a minimum wage can be welfare improving and employment enhancing abstract we examine whether minimum wages can fulfill a useful role as part of an optimal tax transfer scheme the government cannot observe household abilities only their incomes and is constrained to ensure that those working are at least as well off as those not working a minimum wage combined with the institutional features of typical welfare systems allows the incentive constraint to be severed at the ability level associated with the minimum wage if such a scheme can be enforced the government can increase the amount of redistribution from those working to those not working and possibly lower the number of unemployed

the ramsey problem for congestible facilities abstract in recent years a new set of models drawing on vickrey 1969 has been developed to analyze the economics of congestible facilities these models are structural in that they derive the cost function from consumers time of use decisions and the congestion technology standard models in contrast simply assume the general form of the cost function we apply the new approach to analyze the ramsey problem for a congestible facility and show that the solution generally entails cost inefficiency standard models have failed to reveal this result because they treat the cost function as completely determined by technology

time varying risk and long term reversals a re examination of the international evidence long term reversals ltrs have been extensively documented as existing in international markets the predictability of returns opens the question whether investors should continue to diversify across international markets such predictability also has implications for the corporate decision of where and when to raise capital this paper re examines the international evidence for long term contrarian profits using a longer time horizon than all previous studies 81 years of data from 1925 to 2005 and finds that the long term contrarian anomaly disappears when time varying conditional alphas are considered this is true even without transaction costs for the marginal trader conservative transaction costs subsume ltr profits whether returns are risk adjusted or not this suggests that benefits from actual trades on ltrs do not negate a strategy based on diversification although time varying beta has been extensively documented as ineffective in describing ltrs this paper demonstrates that it is important to control for time variation in alpha a full conditional capital asset pricing model captures the ltr premium this suggests that macroeconomic factors are important for understanding ltrs and their associated risk

an empirical study of the patterns and sources of technical inefficiency in traditional and hyv rice cultivation in bangladesh production frontiers are estimated from survey data from a village in bangladesh to examine the technical efficiency of farmers in the cultivation of traditional and high yielding variety hyv rice in spite of much higher yields hyv cultivation displays lower technical efficiency and much greater variability in efficiency also efficiency is not independent of household endowments in that small farmers and or those with the least education and growing experience are least efficient policies that promoted education and provided smaller farmers with greater access to public services would promote efficiency and equity and help reduce hyv yield variability

optimal redistribution with productive social services publicly provided private goods are conventionally considered consumer goods departing from this perspective we analyze the public provision of inputs that improve household productivity e g education and childcare in a two class economy with distorting taxation public provision is always welfare improving with respect to pure taxation given that the public input directly affects household productivity moreover the case for public provision strengthens as households heterogeneity in input demand fades out contrary to consolidated results in the literature the features of optimal provision schemes depend on the nature of publicly provided input namely if it substitutes household productive capacity or just helps households to exploit it

applied welfare economics with discrete choice models economists have been paying increasing attention to the study of situations in which consumers face a discrete rather than a continuous set of choices such models are potentially very important in evaluating the impact of government programs upon consumer welfare but very little has been said in general regarding the tools of applied welfare economics indiscrete choice situations this paper shows how the conventional methods of applied welfare economics can be modified to handle such cases it focuses on the computation of the excess burden of taxation and the evaluation of quality change the results are applied to stochastic utility models including the popular cases of probit and logit analysis throughout the emphasis is on providing rigorous guidelines for carrying out applied work this abstract was borrowed from another version of this item

sources of increased instability in indian and u s cereal production recent growth in indian and u s cereal production has been accompanied by a more than proportional increase in the standard deviation of production this study applies variance decomposition procedures to state data on crop production to analyze the sources of this increased instability it is found that production has become significantly more covariate between states and crops largely because of increased yield variability and a loss in offsetting patterns of variation between crop yields in different states these changes may be associated with more variable prices with higher yielding technologies and with a narrowing of the genetic base

equilibrium with product differentiation tive consumer formulations is used to examine the properties of single and multiple price equilibria conditions under which decreases in the intensity of consumer preferences reduce price are given it is shown that with certain types of demand curves entry can eliminate price cost markups even given product differentiation if competition is localized it is demonstrated that entry does not affect the markup finally the effect of spurious product differentiation on price is examined

