capitalization of government support in agricultural land prices what do we know abstract the objective of this paper is to provide an overview of existing literature both theoretically and empirically on the extent to which agricultural subsidies do translate into higher land values and rents and finally benefit landowners instead of agricultural producers our review shows that agricultural support policy instruments contribute to increasing the rental price of farmland and that the extent of this increase closely depends on the level of the supply price elasticity of farmland relative to those of other factors inputs on the one hand and on the range of the possibilities of factor input substitution in agricultural production on the other hand the empirical literature shows that land prices and rents have in general a significant positive and inelastic response to government support such inelastic response is thought to reflect the uncertain future of the farm programmes and in general studies have indicated that land prices are more responsive to government based returns than to market based returns

distributive leakages of agricultural support some empirical evidence abstract the paper evaluates the transfer efficiency of the austrian bread grain policy taking into account distributive leakages i e how much of the transfers officially intended to support farm income are finally realised in the upstream and downstream industries gardner s am j agric econ 65 1983 225 well known measure of average transfer efficiency ate is augmented for the case of more than two social groups and computer intensive simulation procedures are utilised to deal with parameter uncertainty

physician induced demand for surgery following up the earlier findings by fuchs on surgeon induced demand this paper makes numerous data and econometric improvements in conducting a test of neoclassical and inducement theories a simultaneous equation model is used to estimate physician demand and equilibrium fees for surgery from a sample of 350 psus over the 1969 76 period the results provide definite support for the notion of competitive market failure particularly in large metropolitan areas other things equal fees and utilization are higher in surgeon rich areas although our estimated shift elasticities were only about one third those found by fuchs a statistically significant albeit small price elasticity of demand for surgery was also obtained in contrast to fuchs increasing monopoly and disequilibrium models are also tested without altering the basic findings where surgeons were in short supply their availability significantly affected surgery rates although a small supply effect was found in plentiful areas as well

testing the efficient redistribution hypothesis an application to japanese beef policy we discuss and model the structure of the political economy of japanese beef markets and we apply bullock s statistical test of the efficient redistribution hypothesis to our model to study the pareto efficiency of japanese beef policy in 1990 and 1991 we found that under the hypothesis that our modeled political economy adequately reflects the true japanese beef political economy we could not reject at the 5 significance level that japanese beef policy was inefficient in 1990 and in 1991 however we could reject inefficiency in 1991 at a 7 level of significance

what drives health care expenditure baumol s model of unbalanced growth revisited the share of health care expenditure in gdp rises rapidly in virtually all oecd countries causing increasing concern among politicians and the general public yet economists have to date failed to reach an agreement on what the main determinants of this development are this paper revisits baumol s baumol w j 1967 macroeconomics of unbalanced growth the anatomy of urban crisis american economic review 57 3 415 426 model of unbalanced growth showing that the latter offers a ready explanation for the observed inexorable rise in health care expenditure the main implication of baumol s model in this context is that health care expenditure is driven by wage increases in excess of productivity growth this hypothesis is tested empirically using data from a panel of 19 oecd countries our tests yield robust evidence in favor of baumol s theory

public finance principles and national health care reform public finance principles though usually treated as a minor consideration lie at the heart of effective national health care reform four principles are discussed charge for a service where its cost is created distinguish rents resources and transfers know what services cost and pay accordingly balance distributional and equity concerns the principles implications include since employment does not much affect health costs financing particularly of incremental insureds need not be employer based health resources being immobile many cutbacks in expenditure will not reflect real resource savings and health care financing should mesh with an overall program of taxation and expenditure

promotion of the agricultural sector and political power in austria in most industrialized countries farmers as a small and well orgnized group are ableto influence government decisions to get rent creating proposals enacted two different viewsare presented to explain why the chicagoan view efficient redistribution hypothesis and the virginian view inefficient outcome of political bargaining a vertically structuredempirical model of the austrian farm sector is employed to test both hypotheses quantitativeresults of the welfare transfers from consumers taxpayers to farmers and agribusiness firmsare derived and the political weights of these groups are presented

capital budgets borrowing rules and state capital spending abstract this paper compares the level and composition of government spending in u s states that maintain separate budgets for capital and operating expenditures with that in states that employ unified budgets it also investigates the effects of pay as you go financing rules for capital projects the empirical findings suggest that states with separate capital budgets spend more on public capital projects than comparable states with unified budgets there is no evidence that the presence or absence of a capital budget affects the level of non capital spending pay as you go requirements for financing capital projects are associated with lower levels of both capital and non capital spending

government policy and the firm s capital structure abstract the purpose of this paper is to examine the effects of commonly observed forms of government intervention on the firm s capital structure we show that since market claims against the firm are always properly priced the firm is forced to take market claimants interests into account on the other hand since government claims are usually not adjusted for risk the firm can take advantage of the government it does so by choosing strategies that extract maximum value minimum cost from these policies in particular the firm uses its capital capital structure to maximize the value of the policy thus leading to a determinate capital strucure

the determinants of health expenditures evidence from us state level data most macro studies of what determines health expenditures have used the same panel of oecd country level data based on a more homogeneous panel data set of us states we constructed this note applies the model selection procedure to identify the determinants of health expenditures at the state level we find that the four key factors are gross state products the proportion of the population over the age of 65 the degree of urbanization and the number of hospital beds the cross section income elasticity of health care is around 0 7 implying that health care is a necessity rather than a luxury good at the state level the relative price of health care varies significantly across states but does not appear to have real effects on the amount of resources measured in real dollars a state devotes to health care

