what determines the duration of a fiscal consolidation program abstract this paper assesses the determinants of the length of fiscal consolidation using annual data for 17 industrial countries over the period 1978 2009 relying on a narrative approach to identify fiscal consolidation episodes we show that fiscal variables such as the budget deficit and the level of public debt and economic factors such as the degree of openness the inflation rate the interest rate and per capita gdp are crucial for the fiscal consolidation process additionally we employ duration analysis over a set of consolidation spells and find that as time goes by the likelihood of a fiscal consolidation ending is higher however the hazard function is not monotonic indeed it increases until the eighth or ninth year and starts decreasing afterwards we also find that i spending driven consolidations are shorter than tax driven consolidations ii both types of consolidation are longer in non european countries than for european countries and iii the size of the consolidation program in percentage of gdp does not significantly affect duration all in all our results support the importance of cuts in government spending as a way of bringing economies into a sustainable path for public debt moreover they highlight the role played by a fiscal framework that imposes discipline in governments as a device to credibly shorten the length of fiscal consolidation episodes

rainfall financial development and remittances evidence from sub saharan africa we use annual variations in rainfall to examine the effects that exogenous transitory income shocks have on remittances in a panel of 41 sub saharan african countries during the period 1970 2007 our main finding is that on average rainfall shocks have an insignificant contemporaneous effect on remittances however the marginal effect is significantly decreasing in the share of domestic credit to gdp so much so that at high levels of credit to gdp rainfall shocks have a significant negative effect on remittances while at low levels of credit to gdp the effect of rainfall on remittances is significantly positive

commodity price shocks and civil conflict evidence from colombia how do income shocks aect armed con ict theory suggests two op posite eects if labor is used to appropriate resources violently higher wages may lower con ict by reducing labor supplied to appropriation this is the opportunity cost eect alternatively a rise in contestable income may increase violence by raising gains from appropriation this is the rapacity eect our paper exploits exogenous price shocks in inter national commodity markets and a rich dataset on civil war in colombia to assess how dierent income shocks aect con ict we examine changes in the price of agricultural goods which are labor intensive and natural resources which are capital intensive we focus on coee and oil the two largest exports we nd that a sharp fall in coee prices in the 1990s increased violence dierentially in regions growing more coee by lower ing wages and the opportunity cost of joining armed groups in contrast a rise in oil prices increased violence dierentially in the oil region by in creasing municipal revenue siphoned through rapacity this pattern holds in several other agricultural and natural resource sectors providing robust evidence that price shocks aect con ict in opposite directions depending on the factor intensity of the commodity

us monetary policy and sectoral commodity prices abstract using a structural var svar model we examine the effects of the monetary policy of the united states on sectoral commodity prices including the non fuel commodity prices food prices beverage prices prices of agricultural raw materials prices of metals and prices of fuel energy commodities and macroeconomic activity the empirical evidence suggests that a u s monetary contraction leads to an immediate rise in the broad commodity price index which possibly reflects an aggregation bias greater expected inflation and speculation high production costs or some overshooting due to overreactions then the response erodes after six quarters as the positive interest rate shock vanishes and higher interest rates and liquidity drainage take traction despite this the aggregate price response masks the existence of significant heterogeneity in the price responses of the different types of commodity sectors more specifically a positive interest rate shock leads to i an initial pop in the price returns of the non fuel commodities which later reverses path and becomes negative as in the case of the prices of agricultural raw materials ii a positive and persistent rise in the volatile food prices iii a fall in the beverage prices and iv a persistent reduction in the prices of metals and the prices of energy prices our results also remain globally intact with respect to alternative specifications and identification schemes as well as to unconventional monetary policy effects similar results are also found when commodity futures prices are used we conclude that policymakers should recognize the source of sector inflation before embarking on contractionary monetary policy the design of core inflation targeting is also preferable to headline inflation targeting

