efficient mechanisms for bilateral trading we consider bargaining problems between one buyer and one seller for a single object the seller s valuation and the buyer s valuation for the object are assumed to be independent random variables and each individual s valuation is unknown to the other we characterize the set of allocation mechanisms that are bayesian incentive compatible and individually rational and show the general impossibility of ex post efficient mechanisms without outside subsidies for a wide class of problems we show how to compute mechanisms that maximize expected total gains from trade and mechanisms that can maximize a broker s expected profit journal of economic literature classification number 026

substitute goods auctions and equilibrium this paper identifies two notions of substitutes for auction and equilibrium analysis weak substitutes the usual price theory notion guarantees monotonicity of t tonnement processes and convergence of clock auctions to a pseudo equilibrium but only strong substitutes which treats each unit traded as a distinct good with its own price guarantees that every pseudo equilibrium is a walrasian equilibrium that the vickrey outcome is in the core and that the law of aggregate demand is satisfied when goods are divisible weak substitutes along with concavity guarantees all of the above properties except for the law of aggregate demand

the market value of outstanding government debt 1919 1975 abstract several new series on the market value of outstanding government debt are reported and their methods of construction described the new series on federal debt are compared with other existing estimates and are shown to be markedly superior to them

tenure security and land related investment evidence from ethiopia the authors use a large data set from ethiopia that differentiates tenure security and transferability to explore determinants of different types of land related investment and its possible impact on productivity while they find some support for endogeneity of investment in trees this is not the case for terraces transfer rights are unambiguously investment enhancing the large productivity effect of terracing implies that even where households undertake investments to increase their tenure security this may not be socially efficient in ethiopia government action to increase tenure security and transferability of land rights can significantly enhance rural investment and productivity

job matching under constraints studying job matching in a kelso crawford framework we consider arbitrary constraints imposed on sets of doctors that a hospital can hire we characterize all constraints that preserve the substitutes condition for all revenue functions that satisfy the substitutes condition a critical condition on hospitals revenue functions for well behaved competitive equilibria a constraint preserves the substitutes condition if and only if it is a generalized interval constraint which specifies the minimum and maximum numbers of hired doctors forces some hires and forbids others additionally generalized polyhedral constraints are precisely those that preserve the substitutes condition for all group separable revenue functions

optimal fiscal feedback on debt in an economy with nominal rigidities we examine the impact of different degrees of fiscal feedback on debt in an economy with nominal rigidities where monetary policy is optimal we look at the extent to which different degrees of fiscal feedback enhances or detracts from the ability of the monetary authorities to stabilise output and inflation using an objective function derived from utility we find the optimal level of fiscal feedback to be small there is a clear discontinuity in the behaviour of monetary policy and welfare either side of this optimal level as the extent of fiscal feedback increases optimal monetary policy becomes less active because fiscal feedback tends to deflate inflationary shocks however this fiscal stabilisation is less efficient than monetary policy and so welfare declines in contrast if fiscal feedback falls below some critical value either the model becomes indeterminate or optimal monetary policy becomes strongly passive and this passive monetary policy leads to a sharp deterioration in welfare

government debt management the long and the short of it standard optimal debt management dm models prescribe a dominant role for long bonds and advocate against issuing short bonds they require very large positions in order to complete markets and assume each period that governments repurchase all outstanding bonds and reissue r r new ones these features of dm are inconsistent with u s data we introduce incomplete markets via small transaction costs which serves to make optimal dm more closely resemble the data r r are negligible short bond issuance substantial and persistent and short and long bonds positively co vary intuitively long bonds help smooth taxes over states and short bonds over time solving incomplete market models with multiple assets is challenging so a further contribution of this article is introducing a novel computational method to find global solutions

matching with couples stability and incentives in large markets accommodating couples has been a longstanding issue in the design of centralized labor market clearinghouses for doctors and psychologists because couples view pairs of jobs as complements a stable matching may not exist when couples are present this paper s main result is that a stable matching exists when there are relatively few couples and preference lists are suciently short relative to market size we also discuss incentives in markets with couples we relate these theoretical results to the job market for psychologists in which stable matchings exist for all years of the data despite the presence of couples

impacts of low cost land certification on investment and productivity new land reforms are again high on the policy agenda and low cost propoor reforms are being tested in poor countries this article assesses the investment and productivity impacts of the recent low cost land certification implemented in the tigray region of ethiopia using a unique household and farm plot level panel data set with data from before and up to eight years after the reform alternative econometric methods were used to test and control for endogeneity of certification and for unobserved household heterogeneity significant positive impacts were found including effects on the maintenance of soil conservation structures investment in trees and land productivity copyright 2007 oxford university press

financial globalization inequality and the rising public debt abstract during the last three decades government debt has increased in most developed countries during the same period we have also observed a significant liberalization of international financial markets we propose a multicountry model with incomplete markets and show that governments may choose higher levels of debt when financial markets become internationally integrated we also show that public debt increases with the volatility of uninsurable income idiosyncratic risk to the extent that the increase in income inequality observed in some industrialized countries has been associated with higher idiosyncratic risk the paper suggests another potential mechanism for the rise in public debt jel d31 e62 f65 h63

optimal fiscal and monetary policy in an economy without capital abstract this paper is concerned with the structure and time consistency of optimal fiscal and monetary policy in an economy without capital in a dynamic context optimal taxation means distributing tax distortions over time in a welfare maximizing way for a barter economy our main finding is that with debt commitments of sufficiently rich maturity structure an optimal policy if one exists is time consistent in a monetary economy the idea of optimal taxation must be broadened to include an inflation tax and we find that time consistency does not carry over an optimal inflation tax requires commitment by rules in a sense that has no counterpart in the dynamic theory of ordinary excise taxes the reason time consistency fails in a monetary economy is that nominal assets should from a welfare maximizing point of view always be taxed away via an immediate inflation in a kind of capital levy this emerges as a new possibility when money is introduced into an economy without capital

