financial liberalization urban unemployment and welfare some implications of the artificial low interest rate and the high wage rate policies in ldcs abstract this paper investigates how the low interest rate policy in the commercial banking sector affects the urban unemployment in a small open harris todaro model the rate of urban unemployment unambiguously declines the volume of it shrinks if the rural to urban employment rate and the urban unemployment rate are sufficiently high relative to the wage elasticity of agricultural labor demand the national income increases if agriculture is dominant in the domestic production in such an economy the financial liberalization advocated by the mckinnon shaw school may aggravate the welfare even if it eliminates the financial repression

regional variation in earnings inequality in reform era urban china this article studies the regional variation in earnings inequality in contemporary urban china focusing on the relationship between the pace of economic reforms and earning determination through

information sharing in dea a cooperative game theory approach abstract in this paper a cooperative dea game is proposed based on the idea that different organizations can gain if they share data on the input consumption and output production of their processing units a larger data sample allows a more complete description of the production possibility set and consequently of the efficient frontier however since not all organizations will benefit in the same way it is convenient to use cooperative game theory in order to share the benefits of the cooperation the proposed cooperative dea game is shown to be subadditive and balanced models for computing the value of the game and checking its stability taking into account the exponential number of coalitions that exist when the number of organizations is large are also presented the approach is illustrated with a dataset from the literature

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

positional goods conspicuous consumption and the international demonstration effect reconsidered abstract ragnar nurkse s early formulation of the international demonstration effect explicitly eschewed the possibility that international emulation of the rich has anything to do with status seeking or to use veblen s phrase with conspicuous consumption this paper argues in favor of a reassessment of nurkse s formulation in the light first of recent analyses of advanced countries by hirsch frank and scitovsky which show the powerful welfare implications of consumption based on status seeking and in the light second of the large sociological literature that has investigated the modernization process in developing countries the analysis casts doubt on nurkse s eschewal of status seeking behavior at the international level and suggests an alternative view with a profoundly different set of welfare implications for the third world

stochastic convenience yield and the pricing of oil contingent claims this paper develops and empirically tests a two factor model for pricing financial and real assets contingent on the price of oil the factors are the spot price of oil and the instantaneous convenience yield the parameters of the model are estimated using weekly oil futures contract prices from january 1984 to november 1988 and the model s performance is assessed out of sample by valuing futures contracts over the period november 1988 to may 1989 finally the model is applied to determine the present values of one barrel of oil deliverable in one to ten years time

how would the gas exporting countries forum influence gas trade the cleanest burning fossil fuel today is natural gas while many businesses have gone global it has remained an exception an impending challenge facing the industry however is the evolution of a cartel from the 5 year old gas exporting countries forum how would this new organization influence the trade of gas globally does its existence imply a threat to the development of gas trade the paper reviews this fairly new organization within the context of the above questions it is mainly a comparative study of the body in relation to opec s historical political and economic development subsequently the author proposes probable influence options available to the forum and the impending consequence of such actions on the market the outcome of this study calls for further analysis and research on new issues and questions of interest

school finance reform and private school enrollment evidence from california abstract abstract this paper uses the school finance reforms in california in the 1970s to examine whether the constraints such reforms impose on school districts lead to switching to private schools misspecifications of demand in previous work have led to understatement of reform effects an empirical model of schooling share equations is derived from a discrete choice framework large biases are shown to result from failure to account for heterogeneity of demanders and school district specific fixed effects simulations indicate that the changes in public provision potentially resulting from reform explain a sizeable portion of the growth in the private school share

evaluating natural resource investments notwithstanding impressive advances in the theory of finance over the past 2 decades practical procedures for capital budgeting have evolved only slowly the standard technique which has remained unchanged in essentials since it was originally proposed see dean 1951 bierman and smidt 1960 derives from a simple adaptation of the fisher 1907 model of valuation under certainty under this technique expected cash flows from an investment project are discounted at a rate deemed appropriate to their risk and the resulting present value is compared with the cost of the project this standard textbook technique reflects modern theoretical developments only insofar as estimates of the discount rate may be obtained from crude application of single period asset pricing theory but see brennan 1973 bogue and roll 1974 turnbull 1977 constantinides 1978 the inadequacy of this approach to capital budgeting is widely acknowledged although not widely discussed its obvious deficiency is its the evaluation of mining and other natural resource projects is made particularly difficult by the high degree of uncertainty attaching to output prices it is shown that the techniques of continuous time arbitrage and stochastic control theory may be used not only to value such projects but also to determine the optimal policies for developing managing and abandoning them the approach may be adapted to a wide variety of contexts outside the natural resource sector where uncertainty about future project revenues is a paramount concern