economic development institutional change and the political economy of agricultural protection an econometric study of belgium since the 19th century this empirical study uses 100 years of annual data on 11 agricultural commodities from belgium to measure the impact of structural changes coinciding with economic development and changes in political institutions on agricultural protection the analysis shows that changes in agricultural protection are caused by a combination of factors governments have increased protection and support to farmers when world market prices for their commodities fell and vice versa offsetting market effects on producer incomes other economic determinants were the share of the commodities in total consumer expenditures negative effect and in total output of the economy positive effect with belgium a small economy there was no impact of the trade position changes in political institutions have affected agricultural protection democratic reforms which induced a significant shift in the political balance towards agricultural interests such as the introduction of the one man one vote system led to an increase in agricultural protection the integration of belgian agricultural policies in the common agricultural policy in 1968 coincided with an increase in protection ceteris paribus both institutional factors related to changes in access to and information about the decision making at the eu level and structural changes in the agricultural and food economy may explain this effect

measuring the social costs of suboptimal combinations of policy instruments a general framework and an example abstract since most agricultural programs employ two or more policy instruments simultaneously it is notable that little research has attempted to find optimal instrument combinations and no research exists which evaluates the social costs unrealized benefits of combining instruments suboptimally in our paper we report a simple and feasible method to find optimal policy instrument combinations and we provide the first general formal approach to measuring the social costs of suboptimal policy instrument combinations our approach is illustrated in an analysis for five major u s crops corn feed grains wheat rice cotton the simple model we employ for the illustration suggests that except for the feed grains program the observed programs combined policy instruments quite suboptimally we conclude that agricultural economics research now can and should begin placing increased emphasis on studying optimal policy instrument combinations

a re examination of the meaning and importance of supplier induced demand abstract despite twenty years of work on supplier induced demand sid there has been little discussion or investigation of how inducement affects the health of patients we develop a conceptual framework for sid which includes the clinical effectiveness of the health services utilized as well as the effectiveness of the agency relationship between the physician and the patient the framework is used to identify several conceptually distinct types of utilization each with its own policy implications which have been intermingled in the sid literature after examining each type of utilization we conclude that a continued focus by health economists on the phenomenon of inducement even within an extended conceptual framework may be too limited for the development of policies regarding health service utilization

can baumol s model of unbalanced growth contribute to explaining the secular rise in health care expenditure an alternative test in a recent paper i argued that baumol s model of unbalanced growth offers a ready explanation for the observed secular rise in health care expenditure hce in rich countries baumol s model implies that hce is driven by wage increases in excess of productivity growth i tested this hypothesis empirically using data from a panel of 19 organization for economic cooperation and development oecd countries and found robust evidence in favour of baumol s theory an alternative way to test baumol s theory is to check whether its implication that variations in the relative price of medical care contribute significantly to explaining variations in health expenditure in the same direction has an empirical grounding earlier studies although mostly not in an explicit attempt to test baumol s theory have occasionally rejected this hypothesis despite poor data quality of the available medical price indices i perform the alternative test using data for nine oecd countries my findings suggest that the relat

convergence in per capita health expenditures and health outcomes in the oecd countries our analysis of 19 organization for economic co operation and development oecd countries over the period 1972 to 2006 provides evidence of convergence in per capita health care expenditures for 17 countries while the us and to a lesser degree norway follow a different path a simple decomposition of per capita health expenditures reveals that the divergence of the us comes from the divergence of the ratio of health care expenditures to gross domestic product gdp component while norway s divergence is mainly caused by the labour productivity component interestingly our results suggest that convergence in per capita health expenditures among the 17 oecd countries does not lead to convergence in health outcomes finally we extend our analysis to examine convergence in various determinants of health expenditures

technology and health expenditures a demand approach applied to a process innovation there is controversy among economists as to whether the diffusion of new medical technologies has been a contributing factor to rising health expenditures the economic literature is critically reviewed and another approach is advocated this alternative approach rests on the distinction between product and process innovations it is argued that the relationship between process innovations and health expenditures can be illuminated by determining if the process innovation and the original procedure are utilized as substitutes the empirical results provide no indication that alternative technologies for diagnosing diseases conditions of the upper gastrointestinal tract have been utilized as substitutes by australian medical practitioners operating on a fee for service basis this study finds no evidence to indicate that the process innovation of fibre optic endoscopy has reduced health expenditures associated with diagnosis of diseases conditions of the upper gastrointestinal tract

multiple measurements of u s income inequality using 1980 state census data the gini ratio theil index coefficient of variation atkinson measure four values and nelson index as separate measurements of income inequality are regressed with nineteen ses variables traditionally found significant with gini in past research the standard deviation of educational attainment is dominant among all independent variables as the strongest predictor of inequality mean family income dominant in prior research is a distant second in predictiveness more diversity than commonality is evident among the nineteen ses variables as they predict income inequality measured by the eight different techniques copyright 1988 by mit press

health care expenditures and gdp panel data unit root test results abstract this short paper presents unit root test results for time series on per capita national health care expenditures and gross domestic product in the oecd unlike the country by country test used by hansen p king a 1996 the determinants of health care expenditure a cointegration approach j health econ 15 127 137 the test we employ exploits the panel nature of the oecd data using this approach we are able to reject the null hypothesis that these series contain unit roots no single test is likely to be definitive in this rapidly evolving area of econometric research however our results help to mitigate concern that panel data analyses of national health care expenditures are misspecified

health care education and the cost disease a looming crisis for public choice an economic specter haunts the democratic governments of the world s most prosperous economies the rising cost of health care and education casts a shadow over virtually every election while increasing costs of other services play a part in the growth of the homeless population and the deteriorating sanitation of city streets it will be shown here that both an explanation and a solution in principle are available however while the solution is in one sense simple and straightforward in another it poses a problem of frightening magnitude for public choice if the citizens of these countries are willing to do what is necessary for the supply of educational health care and other related services to keep up with the expansion in overall economic output made possible by rising productivity then if my analysis is correct a difficult choice will be required either ever more of gross national product will have to be channeled through the public sector with all the problems we know that to entail or alternatively these services will have to be transferred to private enterprise in fields where private business firms can hope to succeed only if granted an improbably immunity from the temptation of unwise governmental interference this is indeed scylla and charybdis in spades