fiscal insurance and debt management in oecd economies assuming the role of debt management is to provide hedging against fiscal shocks we consider i what indicators can be used to assess the performance of debt management ii how well historical debt management policies have performed iii how performance is affected by variations in debt issuance using oecd data between 1970 and 2000 we propose performance indicators for debt management which we evaluate using monte carlo analysis those based on the relative persistence of debt perform best there is only limited evidence that debt management has helped insulate policy against unexpected fiscal shocks the degree of fiscal insurance achieved is not well connected to cross country variations in debt issuance patterns

modularity and greed in double auctions abstract designing double auctions is a complex problem especially when there are restrictions on the sets of buyers and sellers that may trade with one another the goal of this paper is to develop a modular approach to the design of double auctions by relating it to the exhaustively studied problem of designing one sided mechanisms with a single seller or alternatively a single buyer we consider several desirable properties of a double auction feasibility dominant strategy incentive compatibility the still stronger incentive constraints offered by a deferred acceptance implementation exact and approximate welfare maximization and budget balance for each of these properties we identify sufficient conditions on two one sided algorithms one for ranking the buyers one for ranking the sellers and on a method for their composition into trading pairs which guarantee the desired property of the double auction our framework also offers new insights into classic double auction designs such as the vcg and mcafee auctions with unit demand buyers and unit supply sellers

the vulnerability of price stabilization schemes to speculative attack this paper examines the effects of government attempts to stabilize the prices of commodities by use of buffer stocks agricultural goods subject to supply uncertainty as well as depletable resources are considered in each case it is shown that the resulting rational expectations competitive equilibrium contains a speculative attack a situation where the entire government stock is suddenly purchased by previously inactive speculators the analysis is applied to the historical attempt to peg the gold price which caused the attack of 1968 the insights gained and the methodology developed also apply to the various international agreements to impose bans on commodity prices which have been proposed by the united nations conference on trade and development

competitive equilibrium in an exchange economy with indivisibilities abstract we analyze an exchange economy in which i all commodities except money are indivisible ii agents preferences can be described by a reservation value for each bundle of indivisible objects and iii all agents are price takers we obtain a necessary and sufficient condition under which market clearing prices exist implications for market mechanisms are discussed journal of economic literatureclassification numbers d51 c78

mechanisms for a spatially distributed market abstract we consider the problem of a spatially distributed market with strategic agents a single good is traded in a set of independent markets where shipment between markets is possible but costly the problem has previously been studied in the non strategic case in which it can be analyzed and solved as a min cost flow problem we consider the case where buyers and sellers are strategic our first result gives a double characterization of the vcg prices first as distances in a certain residue graph and second as the minimal for buyers and maximal for sellers equilibrium prices this provides a computationally efficient individually rational and incentive compatible welfare maximizing mechanism this mechanism is necessarily not budget balanced and we also provide a budget balanced mechanism which is also computationally efficient incentive compatible and individually rational that achieves high welfare finally we present results for some extensions of the model

optimal debt management in a liquidity trap we study optimal debt management in the face of shocks that can drive the economy into a liquidity trap and call for an increase in public spending in order to mitigate the resulting recession our approach follows the literature of macroeconomic models of debt management which we extend to the case where the zero lower bound on the short term interest rate may bind we wish to identify the conditions under which removing long maturity government debt from the secondary market can be an optimal policy outcome we show that the optimal debt management strategy is to issue short term debt if the government faces a sizable exogenous increase in public spending and if its initial liability is not very large in this case our results run against the standard prescription of the debt management literature in contrast if the initial debt level is high then issuing long term government bonds is optimal finally we find a role for revisions in the debt management strategy during lt episodes whereby the government actively manages the maturity structure in some cases removing long bonds from the secondary market

fiscal shocks and their consequences this paper investigates the response of hours worked and real wages to fiscal policy shocks in the post world war ii us we identify these shocks with exogenous changes in military purchases and argue that they lead to a persistent increase in government purchases and tax rates on capital and labor income and a persistent rise in aggregate hours worked as well as declines in real wages the shocks are also associated with short lived rises in aggregate investment and small movements in private consumption we describe and implement a methodology for assessing whether standard neoclassical models can account for the consequences of a fiscal policy shock simple versions of the neoclassical model can account for the qualitative effects of a fiscal shock once we allow for habit formation and investment adjustment costs the model can also account reasonably well for the quantitative effects of a fiscal shock

optimal fiscal and monetary policy under sticky prices this paper studies optimal fiscal and monetary policy under sticky product prices the theoretical framework is a stochastic production economy without capital the government finances an exogenous stream of purchases by levying distortionary income taxes printing money and issuing one period nominally risk free bonds the main findings of the paper are first for a miniscule degree of price stickiness i e many times below available empirical estimates the optimal volatility of inflation is near zero this result stands in stark contrast with the high volatility of inflation implied by the ramsey allocation when prices are flexible the finding is in line with a recent body of work on optimal monetary policy under nominal rigidities that ignores the role of optimal fiscal policy second even small deviations from full price flexibility induce near random walk behavior in government debt and tax rates third sluggish price adjustment raises the average nominal interest rate above the one called for by the friedman rule finally an interest rate feedback rule whereby the nominal interest rate depends on inflation and output fits well the data emanating from the ramsey economy however the fitted rule is not of the taylor type for the implied inflation coefficient is less than one and close to zero and the output coefficient is negative jel classification e52 e61 e63

empowerment and efficiency tenancy reform in west bengal the paper analyzes the effect of agricultural tenancy laws offering security of tenure to tenants and regulating the share of output that is paid as rent on farm productivity theoretically the net impact of tenancy reform is shown to be a combination of two effects a bargaining power effect and a security of tenure effect analysis of evidence on how contracts and productivity changed after a tenancy reform program was implemented in the indian state of west bengal in the late 1970s suggests that tenancy reform had a positive effect on agricultural productivity there

debt and deficit fluctuations and the structure of bond markets we analyse the implications of optimal taxation for the stochastic behaviour of debt we show that when a government pursues an optimal fiscal policy under complete markets the value of debt has the same or less persistence than other variables in the economy and it declines in response to shocks that cause the deficit to increase by contrast under incomplete markets debt shows more persistence than other variables and it increases in response to shocks that cause a higher deficit data for us government debt reveals diametrically opposite results from those of complete markets and is much more supportive of bond market incompleteness