a note on the room mates problem and a related revenue allocation problem we introduce in this note the consistent organizational structure cos problem which can be viewed as a generalization of the college admission and room mates problems both the room mates problem and the cos problem may have no stable solution when side payments are allowed the cos problem but not the room mates problem always has a nonempty core we further study some nucleoli of the cos problem with side payments

a theory of real wage growth in ldcs abstract a general equilibrium framework is presented to explain a variety of developmental experiences the demand side is modelled by assuming a system of preferences that incorporate engel s law in a stark way the framework explains why poverty might be impervious to industrial progress in some countries it also explains why countries which have been able to boost the exports of manufactured goods have been more successful in raising real wages in their economies than countries which have continued to export primary goods the framework indicates how the initial conditions in terms of the level and distribution of wealth influence the growth of real wages in an economy

equilibrium urban unemployment in developing countries is migration the culprit this paper challenges the prediction of todaro s model of rural to urban migration that an increase in urban employment increases urban unemployed it is shown that if the urban demand for labor is isoelastic or inelastic creation of urban jobs causes urban unemployment to decline and urban to rural migration to take place moreover urban job creation always reduces the rate of urban unemployment the paper then remodels the urban job search process and derives the result that equilibrium urban unemployment would not vanish even if the urban rural wage gap were eliminated

gas and lng trading hubs hub indexation and destination flexibility in east asia abstract in the east asian gas markets issues like gas trading hubs hub indexed pricing and destination flexibility are being debated this paper examines the impact of a change in east asia s pricing benchmark and contract flexibility on the regional and global gas markets the paper uses the nexant world gas model a linear program with global cost minimization as the objective to our knowledge this study on hub competition price benchmark change and contract flexibility improvement in east asia will be the first in the literature and have real policy relevance the results show that both price benchmark change and contract flexibility improvements will create an overall benefit for the world and east asia importers but the impacts are different among exporters and importers however there is no evidence of competition among different benchmark hubs and no evidence that destination restrictions cause the asia premium it implies that removal of destination clauses has higher priority than the change to hub indexation for japan korea and chinese taipei but both should be treated equally in china the study also suggests that east asian importers should cooperate among themselves and with exporters to facilitate the hub creation and contract changes in east asia

does immigration induce native flight from public schools into private schools abstract the paper tests whether native born american families respond to inflows of immigrants by sending their children to private school the analysis uses 1980 and 1990 census data from 132 metropolitan areas for primary school students no significant relation between immigration and private school enrolment is found for secondary schools a significant link emerges for every four immigrants who arrive in public high schools it is estimated that one native student switches to a private school white students account for most of this flight natives appear to respond mainly to immigrant children who speak a language other than english at home

properties and comparison of risk capital allocation methods abstract if a financial unit a bank an insurance company a portfolio the financial system of a country etc consists of subunits divisions subportfolios etc then the risk of the main unit should be allocated to the subunits using a risk capital allocation method in a fair way we analyze seven methods widely discussed in the literature or used in practice activity based beta incremental cost gap marginal risk contribution shapley and nucleolus in terms of ten reasonable fairness properties full domain core compatibility diversification strong monotonicity incentive compatibility efficiency equal treatment property riskless portfolio covariance and decomposition invariance we provide proofs or counterexamples for each method and the ten properties that we consider we also computed how often on average core compatibility is satisfied in randomly generated risk capital allocation situations up to nine subunits in 24 treatments for all methods that do not satisfy core compatibility we believe that through the descriptions of the examined methods our paper can serve as a useful guide for both practitioners and researchers

what can be learned from the free destination option in the lng imbroglio we examine the profitability of flexible routing by lng cargoes for a single supplier taking into account uncertainty in the medium term dynamics of gas markets first we model the trajectory of natural gas prices in asia northern america and europe using a threshold vector autoregression representation tvar in which the system s dynamics switches back and forth between high and low regimes of oil price volatility we then use the generalized impulse response functions girf obtained from the estimated threshold model to analyze the effects of volatility shocks on the regional gas markets dynamics lastly the valuation of destination flexibility in lng supplies is conducted using a real option approach we generate a sample of possible future regional price trajectories using monte carlo simulations of our empirical model and determine for each trajectory the optimal shipping decisions and their profitability our results portend a substantial source of profit for the industry and reveal future movements of vessels we discuss the conditional impact of destination flexibility on the globalization of natural gas markets

