the governance of global value chains unresolved human rights environmental and ethical dilemmas in the apple supply chain the continued advance of global value chains as the mode of production for an increasing number of goods and services has impacted considerably on the economies and societies both of the developed world and the emerging economies although there have been many efforts at reform there is evidence of unresolved dilemmas of human rights environmental issues and ethical dilemmas in the operation of the global value chain this paper focuses on the role and performance of apple inc in the global value chain in asia apple is the most successful corporation on earth measured in financial terms and yet has failed to find a solution to recurrent employment and environmental problems occurring in plants manufacturing apple components this analysis informs the current theoretical debate on the development of the global value chain and the continuing institutional failure that leaves employees vulnerable and the environment neglected

management of social issues in supply chains a literature review exploring social issues actions and performance outcomes the social dimension of sustainable development and its impact on supply chains have so far received less attention than the environmental dimension the aim of the research is to explore the intersection between social issues corporate social responsibility csr actions and performance outcomes a structured literature review of social issues in supply chains is presented analysing the research published so far in peer reviewed publications linking csr and supply chain management allows the exploration of strategies and performance outcomes with a focus on social issues the corresponding responsible supply chain actions adopted by firms to address these issues are grouped into communication compliance and supplier development strategies social and economic as well as buyer and supplier performance are identified as the key outcomes but the interactions among these constructs would require further research this paper contributes to the understanding of managing social issues in supply chains by linking social issues responsible supply chain actions and performance outcomes the paper consolidates related research by offering an overarching conceptual framework and points to future research directions and simultaneously provides insights into the management of social issues in supply chains

optimal growth with many consumers abstract a method is described for constructing all pareto optimal allocations for a dynamic economy with many heterogeneous consumers under certainty in which both the technology and consumer preferences are recursive but preferences need not be additively separable over time optimal perfect foresight competitive equilibrium allocations are obtained through the study of a dynamic program for an economy with one consumption good sufficient conditions are given for the existence of a unique interior stationary distribution of consumption and wealth for a two person exchange economy sufficient conditions are given for the global asymptotic stability of the unique interior stationary point

the demand for beer wine and spirits a survey of the literature the demand for alcohol literature is vast and much conflicting information about the nature of the demand for alcoholic beverages has been published this paper presents a survey of the literature and then uses the technique of meta regression analysis to establish insights into the nature of the demand for beer wine and spirits unlike previous meta studies of the demand for alcoholic beverages this study adjusts for the precision of each elasticity estimate the analysis presented suggests reported elasticity estimates will be influenced by such factors as estimation technique data frequency and time period under consideration with respect to time the findings suggest that the demand for alcoholic beverages has become less inelastic since the mid 1950s and that the income elasticity has been falling since the mid 1960s the analysis also found support for the idea that alcohol as a commodity group is a necessity and that consumers respond to price discounting with inventory behaviour rather than true substitution behaviour little support is found for the idea that the demand for alcoholic beverages varies fundamentally across most countries although wine may be an exception language en

consumer demand and the life cycle allocation of household expenditures the purpose of this paper is to estimate the parameters of household preferences that determine the allocation of goods within the period and over the life cycle using micro data in doing so the authors are able to identify important effects of demographics labor market status and other household characteristics on the intertemporal allocation of expenditure they test the validity of the life cycle model using excess sensitivity tests and find that controlling for demographics and labor market status variables can largely explain the excess sensitivity of consumption to anticipated changes in income

the reasonableness of non constant discounting abstract the typical method for valuing the future goods and harms of a public policy alternative is by means of a constant annual discount rate this paper examines the reasonableness for public policy analysis of non constant discounting methods that unlike constant discounting can accord considerable importance to outcomes in the distant future we examine temporal consistency and economic efficiency as reasons for the use of constant discounting and we argue that these reasons do not apply for a public policy choice whose effects are long range and irreversible

the demand for alcoholic drink in the united kingdom 1963 78 1983 the demand for alcoholic drink in the united kingdom 1963 78 applied economics vol 15 no 1 pp 125 140

the demand for home produced and imported alcoholic beverages in cyprus the aids approach the purpose of this paper is to investigate the demand and its composition between home produced and imported for alcoholic beverages in cyprus the methodological approach used is the almost ideal demand system aids both in static and dynamic terms empirically the aids both in its static and dynamic version was estimated using time series 1970 1992 for three sets of data which include 1 alcoholic beverages wine beer other brandies broken down between home produced and imported model a 2 alcoholic beverages only without disaggregation between home produced and imported model b and 3 aggregate alcoholic beverages wine beer other brandies and food model c zellner s iterative estimation procedure was used for estimating the model the empirical findings 1 strongly support the dynamic version of the aids over its static alternative and 2 provide certain guidelines concerning economic policies relating to an increase in government revenues and changing the composition between