large cash transfers to the elderly in south africa we examine the social pension in south africa where large cash sums about twice the median per capita income of african households are paid to people qualified by age but irrespective of previous contributions we present the history of the scheme and use a 1993 nationally representative survey to investigate the redistributive consequences of the transfers documenting who receive the pensions their levels of living and those of their families we also look at behavioural effects particularly the effects of the cash receipts on the allocation of income to food schooling transfers and savings in south africa a large social pension about twice the median per capita income of african households is paid in cash to people qualified by age irrespective of previous contributions we present the history of the scheme and explain how such large transfers could come about in an economy in which the recipients were not only politically weak but without any political representation whatsoever we then use a 1993 nationally representative survey to investigate the redistributive consequences of the transfers documenting who receive the pensions their levels of living and those of their families we also look at behavioural effects particularly the effects of the cash receipts on the allocation of income to food schooling transfers and savings the pressing policy issue for south africans is whether it makes sense to target seven billion rand nearly 2 billion of social expenditure through the current pension schemes our analysis contributes to the discussion by documenting the redistributive and behavioural effects of the transfers we find that at least as far as immediate incidence is concerned and without allowance for behavioural effects the social pension is an effective tool of redistribution and that the households it reaches are predominantly poor because so many of the elderly among south africa s african population live with children the social pension is also effective in putting money into house

winner loser reversals in national stock market indices can they be explained this article examines possible explanations for winner loser reversals in the national stock market indices of 16 countries there is no evidence that loser countries are riskier than winner countries either in terms of standard deviations covariance with the world market or other risk factors or performance in adverse economic states of the world while there is evidence that small markets are subject to larger reversals than large markets perhaps due to some form of market imperfection the reversals are not only a small market phenomenon the apparent anomaly of winner loser reversals in national market indices therefore remains unresolved

value of an additional firm in monopolistic competition the paper develops a model of monopolistic competition in which the satisfaction levels consumers get from products are independently and identically distributed potential substitution among products then generates demand curves through the mechanism of order statistics the value of extra variety can be calculated directly pareto lognormal and beta distributions are investigated using numerical integration some but not all cases support the argument that the optimal number of firms exceeds the equilibrium number

where have the profits gone market efficiency and the disappearing equity anomalies in country and industry returns abstract we are the first to demonstrate the decline in the cross sectional predictability of country and industry returns in recent years we examine 53 anomalies in country and industry indices from 64 markets for the years 1973 2018 the profitability of the strategies has significantly decreased recently driven particularly by the disappearance of value and reversal effects the phenomenon is strongest in large developed markets neither changes in country and industry specific risks nor investor learning from the academic literature can explain the effect our findings support the view that the fall in return predictability is caused by the overall improvement in market efficiency

taste heterogeneity and urban spatial structure the logit model and monocentric theory reconciled abstract a model of urban spatial structure for a linear and closed monocentric city is formulated by allowing the presence of randomly distributed idiosyncratic tastes for location in an otherwise uniform household population land use equilibrium conditions are shown to have a stochastic representation which depends on the distribution of the idiosyncratic tastes over the population of households a special case in which the multinomial logit model gives the representative household s locational choice probability is derived and examined for a logarithmic utility function it is shown that the stochastic equilibrium can also be obtained as the solution of a welfare optimum problem either by maximizing total social welfare primal or by minimizing total opportunity cost dual either formulation gives the equilibrium allocations and associated decentralizing land prices some comparative statics analysis is undertaken to show that while most results are like those of the alonso mills muth model increasing taste heterogeneity decentralizes the linear urban form flattening the rent and population density gradients the alonso mills muth solution is obtained as an asymptotically limiting case which provides an upper bound on the steepness of the rent and population density gradients and a lower bound on the length of the linear city and the welfare level of the representative consumer

market size and substitutability in imperfect competition a bertrand edgeworth chamberlin model competition is often associated with the idea that there are many traders in the market or that each price maker is small as compared to the market this paper introduces this notion of market size in a model of price competition with imperfect substitutes by constructing a model which creates a bridge between the chamberlin and bertrand edge worth lines of work on price competition we investigate the role of two fundamental parameters in the existence of an equilibrium the market size given by the number n of competitors and the degree of substitutability we prove that a for a given number of n 2 of competitors a sufficiently large but finite degree of substitutability entails nonexistence this thus generalizes the bertrand edgeworth nonexistence result which applies only to perfect substitutes b conversely for a given upper bound on the degree of substitutability a sufficiently large number of competitors ensures existence which thus introduces a significant role for market size in models of imperfect competition we finally investigate the proximity of an equilibrium when it exists to a competitive outcome and we find that both high substitutability and large market size are a condition for competitiveness