limits to economic growth as shown by a computable general equilibrium model abstract economic growth is distinguished from commercial growth and is defined in this article as the growth of the value a society puts in monetary terms on all commercial and non commercial goods and values it possesses during a certain period a computable general equilibrium model is used to show the impact of changes in the endowments preferences and production possibilities on economic income which in the model comprises all wealth besides land with its natural resources and labor energy is the key endowment to drive an economy the model leads in an intuitive way to the following conclusions 1 societies should start to use appropriate indicators for true economic growth rather than just for commercial growth as measured by gross national product 2 all types of economic growth are limited no matter if based on endowment growth production efficiency growth or changes in preferences 3 economic growth should be oriented more towards increasing production efficiency and less towards using more natural resources 4 human population growth puts at risk the possibilities for average economic growth per person 5 we should get better prepared to use solar energy in the future 6 besides economic growth there exists pure utility growth which is not measurable in monetary terms it includes much of scientific progress in the long run and is of great importance even though it cannot be included in an indicator of economic growth

predicting price spikes in electricity markets using a regime switching model with time varying parameters this paper shows that a stochastic regime switching model can represent the volatile behavior of wholesale electricity prices associated with price spikes effectively the structure of the model is very flexible because the mean prices in the two regimes and the two transition probabilities are functions of the load and or the implicit reserve margin using price data from the single settlement market in pjm may 1999 to may 2000 the results show that the estimated switching probability from the low to the high regime predicts price spikes well if the reserve margin is measured accurately

immigration and spending on public education california 1970 2000 abstract the evolution of education spending in california has received plenty of attention from both academics and practitioners after this state s education finance reform in the 1970 s this paper quantifies the contribution of immigration to the relative decline in elementary and secondary public education spending per student in california in the period 1970 2000 a quantitative model of school choice and voting over public education is used to perform the counterfactual experiments of interest the model predicts that education spending per student in california would have been 24 higher in the year 2000 if u s immigration had been restricted to its 1970 level

a complementarity model for the european natural gas market abstract in this paper we present a detailed and comprehensive complementarity model for computing market equilibrium values in the european natural gas system market players include producers and their marketing arms which we call traders pipeline and storage operators marketers lng liquefiers regasifiers tankers and three end use consumption sectors the economic behavior of producers traders pipeline and storage operators liquefiers and regasifiers is modeled via optimization problems whose karush kuhn tucker kkt optimality conditions in combination with market clearing conditions form the complementarity system the lng tankers marketers and consumption sectors are modeled implicitly via appropriate cost functions aggregate demand curves and ex post calculations respectively the model is run on several case studies that highlight its capabilities including a simulation of a disruption of russian supplies via ukraine

options on the minimum or the maximum of two risky assets analysis and applications this paper provides analytical formulas for european put and call options on the minimum or the maximum of two risky assets the properties of these formulas are discussed in detail options on the minimum or the maximum of two risky assets are useful to price a wide variety of contingent claims of interest to financial economists applications discussed in this paper include the valuation of foreign currency debt option bonds compensation plans risk sharing contracts secured debt and growth opportunities involving mutually exclusive investments

real options for risk management in petroleum development investments irreversible investments made with incomplete information are the mainstay of the petroleum industry sequential non repetitive investment decisions with alternative pathways associated with exploration through full field development are common we demonstrate a policy development approach that combines the bellman equation for dynamic programming with a real options valuation algorithm this represents the first demonstration of the mathematical union of the two techniques for branching decision pathways producing a generalized policy development framework that provides risk management of investments production expansion investment decisions for a central asian gas condensate field are analyzed using the framework

the new economic case for migration restrictions an assessment abstract migration barriers tend to reduce global production by impeding efficient spatial reallocation of labor recent research argues for a countervailing effect of barriers tending to raise global production by preventing the spread of impoverishing institutions from poor to rich countries while evidence of this mechanism is scarce it is theoretically plausible at high migration rates we propose and calibrate a simple model of dynamically efficient migration when migrants spread economic institutions between countries the net effect of migration depends on three parameters transmission the degree to which origin country total factor productivity is embodied in migrants assimilation the degree to which migrants productivity determinants become like natives over time in the host country and congestion the degree to which transmission and assimilation change at higher migrant stocks on current evidence about the magnitudes of these parameters dynamically efficient policy would not imply open borders but would imply relaxation of current restrictions

short term variations and long term dynamics in commodity prices in this article we develop a two factor model of commodity prices that allows meanreversion in short term prices and uncertainty in the equilibrium level to which prices revert although these two factors are not directly observable they may be estimated from spot and futures prices intuitively movements in prices for long maturity futures contracts provide information about the equilibrium price level and differences between the prices for the short and long term contracts provide information about short term variations in prices we show that although this model does not explicitly consider changes in convenience yields over time this short term long term model is equivalent to the stochastic convenience yield model developed in gibson and schwartz 1990 we estimate the parameters of the model using prices for oil futures contracts and apply the model to some hypothetical oil linked assets to demonstrate its use and some of its advantages over the gibson schwartz model