the importance of the volatility risk premium for volatility forecasting in this paper we study the role of the volatility risk premium for the forecasting performance of implied volatility we introduce a non parametric and parsimonious approach to adjust the model free implied volatility for the volatility risk premium and implement this methodology using more than 20 years of options and futures data on three major energy markets using regression models and statistical loss functions we find compelling evidence to suggest that the risk premium adjusted implied volatility significantly outperforms other models including its unadjusted counterpart our main finding holds for different choices of volatility estimators and competing time series models underlying the robustness of our results

supply and demand driven oil price changes and their non linear impact on precious metal returns a markov regime switching approach abstract this paper examines the nonlinear effect of oil price shocks on precious metal returns using markov regime switching regression we use ready s 2018 approach to decompose oil price changes into supply demand and risk driven shocks results indicate a significant positive impact of demand and supply shocks and a negative impact of risk shocks on precious metal returns although we find evidence of switching between low and high volatility regimes we do not find strong regime effect on supply or demand shocks contemporaneous relationship with precious metal returns however risk shocks influence on precious metal returns is strongly regime dependent these results generally hold for different distributional specification of error terms

street crime and street culture a model shows how reputation concerns can support widespread street crime a street culture where the direct incentives for such behavior are weak there are social benefits to street reputations but those benefits are dominated when reputation concerns draw into crime those who obtain no direct gain from it the model matches facts about violent crime that a standard model cannot easily explain including low monetary returns disproportionate victimization of the young and poor and high variance in rates across small distances the model generates novel implications for policy and social science including a negative effect of social capital

spillovers from the oil sector to the housing market cycle we assess the spillovers from the oil sector to the housing market cycle using quarterly data for 20 net oil exporting and importing industrial countries and employing continuous and discrete time duration models we do not uncover a statistically significant difference in the average duration of booms and normal times in the housing markets of those net oil importers and net oil exporters similarly the degree of exposure to commodity price fluctuations does not seem to significantly affect the housing market cycle however we find that housing booms are shorter when oil prices increase than housing busts when oil prices decrease we also show that the net oil importers are more vulnerable to protracted housing slump episodes than the net oil exporters

liquidity and the dynamic pattern of asset price adjustment a global view abstract global liquidity expansion has been very dynamic since 2001 contrary to conventional wisdom high money growth rates have not coincided with a concurrent rise in goods prices at the same time however asset prices have increased sharply significantly outpacing the subdued development in consumer prices we investigate the interactions between money and goods and asset prices at the global level using aggregated data for major oecd countries our var results support the view that different price elasticities on asset and goods markets explain the observed relative price change between asset classes and consumer goods

metal volatility in presence of oil and interest rate shocks abstract this study uses three two factor volatility models of the garch family to examine the volatility behavior of three strategic commodities gold silver and copper in the presence of crude oil and interest rate shocks the results of the standard garch models suggest that gold and silver have almost the same volatility persistence which is greater than that of copper the cgarch estimates indicate that the short run transitory component of volatility converges to zero much faster for copper than for gold and silver in this sequence however the permanent volatility component demonstrates equally strong persistence in the long run for all three metals the egarch results suggest that the leverage effect is present and significant for copper only implying that gold and silver can be good investment in anticipation of bad times past oil shock does not impact all three metals similarly monetary policy and to leaser extent the oil shocks have calming effects on precious metals but not on copper if the t bill rate is used crises such as the 2003 iraq war heighten metal volatility these results have implications for derivatives valuations using gold as a reserve asset risk analysis and for the commodity exporting countries and commodity producing firms

oil prices and global factor macroeconomic variables abstract this paper investigates the relationship between oil prices global industrial production prices central bank policy interest rate and monetary aggregate with a global factor augmented error correction model we confirm the following stylized relationships i at global level money industrial production and prices are cointegrated ii positive innovation in global oil price is connected with global interest rate tightening iii positive innovation in global money price level and industrial production is connected with an increase in oil prices iv positive innovations in global interest rate are associated with a decline in oil prices and v the u s euro area and china are the main drivers of global macroeconomic factors