state led land reform and local institutional change land titles land markets and tenure security in mexican communities summary this article focuses on the interactions between state and community mechanisms in the design and delivery of a titling program and a land market reform in rural mexico whereas the titling program did provide a greater sense of tenure security among landholders legalizing transactions has unexpectedly generated an informal land market resulting in tenure insecurity for the corresponding buyers these contrasting outcomes are not a matter of technical failure unaffordable fees or rent seeking rather they can be traced back to differentiated processes of policy delivery by the administration officials with regard to acknowledging prevailing local institutions and managing local information

optimal fiscal policy in a stochastic growth model although most neoclassical growth models focus on competitive equilibria which are pareto optimal and ignore the role of government recent works by romer 28 29 judd 20 baxter and king s and bizer and judd 7 have shown that government can be introduced into and suboptimal equilibria can be studied in these models as well their studies however are positive analyses of the effects of fiscal policy in competitive equilibria the purpose of this paper is to apply ramsey s 27 theory of optimal taxation to the normative study of fiscal policy in a stocastic growth model ramsey studied a static representative consumer economy with many goods in his formulation a government consumes a fixed amount of these goods which it purchases at market prices and finances by levying flat rate excise taxes prices and quantities are determined in a competitive equilibrium the government is benevolent and its objective is to choose the optimal tax rates to maximize the representative consumer s utility a number of economists among them kydland and prescott 23 barro 3 turnovsky and brock 31 and lucas and stockey 26 have noted that ramsey s formulation can be applied to dynamic economies with uncertainty if one reinterprets the goods in static problems as dated state contingent goods in this framework a fiscal policy is a rule which specifies state contingent tax rates and the amount of public debt issue in each date the optimal fiscal policy is defined as the one which leads to a quantity

capital taxation and government debt policy with public discounting abstract this paper characterizes capital taxation and public debt policy in a quantitative macroeconomic model with an impatient government and uncertainty the government has access to linear taxes on capital and labor and to non state contingent bonds government impatience generates positive and empirically realistic long run levels of both capital taxes and public debt prior predictive analysis shows that the simulated model matches the distribution of both variables in a sample of 42 countries alongside other statistics the paper then presents econometric evidence that countries with higher political instability used as an approximation of unobservable public discount rates have both higher capital taxes and debt

walrasian equilibrium with gross substitutes in this paper we study the problem of efficient production and allocation of indivisible objects among a set of consumers we assume that the agents preferences depend on the bundle of objects and the quantity of money they consume furthermore we assume that preferences are quasilinear in money and that agents have a large endowment of money with indivisibilities it is well known that many familiar properties of the utility functions fail to ensure existence in their striking analysis of the matching problem kelso and crawford 5 introduce the gross substitutes gs condition which ensures the non emptiness of the core we propose two new conditions and show that with quasilinearity they are equivalent article id jeth 1999 2531 available online at http www idealibrary com on

tenure land rights and farmer investment incentives in china the goal of this paper is to understand the nature of the property rights associated with china s land tenure systems and to study the impact of these property rights on agricultural production efficiency the results show that land tenure and associated property rights in rural china affect the production behavior of farmers the most robust finding is that the right to use land for long periods of time encourages the use of land saving investments while the results show that land tenure affects agricultural production decisions the difference between collective and private plots however is small compared to the private plotcommunal productivity gap that existed in the pre reform period 1998 elsevier science b v all rights reserved

the market value of u s government debt monthly 1942 1980 abstract the market value of outstanding united states treasury debt is calculated on a monthly basis using price and par value data from the treasury bulletin separate series for treasury bills bonds certificates of indebtedness notes and total treasury debt are presented along with estimates of privately held treasury debt and gross federal debt the calculated market value series is compared to par value and an existing annual market value series

contract duration and relationship specific investments empirical evidence from coal markets this paper examines the importance of specific relationship investments in determining the duration of coal contracts negotiated between coal suppliers and electric utilities data for 277 coal contracts are used to perform the analysis the results provide strong support for the view that buyers and sellers make longer commitments to the terms of future trade at the contract execution stage and rely less on repeated bargaining when relationship specific investments are more important

public sector debt dynamics the persistence and sources of shocks to debt in 10 eu countries this paper characterises the time series properties of debt gdp ratios in ten eu countries over the period 1982 2009 it establishes that shocks to debt ratios persist and measures the size and source of the permanent effects of shocks as they evolve over time the analysis shows that debt dynamics in the eu10 are complicated involving important inter country interactions and protracted adjustment periods of the order of ten years we find evidence of asymmetries in the effects of different forms of fiscal consolidation with unanticipated reductions in government spending having a more permanent effect than unanticipated increases in government revenue unanticipated business cycle fluctuations also have important long term effects on the ratio

an efficient dynamic auction for heterogeneous commodities this paper proposes a new dynamic design for auctioning multiple heterogeneous commodities generalizing earlier work that treated identical objects an auctioneer wishes to allocate one or more units of each of k heterogeneous commodities to n bidders the auctioneer announces a vector of current prices bidders report back quantities demanded at these prices and the auctioneer adjusts the prices units are credited to bidders at the current prices as their opponents demands decline and the process continues until every commodity market clears bidders rather than being required to behave as price takers are permitted to strategically exercise their market power nevertheless with pure private values the proposed auction yields walrasian equilibrium prices an efficient outcome results as from a vickrey clarke groves mechanism but bidders are only required to evaluate their demands along a one dimensional path of prices rather than reporting their utilities over the entire k dimensional consumption set the auction is also more transparent and potentially simpler for bidders to understand and has the advantage of assuring the privacy of the upper portions of bidders demands theoretically the new auction provides a new foundation for convergence to walrasian equilibrium in an exchange economy practically it provides an efficient method for simultaneously auctioning two or more related types of securities for example three month and six month treasury bills it is also potentially useful for auctioning multiple types of communications spectrum for example licenses for paired and unpaired spectrum