welfare and economic growth in kenya 1914 76 abstract in this paper we present estimates of per capita income income distribution and poverty in kenya for the period between 1914 and 1976 the estimates indicate that per capita incomes mostly increased up to 1974 inequality increased most of the time until 1950 then fell and increased again until 1971 and then finally fell poverty declined until 1964 but has since then increased slightly a decomposition analysis shows that modern sector enrichment contributed more to growth than modern sector enlargement and that traditional sector enrichment was of greater importance to the poor than modern sector enlargement

rent seeking in natural resource quota allocations this paper examines the incentives for rent seeking in the allocation of natural resource quotas to competing user groups by political bodies the political body has discretion in making the allocation and competing user groups rent seek to influence the allocation we investigate ways in which the governmental body can affect the behavior of the players by setting the ground rules for the competition a political body can affect an allocatively pareto efficient outcome by choosing an appropriate default pre rent seeking policy surprisingly an allocatively efficient default policy is unlikely to minimize social costs however winner take all default policies are likely to maximize not minimize rent seeking a competitive post allocation market reduces rent seeking but is not either itself or in combination with an efficient default policy capable of minimizing social costs however forcing winners in political redistributions to fully compensate losers both lowers the rent seeking levels relative to a potential compensation criterion and when used together with an efficient default policy is capable of obtaining the first best solution of an allocatively efficient allocation with zero rent seeking

price and quantity in international comparisons of health care expenditure an important omission from earlier cross national comparisons of health care expenditure has been the failure to distinguish between price and quantity using recent data on purchasing power parities the purpose of this article is to report some preliminary results regarding health care expenditure and quantity across 22 oecd countries the article concludes that contrary to what has been suggested in some recent articles the relative price of health care is not correlated to the aggregate per capita income the fraction of the national income that is devoted to health care provision increases with the per capita income regardless of whether health care is measured in terms of expenditure or quantity the relative price of health care has a rationing effect on the quantity of health care that is offered with a price alasticity close to minus one the latter finding means that the health care expenditure is not greater in countries with higherprices furthermore the differences in health care expendit

health care expenditure and integration in the countries of the european union national health care differs between the member states of the european union in the quality and quantity demanded and supplied reflecting different economic structures and health care organization and delivery systems since health care expenditure depends primarily on the level of economic development and the structure of the population only convergence in economic performance and the standards of living can lead to convergence of health expenditure standards

on the deadweight cost of production requirements for geographically differentiated agricultural products this article investigates the welfare effects of alternate producer collusion schemes in a context where collusion is authorized in order to cover fixed costs using a linear equilibrium displacement model we find evidence that when the producer group is allowed to control quota levels an input quota policy entails a smaller absolute deadweight loss than an output quota policy this finding suggests that if producer groups are allowed to resort to production distorting instruments to limit output they will make production choices that are less costly for society than if they had been allowed to directly control output levels copyright 2008 oxford university press

the interaction between forms of insurance contract and types of technical change in medical care a simple three parameter description of medical technology is introduced to investigate the relationships between technical change welfare and type of insurance contract the value of a particular change in technology depends on the existing form of contract the marginal equilibrium expected utility to consumers of different types of technical change hinges on the manner in which the insurance arrangement is designed to mitigate moral hazard these results open the way for a positive model of the effects of insurance arrangements on the types of technology that are adopted and the effects of technical changes on the prevalent forms of insurance contract

on the form of transfers to special interests an important question in political economy concerns the form of transfers to special interests the chicago view is that political competition leads politicians to make such transfers efficiently the virginia position is that lack of information on the part of voters leads politicians to favor inefficient sneaky methods of redistribution this paper analyzes the form of transfers in a model of political competition in which politicians have incentives to make transfers to special interests it shows that when voters have imperfect information about both the effects of policy and the predispositions of politicians inefficient methods of redistribution may be employed

pricing and regulating affect environmental ethics effluent charges and tradeable permits are economically efficient but rarely used a new explanation for this discrepancy is offered pricing may crowd out environmental ethics in the pricing and via spillovers also in non pricing sectors pricing may therefore increase pollution providing a reason why decision makers tend to reject environmental pricing five propositions showing the conditions for counterproductive effects are advanced they are consistent with available empirical evidence regulation by setting standards and subsidies damage environmental ethics less than pricing because pollution is condoned damaging environmental ethics may prevent political action in favor of the environment

the new econometrics of structural change dating breaks in u s labor productivity we have seen the emergence of three major innovations in the econometrics of structural change in the past fifteen years 1 tests for a structural break of unknown timing 2 estimation of the timing of a structural break and 3 tests to distinguish unit roots from broken time trends these three innovations have dramatically altered the face of applied time series econometrics in this paper we review these three innovations and illustrate their application through an empirical assessment of u s labor productivity in the manufacturing durables sector

aggregate health care expenditure in the united states evidence from cointegration tests unlike recent studies that are based on international cross sectional series this paper attempts to quantify the role of the determinants of aggregate health care expenditure per capita using time series data for the period of 1960 87 for the united states the paper applies the relatively new procedures of unit root testing cointegration and error correction modelling the evidence supports cointegration although the results indicate that per capita income age of the population number of practising physicians and public financing of health care are important determinants the age structure of the population and number of practising physicians emerge as the major determinants of aggregate health care expenditure in the united states