dynamic almost ideal demand systems an empirical analysis of alcohol expenditure in ireland this paper presents a dynamic form of the almost ideal demand system aids three versions of the static aids model are employed to determine the preferred long run equilibrium model and represents the short run dynamics by an error correction mechanism this estimation procedure is then applied to alcohol expenditure in ireland the estimated point elasticities are consistent with previous studies and a priori expectations beer and spirits are found to be price inelastic in both the short and long run while wine is price inelastic in the short run and price elastic in the long run

clusters chains and compliance corporate social responsibility and governance in football manufacturing in south asia a recent concern in the debate on corporate social responsibility csr in developing countries relates to the tension between demands for csr compliance found in many global value chains gvcs and the search for locally appropriate responses to these pressures in this context an emerging and relatively understudied area of interest relates to small firm industrial clusters local clusters offer the potential for local joint action and thus a basis for improving local compliance on csr through collective monitoring and local governance this article explores the interrelationship between global governance exercised through gvc ties and local governance via cluster institutions in ensuring compliance with csr pressures it undertakes a comparative analysis of two leading export oriented football manufacturing clusters in south asia that have both faced common challenges on child labour the article shows that both forms vertical and horizontal governance have played a part in shaping the response of the two clusters on child labour moreover these two distinct forms of governance have also led to quite differentiated outcomes in terms of forms of work organization and child labour monitoring this raises broader questions on how global csr demands can locally be better embedded and the conditions under which football stitchers labour in these new work forms

household saving micro theories and micro facts in this survey we review the recent theoretical and empirical literature on household saving and consumption the discussion is structured around a list of motives for saving and how well the standard theory captures these motives we show that almost all of the motives for saving that have been suggested in the informal saving literature can be captured in the standard optimizing model particular attention is given to recent work on the precautionary motive and its implications for saving and consumption behavior we also discuss the behavioral or psychological approach that eschews the use of standard optimization techniques and focuses instead on direct consideration on saving we provide a section on facts who save and how much we then discuss informally the recent decline in the u s saving rate and whether the theory is of much use in understanding this and other changes in aggregate saving rates over time we do not find any convincing explanation for the change in saving rates we also discuss some analyses of saving behavior over the life cycle addressing such questions as whether households save enough for retirement and whether the consumption patterns of older households can be rationalized within a simple life cycle model we also review a great number of studies of the consumption euler equations based on our analysis of the studies cited we conclude that there is still mixed evidence that consumption is excessively sensitive to income we also examine in depth the recent empirical literature on the precautionary motive we conclude that although some households do seem to have a significant precautionary motive at some points in their life cycle this motive is not so strong empirically as some investigators suggest

multinationality and corporate ethics codes of conduct in the sporting goods industry the international operations of firms have substantial impact on the formulation and implementation of business ethical principles such as codes of conduct the international sporting goods industry has been a pioneer in setting up codes and thus provides much relevant experience different sourcing strategies degrees of multinationality and national backgrounds affect the contents of codes moreover international non governmental organizations prove equally effective in triggering sophisticated codes

the demand for domestic and imported alcoholic beverages in ontario canada a dynamic simultaneous equation approach the purpose of this paper is to estimate simultaneously dynamic demand functions and consequently income and price elasticities for domestic and imported alcoholic beverages for the province of ontario the methodology used is the almost ideal demand system originally developed by deaton and muellbauer 1980 augmented by pollak s 1970 habit formation hypothesis the empirical application uses time series 1958 1987 for imported and domestically produced spirits wine and beer the findings provide strong support favouring the dynamic version of the almost ideal demand system over its static alternative but little evidence of strong substitution between domestic and imported products

the pricing practices of the liquor control board of ontario revisited box g e p and g m jenkins 1970 time series analysis forecasting and control san francisco holden day box g e p and g c tiao 1975 intervention analysis with applications to economic and environmental problems journal of the american statistical association 70 70 9 canada house of commons 5 june 1980 minutes of proceedings and evidence standing committee on miscellaneous estimates ottawa ministry of supply and services 16 december 1980 minutes of proceedings and evidence standing committee on miscellaneous estimates ottawa ministry of supply and services gregory a r and j g mackinnon 1980 where s my cheque a note on postal strikes and the demand for money in canada this journal 13 683 7 mitchell d j b 1981 collective bargaining and the economy j stieber et al eds u s industrial relations 1950 1980 a critical assessment madison wisc industrial relations research association statistics canada 1975 direct selling in canada cat no 63 218 ottawa information canada 1980 gross domestic product by industry cat no 61 213 ottawa ministry of supply and services 1981 gross domestic product by industry cat no 61 005 october ottawa ministry of supply and services

from chain liability to chain responsibility this article examines whether the involvement of stakeholders in the design of corporate codes of conduct leads to a higher implementation likelihood of the code the empirical focus is on occupational safety and health osh the article compares the inclusion of osh issues in the codes of conduct of 30 companies involved in international framework agreements ifas agreed upon by trade unions and multinational enterprises with those of a benchmark sample of 38 leading multinational enterprises in comparable industries it is found that codes of the ifa group have a higher implementation likelihood in osh than the codes of the benchmark group further european firms culturally more used to stakeholder involvement score higher than their us and japanese competitors and hence are more capable of addressing the safety and health issues in international supply chains the implementation likelihood of codes seems closely related to the type of corporate csr approach