cooperation among liquefied natural gas suppliers is rationalization the sole objective this paper examines the development of cooperative strategies between countries exporting liquefied natural gas lng and members of the gas exporting countries forum gecf this economic study focuses specifically on an often raised scenario the emergence of a cooperative approach designed with the sole aim of logistic rationalization and which would not have any effect on lng prices we first assess the annual gains that may result from this market power free cooperative approach using a simple static transportation model the numerical results obtained suggest that in the absence of a gain redistribution policy this cooperative strategy will probably not be adopted because cooperation would not be a rational move for some exporters the problem of gain sharing is then formulated using cooperative game theory concepts several gain sharing methods have been studied including the shapley value and various nucleolus inspired concepts our results suggest that the choice of a redistribution policy appears relatively restricted out of the methods studied only one per capita nucleolus satisfies two key requirements core belonging and monotonicity in the aggregate lastly we look at how cooperation may give rise to a coordination cost and try to determine the maximum amount of this cost in view of the low level of this amount and the relative complexity of the sharing method implemented we consider that the credibility of a logistic cooperation scenario exempt from market power should be reappraised

linking trade and external debt strategies abstract despite the productive inefficiencies generated by policies of export promotion and of import substitution such development strategies can improve welfare when used in conjunction with a debt strategy export promotion can increase the availability of foreign finance and import substitution can reduce debt service when the latter strategy is optimal partial debt forgiveness increases the creditor group s payoff import substitution is more profitable with a large inherited debt high world interest rate low terms of trade and when creditors fail to reduce inherited debt

education finance reform and the distribution of education resources between 1971 and 1996 opponents of local funding for public schools successfully challenged the constitutionality of school finance systems in sixteen states using the variation across states in the timing of these cases the authors investigate the impact of reform on the distribution of school resources their results suggest that court ordered finance reform reduced within state inequality in spending by 19 to 34 percent successful litigation reduced inequality by raising spending in the poorest districts while leaving spending in the richest districts unchanged thereby increasing aggregate spending on education reform led states to fund additional spending through higher state taxes copyright 1998 by american economic association

immigration and the welfare state immigrant participation in means tested entitlement programs this paper documents the extent to which immigrants in the united states over the past 30 years participate in the many programs that make up the welfare state the immigrant native difference in the probability of receiving cash benefits is small but the gap widens once other programs are included in the analysis 21 percent of immigrant households receive some type of assistance as compared with only 14 percent of native households the types of benefits received by earlier immigrants influence the types of benefits received by newly arrived immigrants hence there might be ethnic networks that transmit information about the availability of particular benefits to new immigrants excerpt

an extension of the τ value to games with coalition structures abstract we introduce the coalitional value which is an extension of the value for tu games to games with a coalition structure we identify a class of tu games that satisfy the property that for every game in this class and every coalition structure on its player set it holds that the coalitional value can be defined for the corresponding game with a coalition structure we study properties of the coalitional value and provide an axiomatic characterization of this allocation rule we use the coalitional value to study bankruptcy problems and the determination of aircraft landing fees

security of supply and retail competition in the european gas market some model based insights in this paper we analyze the impact of uncertain disruptions in gas supply upon gas retailer contracting behavior and consequent price and welfare implications in a gas market characterized by long term gas contracts using a static cournot model in order to most realistically describe the economical situation our representation divides the market into two stages the upstream market that links by means of long term contracts producers in exporting countries russia algeria etc to local retailers who bring gas to the consuming countries to satisfy local demands in the downstream market disruption costs are modeled using short run demand functions first we mathematically develop a general model and write the associated kkt conditions then we propose some case studies under iso elasticity assumptions for the long short run inverse demand curves in order to predict qualitatively and quantitatively the impacts of supply disruptions on western european gas trade in the second part we study in detail the german gas market of the 1980s to explain the supply choices of the german retailer and we derive interesting conclusions and insights concerning the amounts and prices of natural gas brought to the market the last part of the paper is dedicated to a study of the bulgarian gas market which is greatly dependent on the russian gas supplies and hence very sensitive to interruption risks some interesting conclusions are derived concerning the necessity to economically regulate the market by means of gas amounts control if the disruption probability is high enough

nutrition unemployment and international trade abstract this paper adopts the leibenstein hypothesis that there are increasing returns to nutrition over a range for an individual s ability to work this assumption generates unemployment in the models analyzed and allows a study of the effects of trade policy on employment and income distribution the effects of world price changes tariffs production subsidies cum employment taxes and production taxes cum employment subsidies are analyzed

native internal migration and the labor market impact of immigration this paper presents a theoretical and empirical study of how immigration influences the joint determination of the wage structure and internal migration behavior for native born workers in local labor markets using data from the 1960 2000 decennial censuses the study shows that immigration is associated with lower in migration rates higher out migration rates and a decline in the growth rate of the native workforce the native migration response attenuates the measured impact of immigration on wages in a local labor market by 40 to 60 per cent depending on whether the labor market is defined at the state or metropolitan area level