reconsidering carbon permits auction mechanism an efficient dynamic model one of major concerns for china and developing countries is the new international trade rule concerning carbon emissions which one needs to know its suitable mechanism and the possible implication on china s carbon trading market precisely in an emission and trade scheme an important question is whether the auction outcome is efficient since this is closely related with the economic costs of emissions reduction due to the unique features of carbon permits existing auction mechanisms do not seem to be suitable for their distribution inspired by the t tonnement process this paper proposes a new auction mechanism for them for both practical application and theoretical extension the discrete and continuous situations are examined respectively the result shows that the proposed auction converges to pareto optimal equilibria and that without ties the equilibrium is unique for bidders the straightforward bidding strategy is the most preferred one in the sense that the strategy makes them avoid the risk of loss intuitively the auctioneer s utility is increasing in the number of bidders while bidders pay off is increasing in permits to a certain extent the proposed auction mechanism resolves the confliction between efficiency and revenue in the multi item auction theory while it increases people s understanding for carbon emission auction mechanism design

optimal taxation without state contingent debt in an economy studied by lucas and stokey tax rates inherit the serial correlation structure of government expenditures belying barro s earlier result that taxes should be a random walk for any stochastic process of government expenditures to recover a version of barro s random walk tax smoothing outcome we modify lucas and stokey s economy to permit only risk free debt having only risk free debt confronts the ramsey planner with additional constraints on equilibrium allocations beyond one imposed by lucas and stokey s assumption of complete markets the ramsey outcome blends features of barro s model with lucas and stokey s in our model the contemporaneous effects of exogenous government expenditures on the government deficit and taxes resemble those in lucas and stokey s model but incomplete markets put a near unit root component into government debt and taxes an outcome like barro s however we show that without ad hoc limits on the government s asset holdings outcomes can diverge in importa

appropriation and efficiency a revision of the first theorem of welfare economics the first theorem of welfare economics rests on the assumption that individuals have neither price making nor market making capacities we offer a revision in which individuals have such capacities the revision emphasizes two keys for market efficiency i the need to align private rewards with social contributions called full appropriation and ii the need for an assumption to counter the possibility of coordination failures in the choice of produced commodities called noncomplementarity we also emphasize that information about prices of unmarketed commodities involves decentralized knowledge available only to product innovators and that pecuniary extemalities are important potential sources of market failure jel d51 d60 d62

identifying combinatorial valuations from aggregate demand abstract we study identification of combinatorial valuations from aggregate demand each utility function takes as arguments subsets or alternatively quantities of the multiple goods we exploit mathematical insights from auction theory to generically identify the distribution of utility functions in our setting aggregate demand for each item is observable while demand for bundles is not nevertheless our identification result allows us to recover the latter

a dominant strategy double auction a double auction mechanism that provides dominant strategies for both buyers and sellers is analyzed this mechanism satisfies the 1n convergence to efficiency of the buyer s bid double auction in addition the mechanism always produces full information first best prices the inefficiency arises because the least valuable profitable trade may be prohibited by the mechanism the mechanism has an oral implementation utilizing bid and asked prices

optimal fiscal policy under learning abstract this paper characterizes optimal fiscal policy when agents learn about future taxation a benevolent and fully rational government chooses taxes on labor income and state contingent bonds to finance public spending considering that private agents form their expectations through a learning algorithm facing a trade off between distortionary taxes and distorted expectations the ramsey planner chooses the policy that minimizes the total cost of distortions the analysis produces two main results first the government will use fiscal variables to manipulate expectations reducing taxes and issuing debt at times of pessimism and doing the opposite at times of optimism this speeds up learning second the expectation dependent fiscal plan is also history dependent and it prescribes taxes that are not as smooth and more persistent than under rational expectations these findings are robust to alternative learning algorithms

stability and auctions in labor markets with job security fu et al 2016 introduced a stability concept for labor markets with job security we show that their proposed outcomes form nash equilibria of an auction where firms compete for workers this parallels literature on stable outcomes and similar auctions and yields new price of anarchy bounds

the potential of land rental markets in the process of economic development evidence from china abstract we develop a model of land leasing with agents characterized by unobserved heterogeneity in ability and presence of an off farm labor market in this case decentralized land rental may contribute to equity and efficiency goals and may have several advantages over administrative reallocation the extent to which this is true empirically is explored using data from three of china s poorest provinces land rental markets and administrative reallocation reallocate land to those with lower endowments but the former are more effective in doing so and have a bigger productivity enhancing effect information on hypothetical market participation suggests that reducing transaction costs in land rental markets could help to realize significant additional productivity gains

optimal taxation with private government information the ramsey model of fiscal policy implies that taxes should be smooth in the sense of having small variances in contrast empirical labour tax processes are smooth in the sense of being random walks they provide prima facie evidence for incomplete government insurance this paper considers whether private government information might lie behind such incomplete insurance it shows that optimal incentive compatible policies exhibit limited use of state contingent debt and greater persistence in taxes and debt and it argues that they are better approximations to empirical fiscal policies than those implied by the ramsey model the paper also establishes that optimal incentive compatible allocations converge to allocations such that the government s incentive compatibility constraint no longer binds generally these limiting allocations are ones in which the government is maximally indebted their credibility and the interaction of incentive compatibility and credibility is briefly discussed

package auctions and exchanges we report recent advances concerning the package allocation problem in which traders seek to buy or sell combinations of goods the problems are most difficult when some goods are not substitutes in that case competitive equilibrium typically fail to exist but the core is non empty and comprises the competitive solutions also in that case the vickrey auction fails to select core allocations and yield revenues that are less than competitive the ausubel milgrom auction generally selects core allocations and when goods are substitutes prescribes the vickrey allocation we also evaluate the problems and promise of mechanisms for the package exchange problem