breaking the law when others do a model of law enforcement with neighborhood externalities abstract a standard assumption in the economics of law enforcement is that the probability of a violator being punished depends only on the resources devoted to enforcement however it is often true that the productivity of enforcement resources decreases with the number of violators in this paper an individual who violates the law provides a positive externality for other offenders because the probability of being punished decreases with the number of individuals violating the law this externality explains the existence of correlation between individuals decisions to break a law the model evaluates the implications when determining the socially optimal enforcement expenditure focusing specifically on the case of neighborhood crime in particular using a parametrized functional form i show that neighborhood externalities will enhance or impede enforcement depending on the crime rate

crime and social interactions the high variance of crime rates across time and space is one of the oldest puzzles in the social sciences this variance appears too high to be explained by changes in the exogenous costs and benefits of crime we present a model where social interactions create enough covariance across individuals to explain the high cross city variance of crime rates this model provides an index of social interactions which suggests that the amount of social interactions is highest in petty crimes moderate in more serious crimes and almost negligible in murder and rape

super cycles of commodity prices since the mid nineteenth century summary decomposition of real commodity prices suggests four super cycles during 1865 2010 ranging between 30 and 40 years with amplitudes 20 40 higher or lower than the long run trend non oil price super cycles follow world gdp indicating they are essentially demand determined causality runs in the opposite direction for oil prices the mean of each super cycle of non oil commodities is generally lower than for the previous cycle supporting the prebisch singer hypothesis tropical agriculture experienced the strongest and steepest long term downward trend through the twentieth century followed by non tropical agriculture and metals while real oil prices experienced a long term upward trend interrupted temporarily during the twentieth century

oil price shocks and the dispersion hypothesis recent research by david lilien shows that a significant fraction of aggregate unemployment can be explained by the dispersion of employment growth across industries this paper presents two new results in this area first it is shown that a significant fraction of the variation in lilien s dispersion index is due to the differential impact of oil shocks across industries second and more important it is shown that once the dispersion in employment growth due to oil shocks is accounted for the residual dispersion has no explanatory power for unemployment

do oil prices drive food prices the tale of a structural break abstract it is frequently argued that biofuel and ethanol promotion policies in the united states have created a link between oil and corn prices that has accentuated the recent rally in the price of that crop and its substitutes especially soybeans even though it is intuitively appealing one problem with this hypothesis is that ethanol policies have been in place in the us for more than 35 years whereas the run up in food prices dates back only to 2006 however a significant change in us biofuel policy during that year provides an adequate framework to test for the existence of a structural break in the stochastic properties of the corn and soybean price processes the results show that structural stability is rejected and the transmission of oil price innovations to corn prices has become stronger after 2006 no changes with respect to soybeans there is also a significant transmission of corn price innovations to oil and soybean prices moreover the data show evidence of a previously non existent cointegration relationship between oil and corn prices

dissecting the cycle a methodological investigation following burns and mitchell we define the cycle as a pattern in the level of aggregate economic activity an algorithm to locate turning points is developed as is a new measure of pro cyclicality a link between turning points and the moments of the series is established thereby providing the statistical foundation that burns and mitchell s work lacked using these tools we are able to dissect cycles in terms of the contributions made by trend growth volatility serial correlation and non linear effects we dissect several models and find little evidence that certain non linear effects are important to the nature of business cycles

testing the prebisch singer hypothesis since 1650 evidence from panel techniques that allow for multiple breaks abstract in this paper we re examine two important aspects of the dynamics of relative primary commodity prices namely the secular trend and the short run volatility to do so we employ 25 series some of them starting as far back as 1650 and powerful panel data stationarity tests that allow for endogenous multiple structural breaks results show that all the series are stationary after allowing for endogenous multiple breaks test results on the prebisch singer hypothesis which states that relative commodity prices follow a downward secular trend are mixed but with a majority of series showing negative trends we also make a first attempt at identifying the potential drivers of the structural breaks we end by investigating the dynamics of the volatility of the 25 relative primary commodity prices also allowing for endogenous multiple breaks we describe the often time varying volatility in commodity prices and show that it has increased in recent years