ends against the middle determining public service provision when there are private alternatives abstract public provision of a service coexists with private market provision the quality of public provision is determined by majority vote preferences are not single peaked owing to the presence of private alternatives we identify two cases in one majority voting equilibrium always exists and the median income voter is pivotal in the other a necessary condition for equilibrium indentifies the pivotal voter who must have income below the median when equilibrium exists a coalition of middle income households who consume the public alternative will be opposed by a coalition of rich and poor households with the rich choosing private consumption

commodity convenience yield and risk premium determination the case of the u s natural gas market this paper contributes to the understanding of commodity pricing issues by measuring and modeling two of the most important concepts in the storable commodity markets the convenience yield and risk premium an emphasis is placed on the empirical determination of these factors in the u s natural gas market we find that the convenience yield and risk premium are measurable and economically significant while we find that the determination of the convenience yield is largely consistent with economic theories the evidence regarding the determination of the risk premium is mixed

sustaining fiscal policy through immigration this paper explores the fiscal implications of immigration to the us and argues that immigration policy should be viewed as a vital part of fiscal policy in particular a case is made that skill

real option valuation of free destination in long term liquefied natural gas supplies this paper presents a real option model for the valuation of destination flexibility in long term lng supplies stochastic price dynamics in the different markets is modelled through geometric brownian motion processes mean reversion is considered as well as correlation between markets but instead of the usual correlation in return shocks a price convergence term is introduced representing the arbitrage streams between markets model parameters are estimated from market data on lng prices by maximum log likelihood the goodness of the fit for the proposed model is tested as well as for two alternative models confidence intervals for the parameters are given results for the model are calculated by monte carlo simulation frequency distributions for the main results are plotted the effect of the main parameters of the model is studied i e price volatilities price convergence initial prices in the markets mean reversion extra transportation costs number of alternative markets the value of destination flexibility is found to be an important share of the value of lng

product line selection production decisions and allocation of common fixed costs abstract product costs are determined in practice for the purpose of pricing make buy and product line decisions while many costs are directly assignable to individual products common costs have historically presented a difficult conundrum a variety of cost allocation methods are used in practice or have been suggested in the literature to attach these costs to individual products while such procedures are theoretically unsupported they may be able to mimic the correct decisions adequately in this paper we investigate the efficacy of certain cost allocation schemes in a competitive environment the schemes are evaluated with reference to a scenario in which there is a single fixed cost incurred in manufacturing any subset of a set of products under idealized conditions a cournot nash model is developed that describes the number of entering firms and the equilibrium price and production levels using this as a point of reference it is shown that by using gross contribution as an allocation basis optimal product line decisions are achieved without distorting the selection of production levels moreover competitive pressure sufficient to drive total net profits close to zero is sufficient to require that any allocation rule supporting optimal product line decisions yields allocations nearly proportional to gross contributions an analogy is drawn with the allocation of joint costs to coproducts in a competitive environment and the corresponding allocation in proportion to net realizable value

game theory and cost allocation problems problems of allocating joint costs in a reasonable way arise in many practical situations where people decide to work together to save costs cost allocation methods based on game theoretical concepts take into account the strategic aspects of cost allocation situations we give a survey of cost allocation methods based on the nucleolus and the shapley value and introduce also a new one the so called cost gap allocation method which is based on the i value it is shown that for some large subclasses of cost allocation problems this new cost allocation method coincides with old separable cost methods proposed in the thirties by the tennessee valley authority and also with the separable costs remaining benefits scrb method properties of this cost gap allocation method are also treated

a strategic model of european gas supply gasmod abstract this paper presents a model of the european natural gas supply gasmod which is structured as a two stage game of successive natural gas exports to europe upstream market and wholesale trade within europe downstream market and which explicitly includes infrastructure capacities we compare three possible market scenarios cournot competition in both markets perfect competition in both markets and perfect competition in the downstream with cournot competition in the upstream market eu liberalization we find that cournot competition in both markets is the most accurate representation of today s european natural gas market where suppliers at both stages generate a mark up at the expense of the final customer double marginalization our results yield a diversified supply portfolio with newly emerging lng exporters gaining market shares enforcing competition in the european downstream market would lead to lower prices and higher quantities by avoiding the welfare reducing effects of double marginalization binding infrastructure capacity restrictions strongly influence the results and we identify bottlenecks mainly for intra european trade relations whereas transport capacity in the upstream market is globally sufficient in the cournot scenario

the impact of government deficits on money growth in developing countries abstract this paper investigates the relationship between government budget deficits and money growth in the developing countries for which reliabile data exist it is sometimes suggested that it is more likely that money growth follows debt growth in developing countries due to the embryonic state of capital markets and because the central bank generally comes under direct control of the minister of finance our results provide only mixed support for this contention however in the majority of countries in our sample there is no evidence that government deficits affect money growth for high inflation years there seems to be more support for a relationship between deficits and money growth