agent competition double auction mechanism this paper proposes an agent competition double auction mechanism to simplify decision making and promote transactions for the customer to customer marketplaces under the proposed double auction mechanism bidding one s true valuation private information is the best strategy for each individual buyer and seller even when shipping costs and sales taxes are different across various possible transactions the proposed mechanism also achieves budget balance and asymptotic efficiency furthermore these results not only hold for an environment where buyers and sellers exchange identical commodities but also can be extended to an environment with multiple substitutable commodities

in search of a theory of debt management the complete market approach to government debt management argues that a portfolio of non contingent bonds at different maturities should be chosen so that fluctuations in market value offset changes in expected future deficits however this approach recommends huge fluctuations in positions enormous changes in portfolios for minor changes in maturities and no presumption it is always optimal to issue long and invest short term in a wide array of model specifications these extreme volatile and unstable features are undesirable for two reasons firstly fragility of portfolios to small changes in assumptions means that it is often better to follow a balanced budget rather than issue the optimal debt portfolio under some possibly misspecified model secondly for even miniscule transaction costs governments prefer a balanced budget rather than the large positions complete markets recommends the complete market recommendations conflict with a number of features we believe are integral to bond market incompleteness e g transaction costs liquidity effects robustness etc and which need to be explicitly incorporated into the portfolio problem

land tenure arrangements and rural urban migration in china summary obstacles to internal migration in china contribute to inefficiency inequality and land degradation academic and policy debate has primarily focused on discrimination against rural migrants on arrival in urban areas meanwhile barriers to migration out of rural areas have received less attention this paper examines the role of incomplete rural property rights in the migration decisions of rural households we examine the relationship between tenure insecurity and restrictions on land rentals and participation in outside labor markets the results indicate that tenure insecurity reduces migration this relationship is particularly pronounced on forest land which has implications for the conservation of recently replanted forest areas

the effect of land tenure governance on technical efficiency evidence from three provinces in eastern china this study aims to identify the mechanisms through which land tenure governance affects the technical efficiency of grain production in an integrated framework and to examine the impacts of the public governance village self governance and relational governance of land tenure on the technical efficiency of contracted land and rented in land farm level survey data collected from liaoning jiangxi and jiangsu provinces covering the years of 2014 and 2015 is used for the empirical analysis the findings indicate that i public governance associated with land certification significantly increases the technical efficiency of grain production ii village self governance and administrative land reallocations can serve as substitutes for the land rental market in optimizing the distribution of land resources and improving technical efficiency and iii compared to multi year transfer contracts both annual and open ended transfer contracts have negative impacts on technical efficiency

optimal fiscal policy with recursive preferences i study the implications of recursive utility a popular preference specification in macro finance for the design of optimal fiscal policy standard ramsey tax smoothing prescriptions are substantially altered the planner over insures by taxing less in bad times and more in good times mitigating the effects of shocks at the intertemporal margin there is a novel incentive for introducing distortions that can lead to an ex ante capital subsidy overall optimal policy calls for a much stronger use of debt returns as a fiscal absorber leading to the conclusion that actual fiscal policy is even worse than we thought

distress rentals and the land rental market as a safety net contract choice evidence from tigray ethiopia rural households in the semiarid northern ethiopian highlands are net buyers of food crop failure due to erratic and unpredictable rainfall occurs frequently and leads to food shortages and income shocks the renting out of land may be one of the coping responses of households exposed to shocks we developed a theoretical household model for poor landlord households capturing their contract choice response to downside production shocks we tested econometrically whether contract choice may depend on poverty capital constraints production risk and random shocks the multinomial logit model estimates show that poor households experiencing random shocks are more likely to choose fixed rent contracts as a distress response to shocks suggesting that fixed rent contracts may be used to meet immediate needs but at the expense of future incomes we also found that fixed rent contracts are preferred when ex ante production risk is low while sharecropping is more likely where production risk is high finally we found an indication that the choice of a fixed rent contract as a coping response to shocks comes as a last resort after all other means of coping are exhausted

optimal maturity of government debt without state contingent bonds abstract this paper shows that state contingent debt can be synthetically constructed using non contingent debt of different maturities a main policy implication of this principle is that the ramsey allocation with complete markets can be sustained with non contingent debt only by properly managing its maturity structure the numerical experiments however suggest that this policy implication ought to be taken with care we find that the debt positions that sustain the ramsey allocation are very high on the order of a few hundred times total gdp for a very simple four state economy and increasing in the number of states in addition they are very sensitive to small variations in the parameters of the model

on the limitations of government borrowing a framework for empiricaltesting this paper seeks to distinguish empirically between two views on the limitations of government borrowing according to one view nothing precludes the government from running a permanent budget deficit paying interest due on the growing debt load simply by issuing new debt an alternative perspective holds that creditors would be unwilling to purchase government debt unless the government made a credible commitment to balance its budget in present value terms we show that distinguishing between these possibilities is mathematically equivalent to testing whether a continuing currency inflation might be fueled by speculation alone or is instead driven solely by economic fundamentals empirical tests which have been developed for this economic question lead us to conclude that postwar u s deficits are largely consistent with the proposition that the government budget must be balanced in present value terms this abstract was borrowed from another version of this item

matching with contracts comment the theory of two sided matching markets has interested researchers for its theoretical appeal and its relevance to the design of real world institutions the medical residency matching mecha nism in the united states the national resident matching program nrmp and student assign ment systems in new york city and boston are important mechanisms designed by economists using the theory 1 hatfield and paul r milgrom 2005 present a unified framework of matching with contracts which includes the two sided matching and package auction models as well as a simplified version of a labor market model of alexander kelso and vincent p crawford 1982 as special cases they introduce the substitutes condition of contracts which is an adaptation of the substitutability condition in the matching literature roth and marilda a oliveira sotomayor 1990 to matching with contracts they show that there exists a stable allocation if contracts are substitutes for hospitals and that a number of other results in matching generalize to problems with contracts they further claim that the substitutes condition on individual hospitals prefer ences is necessary to guarantee the existence of a stable allocation for all possible singleton preferences of others that is if contracts are not substitutes for a hospital then there exists a preference profile of other hospitals with single job openings and doctors such that there exists no stable allocation we show that this last claim of hatfield and milgrom 2005 does not hold in general the counterexample we present involves a hospital which has two different kinds of positions and the preferences of the hospital are a combination of preferences of these two positions while the substitutes condition does not hold for that hospital we adopt a technique developed by bettina klaus and flip klijn 2005 and show that there exists a stable allocation we then present the weak substitutes condition which we show is necessary to guarantee existence of stable allocations the modified result we present as well as the original contribu tion of hatfield and milgrom 2005 suggest a connection between the substitutes condition and stability 2