aggregate health care expenditures and national income is health care a luxury good it is well known that a strong relationship exists between national expenditures on health care and national income this has been used to suggest that health care is a luxury good and that factors such as the type of health care delivery system in a country are of little importance in determining expenditure levels this paper argues that these implications rely upon the application of microeconomic analysis to macroeconomic data and that this is not appropriate as well as raising questions about the inferences drawn from previous studies new empirical evidence is presented which casts some doubts on previous findings international comparisons are based on purchasing power parity rather than exchange rate conversions underlining the importance of prices as well as quantities in the relationship and leading to the conclusion that the aggregate data show health care to be if anything a necessity rather than a luxury good

voting and paying for public goods an application of the theory of the core abstract let any coalition with a majority of all voters have the power to choose the quantities of public goods under rule i a majority coalition bears a cost of its decision that is proportional to its size under rule ii it must bear the whole cost of its decision thus rule i imposes costs on minorities although they have no power to choose the quantities of public goods while rule ii allows goods to have some attributes of semiprivate goods it is shown that a nonempty core under rule i implies a nonempty core under rule ii but not conversely necessary and sufficient conditions in terms of the properties of the von neumann morgenstern characteristic function are given

estimates of the demand for ethical pharmaceutical drugs across countries and time the aggregate demand for ethical pharmaceutical drugs using country level data for seven countries pooled across an eight year period is estimated the regression analysis reveals that the net price paid by consumers has a negative effect on the average number of prescriptions per capita while income has a positive effect moreover the parameter estimates suggest thst the demand is relatively elastic in most countries and that the income elasticity is greater than one

estimating the moral hazard effect of supplemental medical insurance in the demand for prescription drugs by the elderly almost all persons over the age of 65 are insured under the medicare program for inpatient drug consumption this national insurance plan does not however generally cover the purchase of outpatient prescription drugs rx in 1992 more than onethird of all outpatient drug expenditures in the united states were incurred by medicare enrollees yet approximately 50 percent of the elderly did not have any coverage for this type of treatment daniel waldo 1994 in response to this and other gaps in medicare coverage private firms have offered insurance instruments specifically designed to fill such voids commonly known as medigap policies in addition to this form of financial protection contingent upon state of residency and economic status elderly persons may qualify and obtain coverage for rx through medicaid or a state sponsored drug program however even with these incomeand wealth sensitive options many relatively poor elderly are faced with significant outof pocket drug expenditures coverage is concentrated among those elderly with income over 200 percent of poverty and those below the poverty line stephen long 1994 the most vulnerable elderly seem to be protected from the financial hardship of excessive rx expenses through medicaid coverage but private supplemental insurance is potentially too expensive for seniors near the poverty line to alleviate this burden 11 states currently offer some form of rx insurance that is targeted at those elderly or disabled persons who are relatively poor but do not qualify for medicaid at the national level policymakers and interest groups have advocated adding coverage to the medicare program to assess such programmatic changes an accurate forecast of the potential change in rx usage is needed in this paper we use a 1990 sample of medicare enrolled pennsylvanians who may have private medigap insurance or coverage under the state s rx program to estimate the amount by which the rx demand of the average individual would change in the presence of insurance coverage ceteris paribus such a residual increase in the consumption of a medical commodity has been labeled the moralhazard effect of health insurance the estimation of this effect requires a nonstandard regression technique because insurance coverage for rx and those types of treatments that are complementary or substitutable for prescriptions may be endogenously determined those persons with a higher demand for drugs are more likely to demand supplemental insurance for rx coulson and terza department of economics pennsylvania state university university park pa 16802 neslusan division of economic research at the social security administration 4301 connecticut avenue n w washington dc 20008 stuart department of health policy and administration pennsylvania state university university park pa 16802 funding for survey design and implementation used in this research was supported by grants from the pew charitable trusts and the health care financing administration grant no 88 01439 001 the views expressed herein are not necessarily endorsed by either these agencies or the social security administration 1the now repealed medicare catastrophic coverage act of 1988 as well as many of the recent healthcare reform proposals would have provided for outpatient rx coverage for the elderly 122

pricing profits and technological progress in the pharmaceutical industry the decades old debate over pharmaceutical industry prices profits and innovation has again intensified a number of events coalesced to refocus public interest on pharmaceuticals contributing to public concern were bureau of labor statistics price index increases for pharmaceuticals far outpacing those for the products of other industries another prominent characteristic of the pharmaceutical industry has been its extraordinarily high reported profitability this article examines the phenomena that precipitated the current pharmaceuticals debate their historical antecedents and the principal questions at issue in the author s considered judgment a pell mell march toward regulation of pharmaceutical industry pricing could seriously impair the industry s incentives for investment in new products

physicians choices of specialty location and mode a reexamination within an interdependent decision framework in this paper physicians decisions regarding the specialty community size and mode of their first practices are analyzed in a simultaneous decision model using a nested logit specification physicians face a choice set consisting of eight specialties seven community sizes and three practice settings data come from the longitudinal survey of the class of 1960 income is found to be statistically significant and the average income elasticity is 1 05 which is considerably larger than previous estimates however the elasticity estimate is very sensitive to the assumed decision process a series of policy simulations are then performed to estimate the effect of specified income based policies on the predicted distribution of physicians across specialties community sizes and modes

