiments are performed with a computable general equilibrium model of a small low income semi industrial open economy which is a stylization of south korea of 1963 they are carried out in an international environment assumed to represent the next decade based on a rate of growth of international demand for imports of about half the 1960 1973 rate the results support the adli approach on all counts

a fresh look at the rotten kid theorem and other household mysteries gary becker s rotten kid theorem asserts that if all family members receive gifts of money income from a benevolent household member then even if the household head does not precommit to an incentive plan for family members it will be in the interest of selfish family members to maximize total family income i show by examples that the rotten kid theorem is not true without assuming transferable utility i find a simple condition on utility functions that is necessary and sufficient for there to be the kind of transferable utility needed for a rotten kid theorem while restrictive these conditions still allow one to apply the strong conclusions of the rotten kid theorem in an interesting class of examples

on the credibility of inflation targeting regimes in latin america inflation targeting has been adopted in a set of emerging economies including eight countries in latin america the success of this regime may depend critically on the credibility of the target and the expectation that the authorities will take appropriate actions if the target is breached this paper exploits a database of inflation expectations and attempts to measure whether for a set of inflation targeters in latin america expectations are well anchored a tighter anchoring of expectations is interpreted as a gain in credibility also considered are the effects on the credibility of the regime if the inflation target is breached the results indicate that while inflation expectations have not been fully anchored over the whole sample period credibility has risen but at the same time the cost of breaching the target has grown

empowering rural people for their own development abstract this elmhirst lecture first discusses the features of the institutional environment which allow rural people in low income countries to design plan and implement their own rural development these are divided into two broad groups the institutional environment for rural development environment for the private sector communities and civil society local government and sector institutions and the many factors governing profitability of investment in agriculture while in many poor countries the institutional environment has improved over the last 20 years the most poorly performing countries still have by far the poorest environment for local government in the world within an empowering institutional environment the rate of agricultural and rural development is determined by investments of many different types that in turn depend primarily on the profitability of agriculture the paper discusses the large number of factors which determine profitability few of these are under the direct control of farmers or agricultural sector institutions but depend on governance and investments in other sectors such as trade and transport in many of the poorest countries there has been considerable improvement in macro economic management and sector policies over the past 20 years but progress in international and intra regional trade policies in agricultural trade policies in transport infrastructure and in agricultural research and extension have been limited

inflation targeting in brazil chile and mexico performance credibility and the exchange rate inflation targeting it has been adopted by a growing number of countries and latin america has been part of this world trend this paper reviews the recent it experiences of brazil chile and mexico applying a common empirical framework to the three country cases inflation performance under it and its associated output costs are reported and compared favorably to a control group of other countries the paper analyzes ways by which it has contributed to strengthen credibility the effect of targets on inflation expectations and on actual inflation the low influence of inflation shocks on core inflation and the decline in inflation forecast errors do the three inflation targeters exhibit fear of floating no considering their relatively large exchange rate volatility and moderate international reserve holdings no considering strongly declining inflation to devaluation passthrough coefficients and little evidence for monetary policy reaction to exchange rate shocks yes considering the frequency and intensity of sterilized exchange interventions in comparison to other inflation targeters that float more cleanly

agrifood industry transformation and small farmers in developing countries summary this article introduces this special issue on the rapid transformation of the agrifood industry in developing countries and its effects on small farmers we review the literature from the late 1980s to the present and find evidence first of food processing then retail transformation and mixed evidence of impacts on small farmers both inclusion particularly with resource providing contracts and exclusion sometimes from scale constraint sometimes from inadequate non land assets the special issue papers contribute to the debate by confirming the mix of cases of inclusion and exclusion the cases are main in horticulture and dairy key hopes for smallholder development

separate spheres bargaining and the marriage market this paper introduces the separate spheres bargaining model a new model of distribution within marriage it differs from divorce threat bargaining models e g manser brown mcelroy horney in that the threat point is not divorce but a noncooperative equilibrium within marriage this noncooperative equilibrium reflects traditional gender roles the predictions of our model thus differ from those of divorce threat bargaining models in the separate spheres model cash transfer payments to the mother and payments to the father can but need not imply different equilibrium distributions in existing marriages in the long run the distributional effects of transfer policies may be substantially altered by changes in the marriage market equilibrium

family policy with non cooperative families we consider a non cooperative model of a family s time allocation between market work and providing a home produced family public good such as child care or care for the elderly the model predicts underprovision of the public good because of crowding out this does not necessarily warrant public provision in contrast to other approaches in family economics we find that attempts to redistribute between spouses may alter the final distribution within the marriage and that such a policy may be pareto improving we also find that some degree of progressivity of the income tax can be welfare improving

having it all for all child care subsidies and income distribution reconciled abstract we study the design of child care policies when redistribution matters traditional mothers provide some informal child care whereas career mothers purchase full time formal care the sorting of women across career paths is endogenous and shaped by a social norm about gender roles in the family via this social norm traditional mothers informal child care imposes an externality on career mothers so that the market outcome is inefficient informal care is too large and the group of career mothers is too small so that inefficiency and gender inequality go hand in hand in a first best world redistribution across couples and efficiency are separable redistribution is performed via lump sum transfers and taxes which are designed to equalize utilities across all couples the efficient allocation of child care is obtained by subsidizing formal care at a pigouvian rate however in a second best setting a trade off between efficiency and redistribution emerges the optimal uniform subsidy is lower than the pigouvian level conversely under a nonlinear policy the first best pigouvian rule for the marginal subsidy on informal care is reestablished while the share of high career mothers continues to be distorted downward for incentive reasons this policy is effective in reconciling the objectives of reducing the child care related inefficiency and achieving a more equal income distribution across couples our results continue to hold when the norm is defined within the mothers social group rather than being based on the entire population