a theory of buyer seller networks this paper introduces a new model of exchange networks rather than markets of buyers and sellers it begins with the empirically motivated premise that a buyer and seller must have a relationship a link to exchange goods networks buyers sellers and the pattern of links connecting them are common exchange environments this paper develops a methodology to study network structures and explains why agents may form networks in a model that captures characteristics of a variety of industries the paper shows that buyers and sellers acting strategically in their own self interests can form the network structures that maximize overall welfare

optimal fiscal and monetary policy some recent results this paper studies the quantitative properties of fiscal and monetary policy in business cycle models in terms of fiscal policy optimal labor tax rates are virtually constant and optimal capital income tax rates are close to zero on average in terms of monetary policy the friedman rule is optimal nominal interest rates are zero and optimal monetary policy is activist in the sense that it responds to shocks to the economy

impacts of land certification on tenure security investment and land market participation evidence from ethiopia this brief summarizes the results of a gender impact evaluation study entitled impacts of land certification on tenure security investment and land market participation evidence from ethiopia conducted between 2006 and 2011 in ethiopia the study observed the impact of land registration on tenure security land related investment and rental market participation using 900 randomly selected households and 4000 plots cultivated by the households on the household and land plots level certification resulted in significant reduction of tenure insecurity and an increase in land related investment the propensity to invest in water conservation increased between 20 and 30 percent from panel estimates the increased investment appears to be sustained over the long term the propensity to rent land increases by 9 to 13 percent the titling had significant positive impacts on the rate at which female headed households rented their land funding for the study derived from the gender action plan global land tools network and norwegian environmentally and socially sustainable development essd trust fund

land tenure systems and their impacts on agricultural investments and productivity in uganda this article provides an empirical analysis of the impact of different tenure systems mailo customary and public land on agricultural investment and productivity in central uganda a major hypothesis tested is that land investments and practices may have both economic and tenure security implications the results indicate that coffee planting is used by farmers to enhance tenure security while fallowing is practised to a greater extent by farmers on more secure holdings this supports the notion that farmers consider tenure implications when making investments and that different tenure systems do not inhibit the promotion of tree planting investment tenure had no impact on the productivity of crop farming

auction protocols for decentralized scheduling decentralized scheduling is the problem of allocating resources to alternative possible uses over time where competing uses are represented by autonomous agents market mechanisms use prices derived through distributing bidding protocols to determine schedules we investigate the existence of equilibrium prices for some general classes of scheduling problems the quality of equilibrium solutions and the behavior of an ascending auction mechanism and bidding protocol to remedy the potential nonexistence of price equilibria due to complementarities in preference we introduce additional markets in combinations of basic goods finally we consider direct revelation mechanisms and compare to the market based approach journal of economic literature classification numbers c62 c70 d44

optimal fiscal policy in the neoclassical growth model revisited this paper studies optimal taxation in a version of the neoclassical growth model in which investment becomes productive within the period thereby making the supply of capital elastic in the short run because taxing capital is distortionary in the short run the government s ability desire to raise revenues through capital income taxation in the initial period or when the economy is hit with a bad shock is greatly curtailed our timing assumption also leads to a tractable ramsey problem without state contingent debt which can give rise to debt financed budget deficits during recessions

income and wealth heterogeneity in the macroeconomy how do movements in the distribution of income and wealth affect the macroeconomy we analyze this question using a calibrated version of the stochastic growth model with partially uninsurable idiosyncratic risk and movements in aggregate productivity our main finding is that in the stationary stochastic equilibrium the behavior of the macroeconomic aggregates can be almost perfectly described using only the mean of the wealth distribution this result is robust to substantial changes in both parameter values and model specification our benchmark model whose only difference from the representative agent framework is the existence of uninsurable idiosyncratic risk displays far less cross sectional dispersion and skewness in wealth than u s data however an extension that relies on a small amount of heterogeneity in thrift does succeed in replicating the key features of the wealth data furthermore this extension features aggregate time series that depart significantly from permanent income behavior

markov perfect capital and labor taxes abstract this paper analyzes the markov perfect equilibrium of an economy were a benevolent government that lacks the ability to commit to future policy choices uses taxes on capital and labor income to finance the provision of a public good the main finding is that the government taxes capital and subsidizes labor so that only the dynamic inefficiency of future capital taxes remains if agents preference for the public good is sufficiently high then capital is confiscated setting bounds on taxes alleviates the dynamic inefficiency inherent in capital taxation but some implementations carry a high welfare cost allowing for endogenous capital utilization makes the current capital tax distortionary and implies capital and labor tax rates that are relatively close to those measured for the u s economy

the english auction with differentiated commodities abstract we study economies with indivisibilities that satisfy the gross substitutes gs condition we define an excess demand set with the property that increasing the prices of all goods in excess demand eventually leads to the smallest walrasian prices this procedure is a generalization of the auction studied by g demange d gale and m j sotomayor polit econ 94 1986 863 872 in our auction truthful revelation of demand is a perfect bayesian equilibrium if the smallest walrasian prices correspond to the vickrey clarke groves payments however no dynamic auction can reveal sufficient information to implement the vickrey mechanism if all gs preferences are allowed journal of economic literature classification numbers d4 d44 d5 d51