commodity prices and bric and g3 liquidity a sfavec approach this paper investigates the influence of liquidity in the major developed and major developing economies on commodity prices liquidity is taken to be m2 a novel finding is that unanticipated increases in the bric countries liquidity is associated with significant and persistent increases in commodity prices that are much larger than the effect of unanticipated increases in g3 liquidity and the difference increases over time over 1999 2012 bric liquidity is strongly linked with global energy prices and global real activity whereas g3 liquidity is not the impact of bric liquidity on mineral and metal prices is twice as large as that of g3 liquidity granger casualty goes from liquidity to commodity prices bric and g3 liquidity and commodity prices are cointegrated bric and g3 liquidity and global output and global prices are cointegrated we construct a structural factor augmented error correction sfavec model

effects of global liquidity on commodity and food prices summary this article investigates the relationship between global liquidity and commodity and food prices applying a global cointegrated vector autoregressive model we use different measures of global liquidity and various indices of commodity and food prices for the period 1980 2011 our results support the hypothesis that there is a positive long run relation between global liquidity and the development of food and commodity prices and that food and commodity prices adjust significantly to this cointegrating relation global liquidity in contrast does not adjust it drives the relationship

avoidance screening and optimum enforcement a standard assumption in the economic literature on crime and punishment is that fines are costless transfers given this assumption several economists have argued that it is optimal to set the fine for engaging in a proscribed activity as high as possible the argument is a simple one raising the probability of a fine is costly since it requires devoting more resources to monitoring and apprehending individuals in contrast raising the magnitude of a fine is costless therefore the least costly way to achieve a given expected fine is to set the fine as high as possible presumably equal to the offender s wealth and adjust its probability so that the desired expected fine is obtained

marginal deterrence in enforcement of law we characterize optimal enforcement in a setting in which individuals can select among various levels of some activity all of which are monitored at the same rate but may be prosecuted and punished at varying rates for less harmful acts marginal expected penalties ought to fall short of marginal harms caused indeed some range of very minor acts should be legalized for more harmful acts whether marginal expected penalties should fall short of or exceed marginal harms depends on the balance between monitoring and prosecution punishment costs we also explore how the optimal enforcement policy varies with changes in these costs

empirical studies on agricultural impacts and adaptation abstract agricultural production is heavily dependent on weather outcomes and hence climate change has the potential to significantly alter the sector s productivity both reduced form studies as well as integrated assessment models have found that the agricultural sector might experience significant impacts we discuss the advantages of empirical reduced form studies and their link and potential usefulness to integrated assessment models we further discuss challenges facing empirical studies and recent research that looks at the longer term changes in climate and attempts to measure adaptation

global cycles capital flows commodities and sovereign defaults 1815 2015 abstract capital flow and commodity cycles have long been connected with economic crises sparse historical data however has made it difficult to connect their timing we date turning points in global capital flows and commodity prices across two centuries and provide estimates from alternative data sources we then document a strong overlap between the ebb and flow of financial capital the commodity price super cycle and sovereign defaults since 1815 the results have implications for today as many emerging markets are facing a double bust in capital inflows and commodity prices making them vulnerable to crises

signaling in a global game coordination and policy traps this paper introduces signaling in a global game so as to examine the informational role of policy in coordination environments such as currency crises and bank runs while exogenous asymmetric information has been shown to select a unique equilibrium we show that the endogenous information generated by policy interventions leads to multiple equilibria the policy maker is thus trapped into a position in which self fulfilling expectations dictate not only the coordination outcome but also the optimal policy this result does not rely on the freedom to choose out of equilibrium beliefs nor on the policy being a public signal it may obtain even if the policy is observed with idiosyncratic noise