enforcing higher labor standards within developing country value chains consequences for mnes and informal actors in a dual economy the 2013 collapse of the rana plaza building in dhaka bangladesh led external stakeholders to insist on higher labor standards in apparel global value chains gvcs stakeholders now expect mnes to take full chain responsibility however the increased monitoring and enforcement costs of a large network of suppliers have been non trivial mnes instead implement a cascading compliance approach coupled with a partial re internalization elevated costs are further exacerbated in developing countries where the informal and formal sectors are linked and cost competitiveness greatly depends on this duality monitoring actors in the informal sector is difficult and few informal actors can achieve compliance gvcs have therefore reduced informal sector engagement by excluding non compliant actors and investing in greater automation by seeking to strictly enforce compliance mnes are attenuating some of the positive effects of mne investment particularly the prospects for employment creation especially among women and enterprise growth in the informal sector i discuss how these observations might inform other cross disciplinary work in development ethics and sociology finally i note implications for ib theory from the disparities between the ownership control and responsibility boundaries of the firm

entrepreneurship social mobility and income redistribution in south india development economists have been preoccupied with the problem of increasing the size of the gnp pie to the relative neglect of its distribution despite the recent disenchantment with the viewpoint that all classes share in the benefits of industrial growth empirical data on the distribution of income business opportunity and economic power are in short supply many of the studies on entrepreneurship and economic development when they are not apologetics for ruthless capitalist exploitation as paul baran suggests extol the achievements of the capitalist entrepreneur without examining class origins and monopoly advantage joseph schumpeter sees entrepreneurs irrespective of class origin as heroic figures with the dream and will to found a private kingdom to conquer adversity to achieve success for its own sake and to experience the joy of creation for gustav papanek 1967 the private entrepreneur who is frugal diligent far sighted remarkably able and willing to take political risks is in large part responsible for the success of pakistan in achieving rapid industrialization

the family as an incomplete annuities market families can self insure against uncertain dates of death through implicit or explicit agreements with respect to consumption and interfamily transfers interfamily transfers need have nothing to do with altruistic feelings they may simply reflect risk sharing behavior of completely selfish family members although family annuity markets are incomplete even small families can substitute by more than 70 percent for perfect market annuities given adverse selection and transaction costs family risk pooling may be preferred to public market annuities in the absence of public annuities these risk sharing arrangements provide powerful incentives for marriage and family formation

embedding csr values the global footwear industry s evolving governance structure many transnational corporations and international organizations have embraced corporate social responsibility csr to address criticisms of working and environmental conditions at subcontractors factories while csr codes of conduct are easy to draft supplier compliance has been elusive even third party monitoring has proven an incomplete solution this article proposes that an alteration in the supply chain s governance from an arms length market model to a collaborative partnership often will be necessary to effectuate csr the market model forces contractors to focus on price and delivery as they compete for the lead firm s business rendering csr observance secondary at best a collaborative partnership where the lead firm gives select suppliers secure product orders and other benefits removes disincentives and adds incentives for csr compliance in time the suppliers csr habit should shift their business philosophy toward pursuing csr as an end in itself regardless of buyer incentives and monitoring this article examines these hypotheses in the context of the athletic footwear sector with nike inc and its suppliers as the specific case study the data collected and conclusions reached offer strategies for advancing csr beyond the superficial and often ineffectual code of conduct stage

the impact of the canada united states free trade agreement on u s wine exports on 1 january 1989 the canada united states free trade agreement went into effect the agreement reduced the restrictions on the importation and marketing of wine produced in the united states this article analyzes the impact of this lessening on united states wine exports to canada a demand relation for united states exports to canada is estimated and then used to decompose the effects into their proximate causes these causes are a own price and exchange rate effects b substitute price and exchange rate effects c changes in real income in canada d tariff removal effects and e removal of nontariff trade barriers by canada

industrial clusters and corporate social responsibility in developing countries what we know what we do not know and what we need to know this article provides a review of what we know what we do not know and what we need to know about the relationship between industrial clusters and corporate social responsibility csr in developing countries in addition to the drivers of and barriers to the adoption of csr initiatives this study highlights key lessons learned from empirical studies of csr initiatives that aimed to improve environmental management and work conditions and reduce poverty in local industrial districts academic work in this area remains embryonic lacking in empirical evidence about the effects of csr interventions on the profitability on local enterprises workers and the environment nor do theoretical frameworks offer clear explanations of the institutionalization and effects of csr in local industrial districts in the developing world other key limitations in this research stream include an excessive focus on export oriented industrial clusters the risk that csr becomes a form of economic and cultural imperialism and the potential for joint action csr initiatives in clusters of small and medium sized enterprises to offer a new form of greenwashing from this review the authors develop a theoretical model to explain why csr has not become institutionalized in many developing country clusters which in turn suggests that the vast majority of industrial clusters in developing countries are likely to engage in socially irresponsible behavior