room in the kitchen for the melting pot immigration and rental prices this paper studies the response of housing markets to immigration shocks following card 1990 i examine the changes in rental prices in miami and three comparison groups after the mariel boatlift this exogenous immigration shock added an extra 9 to miami s renter population in 1980 i find that rents increased from 8 to 11 more in miami than in the comparison groups between 1979 and 1981 by 1983 the rent differential was still 7 rental units of higher quality were not affected by the immigration shock units occupied by low income hispanic residents in 1979 experienced an extra 8 differential hike with respect to other low income units relative housing prices moved in the opposite direction from rents in the short run

forms of business organization and rural enterprise development some examples from anglophone africa abstract for rural enterprises in transition from the informal to the formal sector the legal form of business organization adopted can significantly affect the management of the firm partnerships are simple and flexible but may be too loosely structured for some commercial ventures cooperative societies are more formally structured than partnerships and are subject to less complicated statutory requirements than companies although they are vulnerable to far reaching government intervention companies are generally more attractive to institutional lenders and passive investors however their complexity makes them better suited to entrepreneurs with substantial business experience

foreign aid and conditions precedent political and bureaucratic dimensions abstract international donor agencies increasingly use their influence to press for major reforms in development policies and administrative practices in third world countries reform recommendations are often conceptualized with little regard for the political and bureaucratic contexts in which they are to be adopted and pursued without greater concern for issues of political and bureaucratic feasibility however reform recommendations are likely to have only minimal impact policy space research and administrative systems research are promising approaches for acquiring and analyzing information about the political and bureaucratic aspects of government decision making such analyses can improve the potential for reform recommendations to be adopted and pursued

effects of demographic and related microeconomic change on land quality in hills and mountains of developing countries abstract more than 70 empirical studies indicate that local population growth and its microeconomic manifestations in hills and mountains of developing countries do not necessarily threaten forest production agriculture livestock production or watershed stability population growth can make the cost of land relative to labor increase as this cost increases people often change their methods of managing economic plants and animals and make land improvements to offset initial declines in productivity that result from more frequent use of land thus the relationship between land productivity and relative land labor costs often resembles a u halting population growth or removing people from well settled areas might not improve productivity or reduce some off site damages

a compound option model of production and intermediate inventories this article extends the option approach to valuing real assets by modeling the firm as a two stage process with bounded output rates in which the output of the first stage may be held as work in process in this setting the real asset becomes a compound option which if exercised gives the option to finish the work in process and sell the output as its final payoff the existence of intermediate inventories may arise as an optimal investment strategy for exploiting possible future price increases the framework allows us to analyze the effect of uncertainty on output rates and the effect of interest rates changes on inventory levels copyright 1993 by university of chicago press

calculating a water poverty index summary this paper provides discussion of ways in which an interdisciplinary approach can be taken to produce an integrated assessment of water stress and scarcity linking physical estimates of water availability with socioeconomic variables that reflect poverty i e a water poverty index it is known that poor households often suffer from poor water provision and this results in a significant loss of time and effort especially for women by linking the physical and social sciences to address this issue a more equitable solution for water allocation may be found for the purpose of initiating discussion a summary of different approaches to establishing a water poverty index is discussed 2002 elsevier science ltd all rights reserved

international market integration for natural gas a cointegration analysis of prices in europe north america and japan this paper investigates the degree of integration of natural gas markets in europe north america and japan in the time period between the early 1990s and 2004 the relationship between international gas market prices and their relation to the oil price are explored through principal components analysis and johansen likelihood based cointegration procedure both of them show a high level of natural gas market integration within europe between the european and japanese markets as well as within the north american market at the same time the obtained results suggest that the european respectively japanese and the north american markets were not integrated

explaining experience curves for new energy technologies a case study of liquefied natural gas many new energy technologies seem to experience a fall in unit price as they mature in this paper we study the unit price of liquefying natural gas in order to make it transportable by ship to gas power installations all over the world our point of departure is the experience curve approach however unlike many other studies of new energy technologies we also seek to account for autonomous technological change scale effects and the effects of upstream competition among technology suppliers to our surprise we find that upstream competition is by far the most important factor contributing to the fall in unit price with respect to the natural gas business this may have implications for the future development in prices as the effect of increased upstream competition is temporary and likely to weaken a lot sooner than effects from learning and technological change another more general policy implication is that while promoting new energy technologies governments must not forget to pay attention to competition policy