business cycle duration dependence a parametric approach this paper reexamines duration dependence in u s business cycles using parametric hazard models positive duration dependence would indicate that expansions or contractions are more likely to end as they become older this paper provides statistically significant evidence of positive duration dependence for expansions before world war ii and contractions after world war ii the evidence is stronger than in earlier research utilizing nonparametric techniques because certain nonparametric techniques have low statistical power against the type of duration dependence found in this paper evidence is also presented suggesting that expansions became longer on average after world war ii while contractions became shorter copyright 1991 by mit press

multivariate dependence and spillover effects across energy commodities and diversification potentials of carbon assets abstract in a first step we model the multivariate tail dependence structure and spillover effects across energy commodities such as crude oil natural gas ethanol heating oil coal and gasoline using canonical vine c vine copula and c vine conditional value at risk covar in the second step we formulate portfolio strategies based on different performance measures to analyze the risk reduction and diversification potential of carbon assets for energy commodities we identify greater exposure to losses arising from investments in heating oil and ethanol markets we also find evidence of carbon asset providing diversification benefits to energy commodity investments these findings motivate for regulatory adjustments in the trading and emission permits for the energy markets most strongly diversified by carbon assets

commodity prices interest rates and the dollar this paper sheds light on recent fluctuations in commodity prices we investigate whether a decline in real interest rates and the us dollar contributes to higher commodity prices and whether commodity prices display overshooting behavior in response to changes in real interest rates we analyze the behavior of real prices of crude oil food metals and industrial raw materials the analysis is based on structural var models estimated on quarterly data over the period 1990q1 2007q4 our results suggest that commodity prices increase significantly in response to reductions in real interest rates moreover oil prices and prices of industrial raw materials tend to display overshooting behavior in response to such interest rate changes the evidence also suggests that a weaker dollar leads to higher commodity prices shocks to interest rates and the dollar are found to account for substantial shares of fluctuations in commodity prices

booms busts and normal times in the housing market we assess the existence of duration dependence in the likelihood of an end in housing booms busts and normal times using data for 20 industrial countries and a continuous time weibull duration model we find evidence of positive duration dependence suggesting that housing market cycles have become longer over the last decades then we extend the baseline weibull model and allow for the presence of a change point in the duration dependence parameter we show that positive duration dependence is present in booms and busts that last less than 26 quarters but that does not seem to be the case for longer phases of the housing market cycle for normal times no evidence of change points is found finally the empirical findings uncover positive duration dependence in housing market booms of european and non european countries and housing busts of european countries in addition they reveal that while housing booms have similar length in european and non european countries housing busts are typically shor

understanding international commodity price fluctuations abstract an overview is provided of recent work on commodity prices focusing on three themes i financialization of commodity markets commodities being considered by financial investors as a distinct asset class ii trends and forecasts of commodity prices and iii fracking a shorthand for the emergence of new sources of energy supply lessons are drawn on the role of fundamentals and expectations in driving the rapidly changing nature of commodity markets

gps shifting agencies in choice of treatment earlier studies have shown that general practitioners gps prescription choices are influenced by effect patient costs and costs to society patient attitude and own experience this study builds on this knowledge and explores how prescription behaviour is affected when choices are made in different contexts where the conflicting roles as agents for the patient and agents for society are stressed a total of 309 danish gps were randomly allocated to one of three versions of a web based questionnaire which included a discrete choice experiment mixed logit models in willingness to pay wtp space were estimated with and without accounting for stated attribute non attendance results show that the gp s role as agent for his patients is clearly strengthened in the presence of national recommendations in contrast when recommendations are not present and when gps face a patient who is currently taking an expensive albeit effective medication the gp takes on his role as agent for society we find no evi

trends in natural resource commodity prices an analysis of the time domain abstract this paper attempts to reconcile the theoretical predictions of increasing real prices for nonrenewable natural resource commodities obtained from hotelling style models with the empirical findings of falling prices for these commodities a theoretical model for relative price movements is derived for the case of exogenous technical change and endogenous change in the grade of ores mined the model suggests a u shaped time path for relative prices the implied price movements are tested for all the major metals and fuels and the model parameters are found to be statistically significant for 11 out of the 12 commodities tested