saving and liquidity constraints this paper is concerned with the theory of saving when consumers are not permitted to borrow and with the ability of such a theory to account for some of the stylized facts of saving behavior the models presented in the paper seem to account for important aspects of reality that are not explained by traditional life cycle models copyright 1991 by the econometric society

revisiting supplier compliance with mnc codes of conduct recoupling policy and practice at chinese toy suppliers does private regulation of workers rights in global value chains improve working conditions on the factory floor drawing on one of the first systematic longitudinal studies of supplier compliance with multinational corporation mnc codes of conduct this paper finds in contrast to previous research substantial improvements over time while in 2004 the four examined chinese toy suppliers violated most of the evaluated code of conduct criteria and consciously decoupled the code of conduct policy from actual practices by 2009 they had recoupled policy and practice and complied with nearly all examined criteria except working hours the paper contributes to the private regulation literature by challenging previous research claims identifying factors that could make private regulation effective and outlining a research method for empirically studying the effects of codes of conduct over time the paper also contributes to new institutional theory by discussing how recoupling could be influenced by two factors not identified in previous research i trusting relationships between the organization and the stakeholder exerting pressure and ii factors unrelated to main external pressures leading to accidental recoupling

the demand for beer wine and spirits a systemwide analysis the systemwide approach to the analysis of consumer demand considers the multivariate structure of the problem in which the consumer allocates his income to all goods simultaneously this approach combines the theory of the consumer with empirical analysis and has enjoyed much popularity over the past decade for surveys of these developments see brown and deaton 1972 phlips 1974 powell 1974 theil 1975 76 1980 barten 1977 and theil and clements 1980 most previous applications of the systemwide approach have used national accounts commodity groups food clothing housing and so on for many business and government policy purposes however these groups are much too broad for example to analyze the effects on consumption of all but the simplest changes in indirect taxes we would need considerably more disaggregation similarly market researchers need to analyze demand at the individual product level for purposes of forecasting and formulating pricing and other policies the objective of this paper is to use the consumption of beer wine and spirits to illustrate how the approach can be apthis paper illustrates how the systemwide approach to consumer demand can be extended so that it can be applied to narrowly defined commodity groups we use the consumption of beer wine and spirits to show how the approach can be applied to estimate income and price elasticities of demand when the consumer s utility function is appropriately separable in alcoholic beverages and all other goods it is possible to confine our attention to the three beverages and ignore all other goods we use the demand model for a number of simulations designed to analyze the rapid growth of wine consumption we are indebted to john davis peter goldschmidt and kal stening for excellent research assistance to michael wohlgenant and henri theil for helpful comments and discussion and to the new south wales drug and alcohol authority for their partial financial support of this research

methodologies and perspectives in research on labour relations in global agricultural production networks a review the integration of global south actors into the global agricultural economy has attracted research on labour effects this is because global south actors are often integrated at the level of produc

the rate of time preference and dynamic economic analysis strong restrictions on the structure of preferences are a central feature in the received theory of intertemporal allocation in fact most of the modern literature concerned with capital theoretic problems represents preferences by a functional in which an additive utility function is discounted by a constant rate of time preference this specification is attractive because it is analytically tractable in dynamic models and it clearly delineates how tastes and opportunities interact to determine an economy s household s paths of consumption and capital formation however its rigid structure constancy of time preference severely limits the conclusions and explanatory power of the corresponding models this paper considers a class of utility functionals in continuous time which have the appealing feature that the rate of time preference depends systematically on an index of aggregate future consumption the more flexible structure embodied in these functionals leads to important generalizations and

rising power clusters and the challenges of local and global standards this paper explores the intersection between three processes associated with globalisation first the rise of emerging economies like china brazil and india the so called rising powers and their potential to define the contours of globalisation global production arrangements and global governance in the twenty first century second the importance of corporate social responsibility csr goals in the shaping of global trade rules and industrial practices third the significance of small firm clusters as critical sites of industrial competitiveness some of the most significant examples of successful innovative and internationally competitive small firm clusters from the developing world are located in the rising powers and cluster promotion is a core element of national industrial policy in some of these countries there is also evidence of engagement by clustered actors with corporate social responsibility goals around labour and environmental impacts while these three processes have been separately studied there has been no attempt to explore their intersections this paper addresses this gap through a comparative analysis of secondary data and a detailed reading of the literature on csr and clusters in brazil china and india it assesses the evidence on small firm clusters in the rising power economies and considers how these rising power clusters engage with csr goals pertaining to labour social and environmental standards it argues for a greater focus on the formal and informal institutional context termed the social contract in explaining divergent experiences and practices observed across these countries this raises important questions for future academic and policy research on clusters csr and the rising powers the paper concludes by outlining a research agenda to explore the local and global consequences of the relationship between rising power clusters and international labour and environmental standards