rising inequality changes in the distribution of income and consumption in the 1980s this paper examines changes in the distribution of income and consumption in the united states during the 1980s using data from the current population survey income and consumer expenditure survey consumption we reach three primary conclusions first changes in the distribution of consumption parallel changes in the distribution of income the lowest quintile of the consumption distribution received 0 9 percentage points less of total consumption in 1988 than in 1980 the corresponding decline for income was 0 6 percentage points second broad conclusions concerning recent changes in the consumption distribution are not very sensitive to the exact choice of a measure of family needs under a wide variety of alternative household equivalence scales there is a widening in the consumption distribution in the 1980s third the usc of consumption measures of well being in place of measures based on current money income docs change conclusions concerning the extent of poverty in the united stales using the official federal poverty thresholds we find that the overall consumption poverty rate was three percentage points below the income poverty rate in 1988 comparisons of the poverty rates of the elderly and the non elderly are substantially affected by the choice of poverty measure the consumption poverty rare for the elderly was only 60 percent of the rate for adults and one third of the rate for children in 1988 this abstract was borrowed from another version of this item

medical care costs how much welfare loss hardly a week goes by without a front page newspaper article on rising health care costs and the uninsured in this article i focus mainly on costs arguing that the issue has been somewhat misconceived while the level of medical care spending in the u s is a cause for concern the welfare losses associated with rises in that level of spending may not be as large as the public rhetoric can make them seem in fact cost containment may not be as urgent as is widely supposed and some proposed cost containment policies may result in welfare losses for the insured and even increase the number of uninsured

income elasticities of household expenditures a us cross section perspective two linear engel functions are estimated for household total expenditure and for 15 aggregated classifications of consumer durable non durable and service expenditures one model contains only income as the regressor variable the second model incorporating a broad range of household demographic variables introduces three new regressors number of earners in the household self employment status of the reference person and value of household financial assets utilizing cross section data on annual expenditures income elasticities are derived and compared across models the expanded engel model dramatically strengthens estimates for all expenditure categories and generates income elasticities generally lower than those derived from the simpler engel function

review of the literature on the determinants of healthcare expenditure this study reviews the literature on determinants of healthcare expenditure for the period 1998 to 2007 the methodology combines searches in the mesh database of pubmed with the search in the principal journals of health economics 20 primary studies were found that met the criteria for inclusion no single pattern of results is clearly identified among the 20 articles four consider income to be the principal determinant of healthcare expenditure two of them jointly with population ageing six highlight population ageing as against six others that emphasize the proximity to death the remaining six do not focus on a specific variable or focus on another variable e g technological progress or territorial decentralization 11 of the 20 articles calculate the income elasticity of demand only two of them obtaining a value greater than 1 thus cataloguing healthcare expenditure as a luxury good there is therefore no unanimity in the variables and econometric regressions of healthcare expenditure in

does environmental quality influence health expenditures empirical evidence from a panel of selected oecd countries in this paper we examine the role of environmental quality in determining per capita health expenditures we take a panel cointegration approach in order to explore the possibility of estimating both short run and long run impacts of environmental quality our empirical analysis is based on eight oecd countries namely austria denmark iceland ireland norway spain switzerland and the uk for the period 1980 1999 we find that per capita health expenditure per capita income carbon monoxide emissions sulphur oxide emissions and nitrogen oxide emissions are panel cointegrated while short run elasticities reveal that income and carbon monoxide emissions exert a statistically significant positive effect on health expenditures in the long run in addition to income and carbon monoxide we find that sulphur oxide emissions have a statistically significant positive impact on health expenditures

auditing the producer price index micro evidence from prescription pharmaceutical preparations from january 1984 through december 1989 the bureau of labor statistics bls price index for prescription pharmaceuticals grew at 9 09 per year using bls type laspeyres index procedures with monthly price and quantity data on all prescription pharmaceuticals sold by four u s pharmaceutical manufacturers accounting for 24 of industry domestic sales we find that the four company index increases at 6 68 per year when we employ a divisia price index with smoothed weights incorporating new goods the index grows 6 03 per year why does the bls index grow 50 more rapidly than the divisia index that mystery is the focal point of our article

symposium on health care reform the papers in this symposium focus on two major issues of health economics in the context of president clinton s health security act cost containment and labor market effects of financing insurance the act proposes to limit public and private spending a key issue is the extent to which without a limit but with a standardized basic plan supplementary insurance will exist to allow scope for individual choice the act s financing will have an ambiguous effect on labor supply but will encourage formation of small low wage firms several features including community rating and standardization of dependent coverage imply substantial redistribution

least cost cheap food policies some implications of international food aid abstract many low income countries pursue cheap food policies in which consumers pay subsidized prices for bread rice and other staples this paper addresses the issue of why different governments select different food subsidy policies using multiple instruments rather than a simple across the board subsidy to provide consumers with access to cheap food it examines the optimal structure of cheap food policies in the context of a partial equilibrium model in which the country may be large in trade and is able to combine import subsidies or tariffs and output taxes or subsidies to transfer income to consumers through the market the model allows for a marginal opportunity cost of government revenues greater than one dollar in addition in the model food aid from overseas may be either given away to the consumer or given to the government for subsequent sale in the domestic market the results indicate that only by happenstance will a country choose to use a pure consumption subsidy or a pure import subsidy to transfer income to consumers in addition an increase in international food aid does not necessarily lead the government to reduce producer and consumer prices for a commodity

rent seeking market structure and growth we study the role of productive and unproductive entrepreneurship in economic growth in a setting where firms compete in both economic and political markets specifically firms compete for market share through cost reducing technological innovation and they vie for influence over government transfer policy through rent seeking activities we find that rent seeking affects growth in two ways it allows firms to ignore economic competition leading to less innovation and it alters the number of firms that are supported in equilibrium the former effect is negative while the latter is ambiguous we show how these effects depend on various characteristics of economic and political markets