asset pricing puzzles and incomplete markets the representative agent theory of asset pricing is modified to incorporate heterogeneous agents and incomplete markets the model features two types of agents who differ up to a nontradable idiosyncratic component in their endowment processes numerical solutions indicate that individuals are able to diversify a substantial portion of their idiosyncratic income risk through riskless borrowing and lending alone restrictions on the variability of intertemporal marginal rates of substitution hansen and jagannathan 1991 are used to argue that incomplete markets as modeled here cannot account for the properties of asset returns that are anomalous from the perspective of representative agent theory a large literature in financial economics has investigated the extent to which variants of the lucas 1978 general equilibrium theory of asset pricing can account for the joint behavior of aggregate u s consumption and asset returns by and large this literature has concluded that a theory based upon frictionless arrow debreu markets and or a representative agent makes strongly counterfactual predictions regarding even the simple unconditional properties of this relationship mehra and prescott 1985 for instance show that the theory drastically underpredicts the average excess rate of return on u s stocks the so called equity premium puzzle weil 1989 points out as did mehra and prescott that the magnitude of the average risk free rate is far below that predicted by the theory this has been dubbed the risk free rate puzzle numerous authors including grossman melino and shiller 1987 and backus gregory and zin 1989 show that the theory cannot account for term premia inherent in the yield curve hodrick 1987 surveys a large literature which documents the theory s shortcomings in accounting for excess expected returns in foreign exchange markets the notion that the representative agent model cannot account for excess returns across a wide array of asset markets can be made more precise by using tools developed by hansen and jagannathan 1991 and shiller 1982

matching with contracts we develop a model of matching with contracts which incorporates as special cases the college admissions problem the kelso crawford labor market matching model and ascending package auctions we introduce a new law of aggregate demand for the case of discrete heterogeneous workers and show that when workers are substitutes this law is satisfied by profit maximizing firms when workers are substitutes and the law is satisfied truthful reporting is a dominant strategy for workers in a worker offering auction matching algorithm we also parameterize a large class of preferences satisfying the two conditions

spatial competition with price taking firms we consider a price taking equilibrium in the spatial setting a unique pricing equilibrium is shown to exist for any set of firm locations this equilibrium is then used to examine locational incentives in the two stage process in whiclh firms first choose locations anticipating the subsequent price taking outcome the result is spatial agglomeration if demand is inelastic and there are only two firms agglomeration does not occur if demand is too elastic or if there are more than two firms this paper presents a two stage model of spatial competition in which the prices in the second stage constitute a competitive equilibrium rather than being chosen by firms the analysis applies to an industry in which firms prices are regulated by an authority whose concern is to maximize social surplus as we show the prices the regulator would choose are those that would arise in the price taking equilibrium of course the full social optimum could be attained if the authority were also to regulate locations however apart from coarse restrictions such as zoning location regulation does not seem common in practice thus we model firms as deciding on the locations non cooperatively and anticipating correctly the subsequent price regulation for example when airlines were regulated they could choose the quality of their service such as departure times but price was controlled 2 the price taking equilibrium is also relevant even in the absence of regula tion when there are several suppliers at each location then the marginal cost curve associated with each point occupied by firms is simply interpreted as the supply curve the points occupied by suppliers can be thought of as market places or as shopping malls and the rents earned owing to increasing marginal costs can be extracted by the developer of the market place or mall the developer s location decision aims to maximize rents earned in choosing a location each developer takes into account how the ensuing price competition among suppliers both in the mall and across different malls affects the rents that can be extracted in this way locations are determined as a non cooperative equilibrium whereas prices are subsequently determined by walrasian competition we first assume that demand is completely inelastic and we prove the existence of a unique price equilibrium and that an allocation is optimal if and only if it can be supported by a price equilibrium the proofs do not require fixed point theorems and are a direct application of an intuitively appealing result of dubins and spanier 1961 we then extend our existence uniqueness and optimality results to allow for price sensitive demands different demand

government policy in monetary economies i study how the specic details of a micro founded monetary economy aect the determination of government policy i consider three variants of the lagos wright monetary framework a benchmark were all markets are competitive a case which allows for nancial intermediaries and a case with trading frictions although intitutions frictions are shown to have a signicant structural impact in the determination of policy the calibrated articial economies are observationally equivalent in steady state the policy response to aggregate shocks is qualitatively similar in the variants considered however there are signicant quantitative dierences in the response of government policy to productivity shocks mainly due to the idiosyncratic behavior of money demand the variants with no trading frictions display the best t to u s post war data

a generalized measure of farm specific technical efficiency single measures of farm specific technical efficiency over time are calculated for rice farms in central luzon the philippines from the residuals of a stochastic frontier production function panel data from the international rice research institute s periodic loop survey are used results show a narrow range of efficiency between 84 and 95 across the twenty two farms so that there is limited scope for increasing output by resource reallocation a comparison is made with measures of technical efficiency using traditional covariance analysis

testing intertemporal budget constraints theory and applications to u s federal budget and current account deficits this paper extends previous tests of intertemporal budget balance and present value relationships by expanding the set of allowable deficit processes and by deriving a testable condition that is sufficient to ensure intertemporal budget balance as long as the expected discount rate is strictly positive using these tests the authors find that both the postwar federal budget deficit process and the process governing accumulation of u s assets by foreigners are consistent with intertemporal budget balance copyright 1991 by ohio state university press

substitutes and stability for matching with contracts we consider the matching problem with contracts of hatfield and milgrom 2005 and we introduce new concepts of bilateral and unilateral substitutes we show that bilateral substitutes is a sucient condition for the existence of a stable allocation in this framework however the set of stable allocations does not form a lattice under this condition and there does not necessarily exist a doctor optimal stable allocation under a slightly stronger condition unilateral substitutes the set of stable allocations still does not necessarily form a lattice with respect to doctors preferences but there does exist a doctor optimal stable allocation and other key results such as incentive compatibility and the rural hospitals theorem are recovered

optimal fiscal policy in a business cycle model this paper develops the quantitative implications of optimal fiscal policy in a business cycle model in a stationary equilibrium the ex ante tax rate on capital income is approximately zero there is an equivalence class of ex post capital income tax rates and bond policies that support a given allocation within this class the optimal ex post capital tax rates can range from close to independently and identically distributed to close to a random walk the tax rate on labor income fluctuates very little and inherits the persistence properties of the exogenous shocks thus there is no presumption that optimal labor tax rates follow a random walk most of the welfare gains realized by switching from a tax system like that of the united states to the ramsey system come from an initial period of high taxation on capital income