humps and bumps in lifetime consumption in this article we argue that the life cycle model that allows demographics to affect household preferences and relaxes the assumption of certainty equivalence can generate hump shaped consumption profiles over age that are very similar to those observed in household level data sources and in particular match the differences in shape across different education groups liquidity constraints or myopia are not required to explain the empirical features of observed life cycle patterns

is consumption growth consistent with intertemporal optimization evidence from the consumer expenditure survey in this paper we show that some of the predictions of models of consumer intertemporal optimization are in line with the patterns of nondurable expenditure observed in u s household level data we propose a flexible specification of preferences that allows multiple commodities and yields empirically tractable equations we estimate preference parameters using the only u s micro data set with complete consumption information we show that previous rejections can be explained by the simplifying assumptions made in previous studies we also show that results obtained using good consumption or aggregate data can be misleading

evolution of time preference by natural selection this paper entertains the hypothesis that human time preferences are in evolutionary equilibrium i e that no mutation changing time preferences could be favored by natural selection this hypothesis implies that the marginal rate of substitution mrs holding darwinian fitness constant must equal the mrs holding utility constant furthermore in a market economy the latter must equal the mrs in exchange exploiting these principles the author finds that the long term real interest rate should equal ln 2 per generation about 2 percent per year and that young adults should discount the future more rapidly than their elders copyright 1994 by american economic association

cross country alcohol consumption comparison an application of the rotterdam demand system this paper analyses the consumption patterns of the three beverages beer wine and spirits in nine countries australia canada finland japan new zealand norway sweden the uk and the us using the rotterdam demand system a cross country comparison of the results shows that in most countries i wine consumption has grown at a fasteer rate than beer and spirits ii the proportion of consumers expenditure on alcohol is declining iii beer is a necessity and spirits is a luxury iv the demand for the three beverages is price inelastic and iv all three beverages are pair wise substitutes we also investigated the hypothesis of identical parameters for all countries by pooling the data across countries and found that the data do not support the hypothesis

a reexamination of returns to scale density and technical progress in u s airlines the logic of protecting u s airlines from competition was initially founded on the belief that substantial economies of scale existed in the industry and that consumers would benefit through among other things regulation of fares regulation of service network and restrictions on entry and exit from the industry however studies 1 7 8 12 have undermined the faith in economic regulation by showing that economies of scale were minimal and competition would promote efficiency in a recent study caves christensen and tretheway 5 estimated returns to scale rts and returns to density rtd for u s airlines based on a panel dataset for 1970 1981 containing trunk and local service airlines they estimated rtd and rts from a translog cost function for airline services like many other applied economists working with translog cost functions they found that the neoclassical curvature or regularity conditions on the cost function are not satisified in almost half of the observations 105 out of 208 in general concavity property is satisfied in the neighborhood of the sample mean if it is chosen as the point of approximation for the cost function but not at points further from the mean recently diewert and wales 6 suggested alternative flexible functional forms which are globally concave in input prices if the concavity property is satisfied at only one point thus if the concavity property is violated imposition of it at a single point will make the function globally concave without destroying flexibility use of such functional forms can avoid violation of regularity conditions of the cost function at extreme points the objective of this paper is to estimate a model of airline costs along the lines of caves christensen and tretheway 5 however we extend their results in several ways first we consider a modest generalization of the symmetric generalized mcfadden sgm cost function developed by diewert and wales by including network and control variables in the airline cost function the sgm cost function is flexible and globally concave in input prices thus our estimates of parameters and measures of rts rtd and technical progress are based on a cost function which is globally concave second we estimate the system of input demand functions instead of the cost function and while estimating these input demand functions derived from the cost minimizing behavior of the airlines we incorporate firm and input specific effects these effects capture possible differences in production technologies among airlines third we intro

the pricing practices of the liquor control board of ontario reconsidered of course economists are often suspicious of government declarations in this case however we think it justifiable to take them at face value we would agree with breton 1969 who took the higher mark ups levied on foreign wines as prima facie evidence that the lcbo was protecting domestic wines while acheson correctly pointed out that higher mark ups might be consistent with profit maximization and thus could not by themselves logically be taken as evidence of protectionism we wonder why a profit maximization hypothesis would not go any further than price discrimination between foreign and domestic wines surely the profit maximizing mark up on sherries is different from that on champagne or table wines so should profit maximization not imply price discrimination between these groups as well unless the costs of information regarding the elasticities of demand for types of wine are more expensive than the information on elasticity for foreign and domestic wines relative to the increased gross profits from price discrimination along either of these lines one would expect discrimination across types of wine to occur because of these inconsistencies as well as the evidence regarding the other protectionist activities of the lcbo it seems reasonable to us that the particular method of differential mark ups foreign versus domestic and the consistently higher mark ups charged for foreign wines are sufficient pieces of evidence to conclude that the motive behind the lcbo s mark up policy is protectionism not profit maximization