partial market liberalization and the efficiency of policy reform the case of the european dairy sector this article analyzes the efficiency of partial market liberalization and policy reform with an application to the european dairy sector in a second best world partial moves toward market liberalization are not always efficiency improving we develop a general equilibrium model to investigate the efficiency implications of discrete changes in government policy the analysis covers price and quantity instruments used in both domestic and trade policy we derive simple conditions under which partial market liberalization is efficiency improving we apply the approach to agricultural policy reform in the european dairy sector and identify market liberalization scenarios that are not efficiency improving

the economics of special interest politics the case of the tariff this paper investigates the interaction of politicians and special interest lobbies the goal is to model the equilibrium levels of redistributive policies such as taxes subsidies tariffs and regulatory decisions the model is applied throughout to the setting of tariffs by contributing to political campaigns special interest lobbies generate economic returns higher tariffs generate revenue for import competing industries through higher product prices higher milk support prices raise dairy farm income and so forth the lobby invests to maximize these net economic returns in evaluating their chances of election politicians weigh the favorable effects of special interest money against the unfavorable association with the lobby and the social cost of the redistributive policy section i explores the lobby s problem it describes a formalization of mancur olson s discussion of the voluntary provision of public goods and optimal contributions by lobbies to political campaigns section ii describes determination of the equilibrium tariff positions of each politician in a political campaign

on the effect of income and relative price on demand for health care ec evidence this paper demonstrates that the relative price of health care could be used to explain the conflicting results of the empirical studies which attempt to measure the income elasticity of demand our empirical results based on a conventional model and cross national data set for the ec show that whereas health care may be labelled as a luxury good the large income effect can be interpreted as merely offsetting the price effect

u s farm policy and the volatility of commodity prices and farm revenues a dynamic three commodity rational expectations storage model is used to compare the impact of the federal agricultural improvement and reform fair act of 1996 with a free market policy and with pre fair policies results suggest that fair did not lead to significant increases in long run price volatility or revenue volatility the main impact of pre fair relative to the free market regime was to substitute government storage for private storage in a way that did little to support prices or to stabilize farm incomes results also indicate that u s grain market volatility in 1995 2000 was due to fundamental market forces and not to fair copyright 2002 oxford university press

judging agricultural policies a survey this survey provides a structured picture of 40 years of literature which uses welfare economic tools to judge agricultural policy challenges and developments of normative agricultural policy analysis are discussed in an easily accessible graphical framework it is shown how the literature has gone from examining a very small discrete set of simple policies to a much broader often continuous set of policies that combine policy instruments simultaneously the importance of the pareto criterion used to explore the limits of how government can affect welfare is revealed moreover given the importance of the objective of income redistribution in agricultural policy agricultural economists have often departed from the purely efficiency oriented tradition in economics it is shown that they have tried to incorporate equity considerations by either adding these criteria as constraints to the social welfare function or directly incorporating these criteria in the functional form of the social welfare function

evidence on the determinants of canadian provincial government health expenditures 1965 1991 abstract real per capita provincial government expenditures on health care over the period 1965 1991 are examined using pooled time series cross section regression analysis key determinants of real per capita provincial government expenditures on health care over the period 1965 1991 are real provincial per capita income the proportion of the provincial population over age 65 and real provincial per capita federal transfer revenues established program financing had a negative and significant impact on real per capita provincial government health expenditures in newfoundland and quebec an income elasticity of 0 77 implies that health care is not a luxury good

elasticity estimates from a dynamic model of interrelated demands for private and public acute health care this paper investigates the private public mix in acute health care provision in the uk it uses an interrelated shares model derived from a translog function combined with dynamic adjustment using prices for public care constructed from nhs waiting lists the insurance cost of private care and the retain price index impact intermediate and long run elasticities of demand for private and public care are obtained the role of hospital consultants and of an aging population are also considered

factor proportions openness and factor prices in kenya 1965 2000 this study analyses how changes in factor abundance and openness have affected relative factor prices in kenya since 1965 using cointegration analysis and error correction models of relative factor prices we find that factor proportions determined relative factor prices in the long run while openness measured by three different proxies possibly had a short run effect on relative factor returns the only deviation from this pattern occurred during the latter half of the 1990s when there was rapid wage growth mainly due to labour market deregulation

price support acreage controls and efficient redistribution this study is concerned with the combination of target price and acreage controls as the two major mechanisms of farm policy acreage controls are shown to enhance the efficiency of redistribution under a target price program more specifically this study demonstrates that if the traditional cobb douglas production function is assumed acreage controls do not enhance the efficiency of target price programs in the process of redistributing income to the farm sector the study proves that if the elasticity of substitution between land and all other inputs is less than one then the income redistributional costs are likely to be reduced moreover by using an empirical estimate of the elasticity of substitution and farm data for the time period 1984 88 this study demonstrates that acreage control programs have drastically reduced the deadweight losses associated with income redistribution flowing from target price programs these results lend strong support to the public choice notion that politicians favo

granger causality between total expenditure on health and gdp in oecd evidence from the toda yamamoto approach abstract in this paper a modified version of the granger causality test proposed by toda and yamamoto is used to investigate causality between gdp and healthcare expenditure in oecd countries the findings indicate that bidirectional granger causality is predominant

generics and new goods in pharmaceutical price indexes drug prices and their rate of inflation are a major focus of current policy debates on u s health care in this paper we show that where patent expiration and generic entry are significant as they are for many important classes of drugs movements in the official price indexes may be poor indicators of the actual prices paid and the resulting changes in consumer welfare when a drug goes off patent those consumers who regard the branded and generic versions as more or less perfect substitutes experience a substantial price decline and concomitant welfare gain which the current methods used by the statistical agencies fail to capture we suggest a number of alternative ways of proceeding although our computations are based on a limited number of cases they imply that the overall rate of inflation in drug prices may be quite seriously overstated while generic pharmaceuticals are the topic of our calculations the problem discussed is also of wider importance generic drugs are a special and possibly easy case