elicitation of honest preferences for the assignment of individuals to positions the problem of eliciting honest preferences from individuals who must be assigned to a set of positions is considered individuals know that they will be charged for the positions to which they are assigned a set of prices that provide no incentive for the individual to misrepresent his preferences is suggested it is shown that these prices constitute an element of the optimal solution to the dual of a linear programming assignment problem both the optimal allocation and the prices to be charged can be derived by solving two linear programming problems once preferences have been elicited the procedure can usefully be viewed as a simulation of a competitive market under conditions where such a market cannot be expected to function well it results in an efficient allocation where all resources are valued at their opportunity costs and consumer surplus is maximized its outcome thus has the desirable properties of competitive market equilibria

fiscal policy over the real business cycle a positive theory this paper presents a political economy theory of the behavior of fiscal policy over the business cycle the theory predicts that in both booms and recessions fiscal policies are set so that the marginal cost of public funds obeys a submartingale in the short run fiscal policy can be pro cyclical with government debt spiking up upon entering a boom however in the long run fiscal policy is counter cyclical with debt increasing in recessions and decreasing in booms government spending increases in booms and decreases during recessions while tax rates decrease during booms and increase in recessions data on tax rates from the g7 countries supports the submartingale prediction and the correlations between fiscal policy variables and national income implied by the theory are consistent with much of the existing evidence from the u s and other countries

land transfer in rural china incentives influencing factors and income effects land transfer incentives and their effect on farmers income in developing countries have been widely examined in the literate but little is known about the driving mechanism of rural household in

the package assignment model we study assignment problems where individuals trade packages consisting of several rather than single objects although buyers reservations values are non additive efficient assignments can be formulated as a linear programming problem in which the pricing functions expressing duality may be non linear in the objects constituting the packages the interconnections among the linear programming formulation walrasian equilibrium and the core are established in the single seller auction version a necessary and sufficient condition is given for the vickrey payoff point to be implementable by a pricing equilibrium journal of economic literature classification numbers c62 d44 d51

do land markets improve land use efficiency evidence from jiangsu china inefficient use of scarce and fragmented land challenges the sustainability of agriculture land markets may improve land use efficiency in recent years china has employed various instruments to

an efficient ascending bid auction for multiple objects when bidders exhibit multi unit demands standard auction methods generally yield inefficient outcomes this article proposes a new ascending bid auction for homogeneous goods such as treasury bills or telecommunications spectrum the auctioneer announces a price and bidders respond with quantities items are awarded at the current price whenever they are clinched and the price is incremented until the market clears with private values this dynamic auction yields the same outcome as the sealed bid vickrey auction but has advantages of simplicity and privacy preservation with interdependent values this auction may retain efficiency whereas the vickrey auction suffers from a generalized winner s curse

what should fiscal councils do fiscal watchdogs so called fiscal councils have been proposed as a method to counter deficit bias of fiscal policy the paper analyses theoretically what role fiscal councils could play and surve

property rights for the poor effects of land titling secure property rights are considered a key determinant of economic development the evaluation of the causal effects of property rights however is a difficult task as their allocation is typically endogenous to overcome this identification problem we exploit a natural experiment in the allocation of land titles in 1981 squatters occupied a piece of land in a poor suburban area of buenos aires in 1984 a law was passed expropriating the former owners land to entitle the occupants some original owners accepted the government compensation while others disputed the compensation payment in the slow argentine courts these different decisions by the former owners generated an exogenous allocation of property rights across squatters using data from two surveys performed in 2003 and 2007 we find that entitled families substantially increased housing investment reduced household size and enhanced the education of their children relative to the control group these effects however did not take place through improvements in access to credit our results suggest that land titling can be an important tool for poverty reduction albeit not through the shortcut of credit access but through the slow channel of increased physical and human capital investment which should help to reduce poverty in future generations

optimal taxation and oecd labor taxes abstract we derive simple expressions for optimal labor taxes under different assumptions about government bond markets we use these to examine oecd labor taxes estimate the excess burden of taxation and assess the ability of optimal tax models to match the data optimal labor taxes are driven by i a term reflecting ramsey considerations which makes labor taxes vary positively with employment and ii a martingale component reflecting the excess burden of tax which shows persistent responses to shocks to the government s intertemporal budget constraint under complete markets when governments can issue a full set of contingent securities only the first factor is relevant we find substantial evidence that incorporating incomplete markets into the optimal taxation model is critical for empirical success however we find strongest support for the martingale component and only weak evidence for the ramsey component

should fiscal policy be different in a non competitive framework abstract this paper studies if imperfections in the labor market justify a different fiscal policy we present a dynamic general equilibrium model with a ramsey planner deciding about public spending labor taxes and debt two different labor market setups are considered first we assume a competitive labor market and then we introduce a union with monopoly power both models reach the same conclusion as regards to the cyclical properties of the optimal policy it is not optimal to implement a countercyclical fiscal policy we also find that government spending should be larger under perfect competition these main results arise both under complete and incomplete markets for the debt

measuring the production efficiency of alternative land tenure contracts in a mixed crop livestock system in ethiopia abstract in this paper we test the hypothesis that land held under varying configurations of property rights will be farmed at different levels of production efficiency production data were collected from 477 plots in a fairly productive mixed farming system in the ethiopian highlands interspatial measures of total factor productivity based on the divisia index were used to measure the relative production efficiency of three informal and less secure land contracts rented share cropped and borrowed relative to lands held under formal contract with the ethiopian government although the informally contracted lands are farmed 10 16 less efficiently the analysis indicates that farmers of such lands actually apply inputs more rather than less intensively i e more inputs per unit of land the gap in total factor productivity thus results from the inferior quality of inputs or lack of skills in applying them rather than a lack of incentive to allocate inputs to mixed crop livestock farming for this reason we find no empirical basis to support the hypothesis that land tenure is a constraint to agricultural productivity