the economics of immigration this literature review concerns the impact of immigration on the economy of the host country focusing on the experience of the united states the emphasis is on the period from the 1970s to the 1990s the author shows that research earlier in this period generally concluded that the economic effects of immigration were positive but that more recent research on later migrations have generally concluded that immigration may be having an adverse effect on the earnings of native unskilled workers and be placing an increased burden on welfare programs the importance of such economic analysis for the formulation of appropriate migration policies is stressed

allocating the co2 emissions of an oil refinery with aumann shapley prices abstract linear programming is widely used by multiproduct oil refining firms which minimize a refinery s variable cost under a set of constraints in addition to operating costs this variable cost can include the cost associated with the refinery s co 2 emissions we suggest a quite general approach combining use of aumann shapley cost sharing method and breakdown of the objective function of the linear program this approach determines an appropriate rule for the allocation of the refinery s co 2 emissions or in general variable costs among the various finished products which can be used for purposes of life cycle assessment a numerical application to a simplified refining model is presented

the effect of education on crime evidence from prison inmates arrests and self reports we estimate the effect of high school graduation on participation in criminal activity accounting for endogeneity of schooling we begin by analyzing the effect of high school graduation on incarceration using census data instrumental variable estimates using changes in state compulsory attendance laws as an instrument for high school graduation uncover a significant reduction in incarceration for both blacks and whites when estimating the impact of high school graduation only ols and iv estimators estimate different weighted sums of the impact of each schooling progression on the probability of incarceration we clarify the relationship between ols and iv estimates and show that the weights placed on the impact of each schooling progression can explain differences in the estimates overall the estimates suggest that completing high school reduces the probability of incarceration by about 76 percentage points for whites and 3 4 percentage points for blacks we corroborate these findings using fbi data on arrests that distinguish among different types of crimes the biggest impacts of graduation are associated with murder assault and motor vehicle theft we also examine the effect of drop out on self reported crime in the nlsy and find that our estimates for imprisonment and arrest are caused by changes in criminal behavior and not educational differences in the probability of arrest or incarceration conditional on crime we estimate that the externality of education is about 14 26 of the private return to schooling suggesting that a significant part of the social return to education comes in the form of externalities from crime reduction

mean reversion in equilibrium asset prices evidence from the futures term structure we use the term structure of futures prices to test whether investors anticipate mean reversion in spot asset prices the empirical results indicate mean reversion in each market we examine for agricultural commodities and crude oil the magnitude of the estimated mean reversion is large for example point estimates indicate that 44 percent of a typical spot oil price shock is expected to be reversed over the subsequent eight months for metals the degree of mean reversion is substantially less but still statistically significant we detect only weak evidence of mean reversion in financial asset prices in this study we provide evidence of mean reversion in the prices of several real and financial assets rather than examining evidence of ex post reversion using time series of asset prices we use price data from futures contracts with varying delivery horizons to test whether investors expect asset prices to revert this approach offers two advantages first since futures prices are readily available for many markets our procedure can be implemented for many assets including those for which reliable spot price data is elusive second there is little ambiguity as to the source of any mean reversion detected using our method subject only to the maintained assumption that the no arbitrage cost of carry condition holds our test detects mean reversion that is expected to occur in equilibrium but has no power to detect mean reversion resulting from noise or inefficiencies our methodology focuses on relations between price levels and the slope of the futures term structure defined as the change across delivery dates in the futures prices observed on a given trading date an inverse relation between prices and the futures term slope constitutes evidence that investors expect mean reversion in spot prices to illustrate initially assume there are no

information bureaucracy and economic reforms in china and the soviet union the argument in this essay can be reduced to the following form the better a planning system is in terms of central planning techniques the less likely it is to depart from central planning the author proposes an information approach to explain why china launched economic reforms at a relatively earlier stage of development than did the soviet union the claim is twofold regarding the connections between initiation of reform and information flows in china and in the soviet union first all else being equal a bureaucracy better informed about economic conditions is more likely to pursue realistic economic objectives and its policies are less likely to induce macroeconomic instability to the extent that macroeconomic instability activates a search for alternatives to the status quo including reforms a bureaucracy with better information collection capabilities is less likely to initiate such a search and therefore less likely to initiate reforms second policymakers choose between reforms and the strengthening of central planning as alternative solutions to the status quo the choice of one solution over another depends on their relative costs again all else being equal the higher the costs of strengthening central planning or reform the more likely is reform or strengthening of central planning to be chosen this essay focuses on one aspect of these costs the costs of information provision

growth effects of foreign and domestic investment over tha past few years numerous studies in sociology have concluded that foreign investment harms poor nations these studies have focused on the coefficient for foreign capital stock controlling for flow new investment and defying logic have inferred that a negative coefficient for stock reflects dependency effects that retard economic growth since capital stock is the denominator for investment rate the greater the stock the lower the investment rate for a given level of new investment hence the negative coefficient for capital stock found in dependency studies indicates a beneficial investment effect not a harmful effect this point is demonstrated by reanalysis of the data used in dependency studies in these data foreign investment spurs growth earlier analysts have concluded otherwise only because their conclusions have belied their findings