an econometric analysis of health care expenditure a cross section study of the oecd countries this paper is an empirical examination of the determinants of aggregate health care expenditure the paper presents a systematic analysis of relationships across 19 oecd countries showing the effects of aggregate income institutional and socio demographic factors on health care expenditure the results indicate that institutional factors of the health systems in addition to per capita gross domestic product gdp contribute significantly to the explanation of the health care expenditure variation between countries for example the way physicians in outpatient care are paid and the mixture of public private funding and inpatient outpatient care

on the international stability of health care expenditure functions are government and private functions similar this paper studies the stability of health care expenditure functions in a sample of oecd countries we adopt the cointegration approach and the results show that there is a long term relationship between total health care expenditure hce and gross domestic product gdp however the existence of cointegration is only shown when we admit the presence of some changes in the elasticities of the model our results also provide evidence against the existence of a unique relationship between health and gdp for the sample thus we can conclude that the differences in health systems may cause differences in the aggregate functions additionally we examine aggregate health functions for government ghce and private expenditures phce again finding evidence of different patterns of behaviour finally we open a discussion on the character of health as a necessary or luxury good in this context we find differences between the government and the private function in order to illustrate these findings we propose a theoretical model as an example of the influence of political decisions on income elasticity

on the determination of the us aggregate health care expenditure per capita real health care expenditure is examined against three major groups of explanatory variables economic demographic and health stock and it is found that the three groups of variables have an impact on real health care spending other subcategories such as real private and government health care pharmaceutical dental home nursing ambulatory personal medical consumption and in patient expenditures have also been examined and have been found to be affected by the explanatory variables for several subcomponents there is evidence of supplier inducement of the demographic group of variables the ageing population had an impact only on the per capita real overall and private health care outlay and pharmaceutical spending also cointegrating relationships were found and consistent estimators of the elasticities found

explaining price policy bias in agriculture the calculus of support maximizing politicians a model is developed to explain observed patterns of policy intervention in agriculture we analyze the interaction between political support seeking politicians and supportsupplying citizens society consists of a rural and urban group we determine the effects on transfers of relative group size disparities in income endowments between groups and the deadweight loss of redistribution the framework advanced is an alternative to that of the interest group model and is used to explain for example why the export sectors in developing countries are taxed more and why the united kingdom is less adamant for higher price supports than germany

disentangling the consequences of direct payment schemes in agriculture on fixed costs exit decisions and output this paper goes beyond orthodox considerations of direct payment effects on agricultural output by highlighting the role of subsidies in affecting individual producers ability to cover fixed costs and in distorting the volume of aggregate production and net trade by implicitly discouraging exits the theoretical model considers both taxpayer and consumer financed decoupled direct payment schemes and compares them to a coupled production subsidy in terms of possible producer responses to direct payments the paper proposes an analytical framework of production decision making in the presence of a stochastic distribution of fixed costs across representative farms the paper shows that decoupled payments in theory can have a larger effect on output than coupled payments the model explicitly recognizes three consequences of domestic support a induce exit or entry b bias production incentives to domestic markets and c cross subsidize export in global markets an empirical model of the u s wheat sector is developed to illustrate the relative potential impacts of coupled versus decoupled payments on output through the effects on a farmer s ability to cover fixed costs and hence exit decisions

the substitution bias of the laspeyres price index an analysis using estimated cost of living indexes the most commonly used measure of the cost of living the consumer price index cpi published by the bureau of labor statistics is essentially a laspeyres price index it is well known however that a laspeyres price index provides an upward biased estimate of the cost of living because in keeping the same base period basket of goods as weights it does not take into account substitution among commodities induced by relative price changes the magnitude of the bias is an empirical question which is the focus of this study an estimate of the substitution bias may be obtained by taking the difference between the laspeyres price index and an estimated true cost of living index the true cost of living index cli is based on the theory of consumer demand it is the ratio of the minimum expenditures under two different price regimes necessary to maintain a constant level of utility as opposed to the constant basket of goods in the laspeyres index the size of the bias depends on two factors 1 the size of consumption substitution elasticities if there is no commodity substitution then the cli and laspeyres index coincide regardless of changes in relative prices and 2 the magnitude of relative price changes if all prices move together then the cli and laspeyres index again coincide regardless of the size of substitution elasticities in order to compute a true cli it is necessary to specify a particular utility function and estimate the parameters of the resulting system of demand equations see for example louis phlips p 135 several estimates of the magnitude of the substitution bias have appeared in the literature but all previous studies suffer from a common weakness they are all based on a very small number of commodities essentially because of econometric problems involved in estimating large systems of demand equations in one group of studies demand models have been estimated using highly aggregated data in which total consumption is grouped into four to nine aggregate commodites such as housing durables or clothing arthur goldberger and theodore gamaletsos for example estimate the linear expenditure system les demand model using data on five aggregate goods for several european countries and compare the resulting cli for one of the countries greece to the corresponding laspeyres price index tran van hoa estimates costof living indexes for six australian provinces using data on nine aggregate goods phlips cites work by r sanz ferrer who computed a cli for belgium from data on eight aggregate commodities in such studies using highly aggregated data the estimate of the substitution bias may be understated because the aggregation obscures substitution in consumption within categories which is perhaps more prevalent than substitution between gross aggregates another shortcoming of these three aggregate studies is the fact that they use only a single demand system and hence do not explore the sensitivity of the cli to a priori u s bureau of labor statistics the groundwork for this study was my dissertation i would like to thank the chairman and members of my committee r robert russell llad phillips and robert deacon for their support and helpful suggestions and jack triplett robert pollak richard j mcdonald and a referee for valuable comments on an earlier version the views expressed are my own and do not necessarily reflect the policies of the bureau of labor statistics for a theoretical discussion of cost of living indexes see robert pollak 1971b and paul samuelson and subramanian swamy