time varying long range dependence in energy futures markets abstract this study aims to investigate the presence of long range dependence in energy futures markets using a daily dataset covering from 1990 to 2013 which includes crucial events for energy markets such as invasion of iraq and global financial crisis of 2008 we estimate time varying generalized hurst exponents of several energy futures contracts with different times to maturity using a rolling window approach results reveal that efficiency of energy futures markets is clearly time varying and changes drastically over the sample period for futures contracts with 1 4 months to maturities crude oil and gasoline are found to be more efficient compared to others on the other hand for contracts with 5 9 months to maturities crude oil and natural gas futures are more efficient for almost every different month to maturity heating oil and gas oil futures are found to be the least efficient markets moreover in general the efficiency of energy futures markets is found to be decreasing dramatically when time to maturity is increasing several implications are discussed

crime punishment and the market for offenses crime is a subject of intense emotions conflicting ideologies however economists have generally explained it as a reflection of individual choice and equilibrating market forces two major themes of the literature are outlined the evolution of a market model to explain the diversity of crime across time and space and the debate about the usefulness of positive versus negative incentives systematic analyses generally indicate that crime is affected on the margin by both positive and negative incentives there are serious limitations to the effectiveness of incapacitation and rehabilitation and optimal enforcement strategies involve trade offs between narrow efficiency and equity considerations

cross quantilogram based correlation and dependence between renewable energy stock and other asset classes abstract we study the cross quantile dependence of renewable energy re stock returns on aggregate stock returns changes in oil and gold prices and exchange rates applying a recently developed cross quantilogram approach we provide two novel findings first although prior studies show that re stock returns have a positive dependence on changes in oil prices and in the aggregate stock index we find that the relationship is not symmetric across quantiles and that this asymmetry is higher in longer lags second while the extant literature provides evidence that exchange rates and gold returns exert a positive influence on aggregate stock returns we report that this positive influence on re stock returns is observed only during extreme market conditions these results are robust i even after controlling for economic policy and equity market uncertainties as well as ii in both a time static full sample and recursive subsamples

global factors uncertainty weather conditions and energy prices on the drivers of the duration of commodity price cycle phases abstract we investigate the role of global factors in explaining the length of commodity price cycle phases using a continuous time weibull duration model and data for a panel of 33 countries over the period 1980q1 2015q4 we find evidence of increasing constant positive duration dependence for commodity price booms and busts normal time spells global macroeconomic conditions in particular inflation economic policy uncertainty and monetary policy actions significantly affect the duration of all commodity price cycle phases global environmental conditions also impact the duration of commodity price booms with a rise in average temperature rainfall increasing reducing their length a rise in the number of military conflicts around the globe is associated with shorter booms and busts finally we find that a rise in oil prices is linked with longer booms and shorter busts

what can we learn about commodity and credit cycles evidence from african commodity exporting countries abstract this study analyzes the relationship between commodity prices and credit to the private sector in commodity exporting developing countries particularly three nations in sub saharan africa in this regard we extend the findings of non empirical studies dealing with this issue for the case of african countries and complement the literature on the methodological side by investigating this relationship using wavelet analysis this frequency approach is appropriate as it takes into account investor heterogeneity and the time variant characteristic of the studied relationship further it explains the lead lag relationship between the studied series first we observe that credit and commodities are strongly related over long timescales suggesting that the credit market reacts strongly to long term change in commodity markets and thus tends to be sensitive to persistent commodity shocks second for medium and short timescales the interaction is high and significant only during periods of turmoil in terms of the lead lag relationship our results also show that the commodity market causes fluctuations in the credit market