a theory of time preference grant a taylor this article proposes that people generally prefer present consumption to future consumption because their expected utility from consumption eventually falls as their mental and physical abilities eventually decline with age moreover contrary to the ubiquitous intertemporal formulation with a constant rate of time preference and contrary to three recent theories of time preference that predict decreasing discounting as people age this article asserts that discounting increases over the life cycle this hypothesis is supported by data from the panel study of income dynamics as well as evidence from numerous previous studies jel d91 1 introduction despite the almost universal assumption of time preference in models of intertemporal choice an adequate explanation of why people discount the future has not been provided 1 olsen and bailey 1981 make a convincing case for positive time preference by contradiction i e without time preference models of intertemporal choice do not yield predictions consistent with observed behavior but they do not explain why individuals would rationally discount the future 2 three recent studies have attempted to provide the explanation rogers 1994 argues that societies that discount the future at a rate of about 2 will be the long run survivors in an evolutionary fitness situation 3 posner 1995 argues that discounting occurs because individuals have multiple selves that is people are weighting their present consumption far more heavily than their future consumption because the present self and the future self are in some meaningful sense separate persons 92 becker and mulligan 1997 argue that discounting occurs because of a rational defective recognition of future utilities 730 but as will be shown these three theories are inconsistent with empirical evidence on consumption over the life cycle in at least one important aspect this article constructs and empirically supports a new theory of time preference the hypothesis is that people do not have an intrinsic preference for present consumption relative to future consumption instead the instantaneous utility function also known as the felicity function is expected to vary with age just as people s physical and mental abilities vary with age in other words the ability to enjoy consumption eventually deteriorates over the life cycle along with other abilities this life cycle view of the expected utility function causes people to rationally devalue consumption in periods of low expected felicity that is discount future consumption perhaps this is what is meant by the cliche don t wait until you are too old to enjoy it moreover this causes individuals implicit discount rates to vary systematically with age 4 in fact this provides the testable implication of the theory the standard specification of intertemporal preferences holds the discount rate constant over th e life cycle 5 to be more precise in the early stage of the life cycle the capacity to enjoy consumption may be expected to rise hence a young individual s discount rate may be negative figure 1 illustrates this possibility with a hypothetical adult life cycle marginal felicity function for a given level of consumption u sub c c a c denotes consumption and a denotes age and its corresponding discount rate function rho a the vast majority of wealth is held by older people that is those in the declining stage of their abilities thus the preference for present consumption over future consumption appears to hold in the aggregate this view of intertemporal preferences may at first seem inconsistent with practically all dynamic analyses which are based on the notion of stationary utility on further consideration however the hypothesis is quite consistent with modern consumer theory since becker 1965 it has been widely accepted that households derive utility from commodities that are produced with market goods combined with household time and skills i

intertemporal dependence impatience and dynamics abstract this paper develops simple geometric methods for analyzing consumer behavior under recursive but intertemporally dependent tastes since the preferences studied need not be time additive they allow the marginal utility of consumption on a given date to vary with consumption on other dates intertemporal dependence is induced by the presence of a variable individual rate of time preference the optimal consumption responses to transitory and anticipated changes in incomes and interest rates are easily derived and are similar in many respects to the responses implied by the standard constant time preference model intuitive explanations of the first order conditions describing optimal paths are provided

how to promote clusters policy experiences from latin america abstract in this paper we propose to differentiate between three types of clusters when it comes to formulating cluster oriented policies in latin america survival clusters of micro and small scale enterprises owe their existence more to unfavorable macroeconomic conditions and less to entrepreneurial competence and dynamism their competitive potential is limited support measures should mainly aim at improving the conditions for survival since these clusters are important in creating employment opportunities the impetus should be to break through the low skills low investment vicious circle more advanced and differentiated mass producers have been flourishing in the import substitution era but are coming under enormous pressure with the transition to open economies in these clusters the main challenge is to create an environment that stimulates and supports learning innovation and constant upgrading clusters of transnational corporations are typically dominated by foreign firms not only at the final assembly stage but also in parts production these clusters often are showcases of best practice manufacturing this can be used to stimulate the upgrading of domestic firms notably by involving them in the supply chain of transnationals

quality of life and the wtp for an increased life expectancy at an advanced age abstract in this study we report an attempt to measure the value adult swedes impute to an increased survival probability at high ages a rating scale between the worst possible quality of life 1 and the best possible quality of life 10 is used to indicate the quality of life a person expects to achieve at an advanced age we find a highly significant correlation between this quality measure and the insurance premium a person is willing to pay in exchange for a programme increasing the expected length of life by one year conditional on having survived until the age of 75 years the maximum insurance premium the average person is willing to pay for such a programme is less than 1500 the willingness to pay increase with a person s age but at a low rate the implied average marginal rate of time preference is about 1 percent