a proposal for using incentive precommitments in public enterprise funding abstract among the central problems of less developed countries ldcs is the poor performance of their public enterprises pes and the seemingly limited ability of governments and other agencies to improve this performance this paper proposes that project agencies be induced as a part of the initial financing of pes to undertake specific types of precommitments a precommitment to liquidate the project if its ex post performance falls below some threshold level and a precommitment to link a non negligible part of employee compensation to actual performance our proposal is not guaranteed to improve pe performance because there are no perfect solutions to what is inherently a politically difficult problem nevertheless we argue that as long as public enterprises exist independent of whether this is a good idea or not a precommitment to use performance based incentives is likely to improve their performance we discuss the primary sources of pe losses compare their probable magnitudes and explain how various precommitments are likely to ameliorate such losses our proposal is aimed at stimulating more thought on this subject and is addressed to a broad audience

education finance reform and investment in human capital lessons from california abstract this paper examines the effect of different education financing systems on the level and distribution of resources devoted to public education we focus on california which in the 1970 s was transformed from a foundation system of mixed local and state financing to one of effectively pure state finance and subsequently saw its funding of public education fall between 10 and 15 relative to the rest of the us we show that a simple political economy model of public finance can account for the bulk of this drop we find that while the distribution of spending became more equal this was mainly at the cost of a large reduction in spending in the wealthier communities with little increase for the poorer districts our calibrated model implies that there is no simple trade off between equity and resources we show that if california had moved to the opposite extreme and abolished state aid altogether funding for public education would also have dropped by almost 10

how should the cost of joint risk capital be allocated for performance measurement we consider the problem of allocating the cost of risk capital based on value at risk var for performance measurement in a decentralized organization with several divisions the focus of the analysis is on fair risk capital allocation schemes to this end we analyze several well known allocation schemes in the context of a model based on cooperative game theory using the core concept we provide theoretical evidence that two allocation schemes the beta method and the nucleolus method turn out to perform best in allocating the cost of risk capital a simulation study shows that another allocation method the cost gap method shows similar results however within an experiment we obtain empirical evidence that the core concept is of minor importance with respect to individually perceived fairness subjects tend to favor simple allocation rules such as the activity level method and the beta method in summary only the beta method can be considered to be fair both from a normative and a descriptive point of view

joining the ccs club the economics of co2 pipeline projects this paper examines the conditions for a widespread adoption of carbon capture transport and storage ccs by a group of emitters that can be connected to a common co2 pipeline it details a modeling framework aimed at assessing the critical value in the charge for the co2 emissions required for each of the emitters to decide to implement capture capabilities this model can be used to analyze how the tariff structure imposed on the co2 pipeline operator modifies the overall cost of co2 abatement via ccs this framework is applied to the case of a real european co2 pipeline project we find that the obligation to use cross subsidy free pipeline tariffs has a minor impact on the minimum co2 price required to adopt the ccs in contrast the obligation to charge non discriminatory prices can either impede the adoption of ccs or significantly raise that price besides which we compared two alternative regulatory frameworks for co2 pipelines a common european organization as opposed to a collection of national regulations the results indicate that the institutional scope of that regulation has a limited impact on the adoption of ccs compared to the detailed design of the tariff structure imposed on pipeline operators

all school finance equalizations are not created equal school finance equalization has probably affected american schools more than any other reform of the last 30 years understanding it is a prerequisite for making optimal social investments in human capital yet it is poorly understood in this paper i explain why it differs from conventional redistribution because it is based on property values which are endogenous to schools productivity taste for education and the school finance system itself i characterize equalization schemes and show why some level down and others level up schemes that strongly level down have unintended consequences even poor districts can end up worse off i also show how school finance equalization affects property prices private school attendance and student achievement

two markets and a weak link abstract we characterise the relationship between two network based oligopoly markets when local players share the interconnection s ownership to that purpose we analyse the case of the bacton uk zeebrugge belgium natural gas pipeline using vector auto regressive representation techniques we conclude that there is a threshold of capacity deployment after which the two local markets split as a result the relationship between local price differentials and capacity utilisation is increasing and convex we also show that the local prices dynamic structure is characterised by convergence features

cash crops in developing countries the issues the facts the policies the issue of cash crops is profoundly controversial the debate uses different definitions of the term and slides across levels of analysis from the household to the international economy it also cuts across arguments crops countries and time periods this paper sets out to order the debate it deals first with definitions and taxonomy and then reviews issues connected with cash crops and a growth b distribution c food security d dependency and e the environment the paper concludes that with appropriate policies cash crops can offer a route to equitable growth