commodity prices and growth in africa a frican economies export primary commodities and most export little else policymakers as well as economists and historians of african economic development have seen these exports as both a hope and a curse the following parable tells the story once upon a time a servant of the ruler discovered a miraculous plant which grew readily in that country and whose seeds could be woven into fine cloth so desirable was this fabric that it became prized all over the world and fetched a high price after two score years the plant accounted for most of the country s trade with the world the ruler ordered the peasants to grow the plant paid them only a fraction of its price and he and his nobles became fabulously wealthy because the ruler wished to be remembered as a great ruler and as the father of his country he used his wealth to build a great army and brought machines from foreign countries to make the fine goods that previously could only be obtained from foreign merchants but the machines often broke down and the goods that they made were of poor quality and after the ruler died they were left to rust under the ruler s successor there was a war in a foreign land where the plant also grew so that there was a great shortage and its price increased threefold in only three seasons the new ruler spent his newfound riches on fantastic extravagance while immense sums were expended on public works after the manner of the east and on productive works carried out in the wrong way or too soon not even the threefold increase in prices could support these expenditures and the country soon found itself deeply in debt when the war ended and the price fell the country could no longer pay the interest on its debt or borrow more money even after it had sold its only useful public work to a foreign power so that power sent a mission to the country the publication of whose report from which the above

does global liquidity drive commodity prices abstract this paper tackles the question of whether a cross sectional perspective on monetary policy is capable of explaining movements in global commodity prices in this vein we contribute to the rich literature on global liquidity in two different ways on the one hand to achieve a global series in terms of common monetary policy shocks we propose a distinction between common and idiosyncratic factors across economies as proposed by bai and ng 2004 our second innovation stems from the consideration of a markov switching vector error correction model when analyzing time varying short run dynamics having identified the long run structure which includes a proportional relationship between commodity prices and global liquidity in the first step our results indeed show that the impact of a global liquidity measure on different commodity prices is significant and varies over time one regime approximately accounts for times where commodity prices significantly adjust to disequilibria while the second regime is characterized by either a weak or no commodity price adjustment the fact that global liquidity also reacts to disequilibria in a specific regime demonstrates the two way causality between monetary policy and commodity prices

why do increased arrest rates appear to reduce crime deterrence incapacitation or measurement error this paper attempts to discriminate between deterrence incapacitation and measurement error as explanations for the negative empirical relationship between arrest rates and crime measurement error cannot explain the observed patterns in the data incapacitation suggests that an increase in the arrest rate for one crime will reduces all crime rates deterrence predicts that an increase in the arrest rate for one crime will lead to a rise in other crimes as criminals substitute away from the first crime empirically deterrence appears to be the more important factor particularly for property crimes jel k42

booms and slumps in world commodity prices abstract this paper examines the duration and magnitude of cycles in world commodity prices cycles are a dominant feature of commodity prices and dealing with the economic consequences of booms and slumps in prices continues to be one of the most challenging issues facing policymakers in commodity exporting developing countries we find that there is an asymmetry in commodity price cycles as price slumps last longer than price booms how far prices fall in a slump is found to be slightly larger than how far they tend to rebound in a subsequent boom in addition for most commodities the probability of an end to a slump boom in prices is independent of the time already spent in the slump boom

social norms and the enforcement of laws we examine the interplay between social norms and the enforcement of laws agents choose a behavior e g tax evasion production of low quality products corruption harassing behavior substance abuse etc and then are randomly matched with another agent there are complementarities in behaviors so that an agent s payoff decreases with the mismatch between her behavior and her partner s and with overall negative externalities created by the behavior of others a law is an upper bound cap on behavior a law breaker when detected pays a fine and has her behavior forced down to the level of the law equilibrium law breaking depends on social norms because detection relies at least in part on whistle blowing law abiding agents have an incentive to whistle blow on a law breaking partner because this reduces the mismatch with their partners behaviors as well as the negative externalities when laws are in conflict with norms and many agents are breaking the law each agent anticipates little whistle blowing and is more likely to also break the law tighter laws banning more behaviors greater fines and better public enforcement all have counteracting effects reducing behavior among law abiding individuals but increasing it among law breakers we show that laws that are in strong conflict with prevailing social norms may backfire whereas gradual tightening of laws can be more effective in influencing social norms and behavior