the demand for alcoholic beverages in spain the objective of this study is to analyze the main determinants of alcoholic beverages consumption at home data comes from the latest spanish household national survey which provides information on expenditure and quantities of different food products by household because households are interviewed only 1 week a large number of zeros have been recorded among the existing censured demand models the double hurdle dh model the purchase infrequency model and the tobit purchase infrequency model among others and after carrying out model selection tests the dh model has been finally estimated all expenditure elasticities are positive corresponding the highest value to spirits own price elasticities are negative and also in this case the spirits exhibit the highest value socio economic variables also play an important role in explaining consumer purchase and consumption decisions

economic and social upgrading in global value chains and industrial clusters why governance matters the burgeoning literature on global value chains gvcs has recast our understanding of how industrial clusters are shaped by their ties to the international economy but within this context the role played by corporate social responsibility csr continues to evolve new research in the past decade allows us to better understand how csr is linked to industrial clusters and gvcs with geographic production and trade patterns in many industries becoming concentrated in the global south lead firms in gvcs have been under growing pressure to link economic and social upgrading in more integrated forms of csr this is leading to a confluence of private governance corporate codes of conduct and monitoring social governance civil society pressure on business from labor organizations and non governmental organizations and public governance government policies to support gains by labor groups and environmental activists this new form of synergistic governance is illustrated with evidence from recent studies of gvcs and industrial clusters as well as advances in theorizing about new patterns of governance in gvcs and clusters

positive time preference the case for positive time preference is absolutely compelling unless there is an infinite time horizon with the expectation of unending technological advance combined with what we call drastically diminishing marginal utility this finding holds both in the positive and normative senses a corollary is that savings are interest elastic

implementing supplier codes of conduct in global supply chains process explanations from theoretic and empirical perspectives western buying companies impose supplier codes of conduct scc on their suppliers in developing countries however many suppliers cannot fully comply with scc and some of them even cheat in scc in this research we link contract characteristics price pressure production complexity contract duration to the likelihood of supplier s commitment to scc through a mediating process how the buying companies govern their suppliers our structural equation model analysis shows that the hierarchy relational norms governance is a perfect mediator of contract characteristics effects on the likelihood of supplier s commitment the market governance an insignificant one the managerial implications are provided for successfully implementing scc in global supply chains

precautionary saving and accidental bequests this paper presents a simple general equilibrium model of precautionary saving and accidental bequests this model is used to analyze the implications of individual lifetime uncertainty for aggregate consumption and capital accumulation a precautionary demand for saving arises because an individual consumer does not know in advance the date at which he will die and he wants to avoid low levels of consumption in the event that he lives longer than expected an implication of this precautionary saving is that when death does occur the consumer is generally holding some wealth which is then passed on to his heirs in the form of an accidental bequest even if all consumers have the same ex ante mortality probabilities there will be some intracohort variation in the date of death consequently there will be a nondegenerate distribution of bequests left by consumers in a cohort this nondegenerate distribution of bequests left by one generation induces variation in the distributions of wealth consumption and bequests of subsequent generations the importance of bequests in aggregate saving has been established by laurence kotlikoff and lawrence summers 1981 who reported that 80 percent of u s household wealth is inherited wealth one interpretation of this finding is that the simple life cycle model without bequest motives is an inadequate description of saving behavior in the united states but the model i present demonstrates that accidental bequests by selfish consumers can account for a potentially sizeable fraction of aggregate wealth although some part of bequests especially by the wealthy undoubtedly results from an explicit bequest motive accidental bequests also play a role in the intergenerational transfer of wealth as well as in the intragenerational variation in wealth in order to focus on the role of accidental bequests i purposely exclude a bequest motive from the specification of the utility function the effects of lifetime uncertainty on individual consumption behavior were first examined formally in a seminal paper by menachem yaari 1965 yaari s model provided the basic framework for virtually all subsequent work on uncertain lifetimes including well known papers by nils hakansson 1969 stanley fischer 1973 robert barro and james friedman 1977 david levhari and leonard mirman 1977 and kotlikoff and avia spivak 1981 however all of these papers focused on the consumption decision of an individual and ignored the effect of accidental bequests on the behavior of the recipients of these accidental bequests 2 as will be shown at various points in this paper changes in the economic environment can have effects on aggregate behavior which differ sharply from the effects on individual behavior because of the endogenous adjustment of bequests the effects of department of economics harvard university cambridge ma 02138 this paper is a revised version of bequests and social security with uncertain lifetimes nber working paper no 1372 june 1984 i thank olivier blanchard john burbidge christopher cavanagh robert clower stanley fischer benjamin friedman elhanan helpman mervyn king nobuhiro kiyotaki laurence kotlikoff robert mcdonald james pesando julio rotemberg lawrence summers lars svensson mark watson and jeffrey wolcowitz for valuable conversations and correspondence i also thank the participants in seminars at boston university columbia university cornell university federal reserve board harvard university university of iowa mit university of minnesota university of montreal national bureau of economic research north carolina state university the wharton school and yale university and two anonymous referees for their helpful comments i also thank the national science foundation for financial support 1 in the presence of perfect annuity and life insurance markets there may or may not be bequests depending on the presence or absence of a bequest motive but there would be no accidental bequests 2 kotlikoff and spivak focus on the role of the family in providing an incomplete annuities market but stop short of a full scale overlapping generations model in which the distribution of bequests is determined endogenously