macromomentum returns predictability in international equity indices this study examines momentum and reversals in international stock market indices we find that country stock indices exhibit momentum during the first year after the portfolio formation date and reversals during the subsequent 2 years positive currency momentum predicts low stock index returns in the future thereby weakening momentum and strengthening reversals in u s dollar denominated stock index returns cross sectional regression tests involving individual stock indices confirm the portfolio findings our results are consistent with a key prediction of recent behavioral theories that initial momentum should be accompanied by subsequent reversals

impact of new agricultural technology on the instability of foodgrain production and yield data analysis for bangladesh and its districts abstract recent studies claim that the green revolution has increased foodgrain production and yield variability using bangladeshi national and regional data this paper provides intertemporal and cross sectional evidence to the contrary intertemporal data indicate that on the whole the relative variability of foodgrain production and yield has fallen with the adoption of green revolution technologies cross sectional regional data further support this view using various proxies for technological change the results indicate that regions with higher rates of adoption of green revolution technologies have lower relative variability of foodgrain production and yield

demand for differentiated products discrete choice models and the characteristics approach we propose a specific characteristics framework in order to construct linkages between alternative conceptual approaches to modelling product differentiation first it is shown that a demand system which satisfies the gross substitutes property imposes specific requirements on the locations of products in particular the dimension of the characteristics space must be larger than or equal to the number of products minus one we then identify a method for casting a given demand system subject to certain restrictions into our characteristics framework this is illustrated for the logit probit and linear probability models of discrete choice theory finally we find a characteristics representation of the ces representative consumer

economics and the debate about preservation of species crop varieties and genetic diversity the paper reviews and outlines criteria that have been suggested for determining whether or not to save a species for extinction priorities as set out in the world conservation strategy cost benefit analysis and the safe minimum standard approach are given particular consideration the different criteria also are compared assuming that there is an absolute upper constraint on the amount of resources available for the conservation of species there is some discussion of whether the reduction in available crop varieties is adding to or reducing the instability of crop yields it is claimed that relative variability appears to be falling but there may be an increasing risk of non sustainability the importance of the burden of proof in the conservation versus non conservation debate is stressed and it is suggested that recent economic thought has swung more towards the view that the burden of proof should rest on those seeking to carry out activities which may extinguish a species

variety and size regulation in discrete choice oligopoly imperfectly competitive markets for a differentiated product may underprovide brand variety when consumer tastes for brands are highly heterogeneous we show that when the brands in question are indivisible in consumption and each consumer buys a customized quantity or size of the preferred brand only a welfare improvement can be obtained by regulating the size of purchase we study neutral size regulation which requires that the size of purchase be set equal to the size that would prevail in the absence of regulation this improves brand variety and consumer surplus provided consumer tastes are sufficiently heterogeneous

patent replacement and welfare gains abstract patents were chosen in an era when modern public finance tools were unavailable the same innovation outcomes can be achieved with higher welfare if patent elements are replaced by modern features this paper constructs two theoretical models of product innovation and simulates the welfare effects of replacing patents with an intertemporal bounty arrangement we find that replacing patents with this alternative has the potential to increase welfare in the united states through reform of pharmaceutical patents by 43 9 194 billion when measured in present value terms this is 0 3 1 3 of annual gdp based on simulations involving four selected drug sectors the potential to increase welfare would be higher if applied to the larger sector of drugs as a whole in principal patents could be replaced in other sectors as well

effective demand enterprise reforms and public finance in china economic reform in china athar hussain and nicholas stern this paper examines some problems of transition from a command to a market economy through an analysis of the most important example to date the reforms in the chinese economy since the late 1970s our focus is on the links between enterprise reforms effective demand and public finance the reforms have created a curious and problematic hybrid of market and command economies with serious problems of coordination they have concentrated almost exclusively on the delegation of decision making to enterprises from the higher to lower tiers of the government without taking into account its implications for investment consumption and public finance an understanding of future policy and lessons for other countries requires a careful examination of the effects of these past policies granting discretion to enterprises over investment and wages has resulted in both an investment and consumption boom but paradoxically a fall in profits there are strong reasons to suppose that the investment ratio has been too high in recent years fuelling inflation and slowing additions to supply by prolonging the gestation period of investment there has been a large increase in liquid assets in the hands of households which makes their expectations increasingly important for macroeconomic policy there is need for concerted financial innovation to diversify household wealth away from liquid assets finally the changes in the composition of government revenue and expenditure are disturbing there is an urgent need for a flexible and broad based tax system and for reducing price subsidies and subsidies to loss making enterprises