an empirical model of the demand for health care in belgium the paper presents an empirical model of the demand of health care in belgium the analysis pertains to 17 categories of medical care and to two subgroups of health insurance beneficiaries namely the active and the widows orphans pensioners and invalids the estimation results show that income and relative prices matter in the demand for medical care supplier induced demand is also detected for a number of medical care categories other explanatory variables in the model include the size of the child population climatic conditions and a time trend representing technological advances in health care

a theory of competition among pressure groups for political influence this paper presents a theory of competition among pressure groups for political influence political equilibrium depends on the efficiency of each group in producing pressure the effect of additional pressure on their influence the number of persons in different groups and the deadweight cost of taxes and subsidies an increase in deadweight costs discourages pressure by subsidized groups and encourages pressure by taxpayers this analysis unifies the view that governments correct market failures with the view that they favor the politically powerful both are produced by the competition for political favors

studying the role of political competition in the evolution of government size over long horizons here we argue for the use of cointegration and error correction analysis to combine economic factors that are nonstationary with political factors that are stationary into an empirical model of the evolution of public policy over long periods the approach is applied to disentangle the contributions of economics and politics to the evolution of public expenditure by the government of canada over 130 years political competition emerges as the primary political factor affecting government size

robust determinants of health care expenditure growth our aim is to disclose robust explanatory variables for health care expenditure hce growth by introducing to this field of research a method that is especially well suited for situations of model uncertainty the extreme bounds analysis eba we analyse data for 33 oecd countries over the period 1970 2010 and include as far as it is statistically feasible all macroeconomic and institutional determinants of hce growth in the eba that have been suggested in the literature furthermore we analyse to what extent outliers in the data influence the results our results confirm earlier findings that gdp growth and a variable representing baumol s cost disease theory emerge as robust and statistically significant determinants of hce growth depending on whether or not outliers are excluded we find up to six additional robust drivers the growth in expenditure on health administration the change in the share of inpatient expenditure in total health expenditure the lagged government share in gdp t

a stochastic dominance analysis of growth recessions and the u s income distribution 1967 1986 the adverse effects of recessions and the benefits of growth are widely researched and generally well understood but the effects of recessions and low growth on the distribution of income have not been so extensively researched nor are they well understood this paper applies stochastic dominance a relatively new approach to studying income distributions to investigate the effects of recent growth and recessions on the u s income distribution rather than looking at a single summary statistic such as per capita gnp across time we consider the entire income distribution and measure economic performance by looking at a number of points within the distribution our objective is twofold first we use recent developments in income distribution theory and measurement to present inference based measures of the u s income distributions across time second we address the question of how recent growth and recessions have impacted on the well being of specific income groups and classes

the determinants and effects of health expenditure in developed countries previous studies of international differences in health spending have been restricted to the use of relatively small samples of cross sectional data our objective here is to re examine the results of previous work using a sample of 560 pooled time series and cross section observations results confirm the importance of gdp as a determinant of health spending with an estimated income elasticity at or around unity but also suggest that oecd countries should not be regarded as a single homogeneous group the importance of some non income variables is also confirmed although the direct effect of these factors appears to be small

an incentive approach to land set aside programs abstract this paper is devoted to a theoretical analysis of policies aiming at reducing the supply of agricultural produce through contractual or mandatory land set aside the model relies on contract theory under adverse selection it allows us to evaluate the impact of asymmetric information about yields on the optimal price support policy and on land set aside specifically we analyze an optimal contractual policy consisting of a subsidy system which makes transfers dependent on the set aside area and a policy of mandatory land set aside applying uniformly to all farms and ignoring incentive constraints numerical simulations allow us to assess and compare the respective effects of these policies

the economics of health and health care what have we learned what have i learned victor fuchs and i have been talking with each other about the economics of health and health care since we met nearly 30 years ago i was pleased therefore when he asked me to organize this session of his american economic association annual meeting but then rather dismayed by his suggestion that as one of the papers in the session i offer an overview of what i have learned about the subject during those 30 years as a profession we have indeed learned a great deal in these three decades the rapid growth of health care spending that doubled its gdp share to one seventh of the economy and the 1966 medicare and medicaid programs that have made federal health care spending exceed the combined total of all domestic discretionary federal outlays have attracted a generation of researchers to a subject that had been largely neglected by economists before the 1960 s 1 econometric research and conceptual developments have been mutually reinforcing helped by advances in econometric theory and by the government s creation of a rich array of detailed data although there remains substantial controversy about many issues in this field as in most other parts of economics there is no doubt that anyone setting out to teach a course on health economics or to do policy analysis in this area would start from a very different base today than 30 years ago

the political economy of farmland ownership regulations and land prices one of the most ubiquitous forms of agricultural regulation is a restriction on farmland ownership one canadian example of a farmland ownership restriction is the saskatchewan farm security act fsa passed in 1974 the purpose of this article is to explain using a political economy framework why the fsa was implemented and to estimate the effect of the fsa on saskatchewan farmland values a present value pv model is used to estimate the relationship between land values rents and the regulation the hausman endogeneity test reveals that the regulation variable is endogenous with the land price the sign of the regulation variable is negative which fits with the theory i e the more stringent the regulation the lower the land value we estimate that the regulation lowered saskatchewan farmland prices by an average of 4 to 34 us acre depending on whether ordinary least squares ols or two stage least squares tsls is employed in the estimation over the period of 1974 2001