uncertain lifetime consumption and dissaving in retirement this paper asks whether the continued accumulation or mild dissaving observed among the retired can be explained by uncertain lifetime in the absence of annuities after an initial period influenced by borrowing constraints under constant relative risk aversion uncertain lifetime depresses consumption by a proportion increasing with age if the elasticity of intertemporal substitution in consumption is small illustrative computations based on actual income and survival data show that plausible elasticities are sufficiently small to give this effect the reduction in consumption is large enough to explain much of the lack of decumulation by the elderly

malthusian selection of preferences the authors study natural selection of preferences using a golden age model with endogenous population in equilibrium all agents have preferences with maximum biological fitness given resource constraints and total population is the maximum the environment can sustain naturally selected agents follow the golden rule acting as if they maximize the undiscounted sum of per capita felicities of current and future generations selected preferences and hence work saving consumption and population density vary predictably with environmental differences copyright 1990 by american economic association

labour leverage in global value chains the role of interdependencies and multi level dynamics the global segmentation of production and distribution has resulted in highly complex global value chains gvcs where vertical and horizontal dynamics are equally important in determining working conditions and providing points of leverage for labour borrowing notions of multi level governance we propose an analytical framework for describing and explaining success and failure of labour agency when attempting to improve working conditions along gvcs our starting point is that the high complexity of gvcs and the absence of a global overarching authority have been balanced by the emergence of governance mechanisms of different forms and at different levels an assessment of these mechanisms which emphasize process over institutions reveals how different types of interactions and interdependencies along gvcs impact on labour s use of power we argue that in order to fully situate labour agency within governance debates any future research agenda needs to be driven by micro level bottom up approaches

macroeconomic policy exchange rate dynamics and optimal asset accumulation the paper develops a model of exchange rate and current account determination for a small economy peopled by infinitely lived utility maximizing households in this setting a central bank purchase of foreign exchange has no real effects when central bank foreign reserves earn interest at the world rate and proceeds are returned to the public in contrast an increase in the monetary growth rate does have real effects even in the long run the model developed here implies that an increase in government spending may lead to a surplus on current account the external adjustment process predicted by the model is one in which consumption real balances and external assets all rise or fall simultaneously

interprovincial versus international free trade the brewing industry this paper examines the potential welfare changes resulting from the removal of the interprovincial and international trade barriers currently in place in the brewing industry using a cost function estimated on plant level data we find that the potential gains from rationalizing production following liberalizing trade between canada s provinces outweigh the further benefits which would result from free trade in the international sphere given interprovincial free trade the rationalization of the industry in terms of a reduced number of plants could lead to producer gains on a recurring basis equal to as much as 15 per cent of expenditures at market prices

is there a retirement savings puzzle in this paper we ask whether households are saving enough for their retirement we use data on income expenditure and expenditure components to analyse patterns of behaviour at and around the time of retirement for successive date of birth cohorts we compare periods of unemployment to periods of retirement and separate expenditures into categories reflecting work related expenditures basic necessities and other goods we find that income typically falls by more at unemployment than retirement but the reverse is true for expenditure we observe falls in expenditure at retirement for all expenditure categories using a stochastic life cycle model including mortality rates we assess the anticipated impact of retirement on consumption against that of unemployment the inter relationship between goods and leisure explains a large part of the persistent fall in expenditure at retirement we argue that the only way in which the life cycle hypothesis could be reconciled with the remaining unanticipated dip in consumption would be with the systematic arrival of unexpected adverse information at the time of retirement

consumption over the life cycle and over the business cycle the main aim of this paper is to assess the validity of the life cycle model of consumption in particular we address an issue that has recently received much attention especially in the macroeconomic literature that of excess sensitivity of consumption growth to income growth we do this using a time series of cross sections and a novel and flexible parameterization of preferences the former allows us to address aggregation issues directly while with the latter we can allow both the discount factor and the elasticity of intertemporal substitution eis to be affected by various observable variables and lifetime wealth the main findings can be summarized as follows i the excess sensitivity of consumption growth to labor income disappears when we control for demographic variables this is true both at life cycle and business cycle frequencies ii estimation of a flexible specification of preferences indicates that the elasticity of intertemporal substitution is a function of several variables including the level of consumption the eis increases with the level of consumption as expected iii the variables that change the eis are also important in explaining why we observe excess sensitivity over the business cycle iv we are able to reconcile our results with those reported both in the macro and micro literature v in our specification the elasticity of intertemporal substitution is not very well determined this result however should be taken with care as we have not made an effort to construct a preferred specification which would probably include additional controls for labor supply behavior the evidence presented shows that the life cycle model cannot be easily dismissed indeed we believe that the model does a good job at representing consumption behavior both over the life cycle and over the business cycle