production lot sizing and carbon emissions under cap and trade and carbon tax regulations cap and trade and carbon tax are two emission regulations widely used to curb the carbon emissions generated from firms based on economic order quantity eoq model this paper examines the production lot sizing issues of a firm under these two regulations respectively the optimal lot size and emissions under the two regulations are achieved we then investigate the impacts of production and regulation parameters on the optimal lot size and emissions furthermore we compare the firm s optimal carbon emissions under the two regulations it is found that under the cap and trade regulation the firm s decisions of the optimal emissions as well as permits trading depend on the differentiated permits trading prices if setup incurs the same cost as holding incurs per unit of generated emissions both regulations always lead to the same optimal emissions which is also equal to that without emission regulation otherwise neither regulation always leads to lower emissions than the other does

bequests gifts and social security this paper analyses the very long run or stationary state impact of an unfunded social security system we use an overlapping generations model framework a key feature is that while parents care about their children and can leave non negative bequests to them children also care about their parents and can make non negative gifts to them we show that the possibility of negative net bequests may make social security less harmful to private wealth accumulation than would otherwise be the case a subsidiary finding is that risk loving behaviour may emerge for some households due to the nature of intergenerational transfers within family lines

when does labor scarcity encourage innovation this paper studies whether labor scarcity encourages technological advances that is technology adoption or innovation for example as claimed by habakkuk in the context of nineteenth century united states i define technology as strongly labor saving if technological advances reduce the marginal product of labor and as strongly labor complementary if they increase it i show that labor scarcity encourages technological advances if technology is strongly labor saving and will discourage them if technology is strongly labor complementary i also show that technology can be strongly labor saving in plausible environments but not in many canonical macroeconomic models

the new role for the world bank the world bank was founded to address what we would today call imperfections in international capital markets its founders thought that countries would borrow from the bank temporarily until they grew enough to borrow commercially nac 1946 p 312 black 1952 some critiques and analyses of the bank are based on the assumption that this continues to be its role for example some argue that the growth of private capital flows to the developing world has rendered the bank irrelevant however we will argue that modern analyses should proceed from the premise that the world bank s central goal is and should be to reduce extreme poverty and that addressing failures in global capital markets is now of subsidiary importance the bank s stated goal is reducing poverty the overwhelming majority of bank subsidies from its shareholder countries go to the international development association ida its arm for making grants and highly concessional loans to the lowest income countries the bank s greatest impact comes from its role in the dramatic policy changes many developing countries have undertaken in multiple sectors that most economists would consider likely to reduce poverty either by increasing growth or promoting equity why might donor countries choose to work through an international organization to advance the goal of reducing poverty effective aid often involves

secular stagnation the effect of aging on economic growth in the age of automation several recent theories emphasize the negative effects of an aging population on economic growth either because of the lower labor force participation and productivity of older workers or because aging will create an excess of savings over desired investment leading to secular stagnation we show that there is no such negative relationship in the data if anything countries experiencing more rapid aging have grown more in recent decades we suggest that this counterintuitive finding might reflect the more rapid adoption of automation technologies in countries undergoing more pronounced demographic changes and provide evidence and theoretical underpinnings for this argument

optimal production and carbon emission reduction level under cap and trade and low carbon subsidy policies abstract in recent years massive carbon emissions have caused serious global environmental damage such as a worsening greenhouse effect and thick haze to curb carbon emissions as well as maintain sustainable economic development governments promote the development of low carbon economy by issuing multiple policies among which the cap and trade policy ctp and low carbon subsidy policy lcsp are widely adopted moreover manufacturers are increasingly adopting carbon emission reduction technology to produce greener products considering related government policies and rising environmental awareness among consumers to give policy making insights to governments as well as production and carbon emission reduction decision making insights to manufacturers this paper investigates the impacts of ctp and lcsp on the production and carbon emission reduction level of a manufacturer and explores which policy is better for society the results show that the carbon emission reduction level increases as the carbon trading price increases whereas it is independent of the unit low carbon subsidy interestingly the carbon trading price does not always have a negative effect on the manufacturer s profit and the cap does not always produce a positive effect on the manufacturer s profit more importantly we find that lcsp is more beneficial to society when the environmental damage coefficient is less than a threshold but otherwise ctp is more beneficial

production and transportation outsourcing decisions in the supply chain under single and multiple carbon policies abstract cap and trade and carbon tax are the two main policies to reduce carbon emissions different from the previous literature and practice this paper examines the production and transportation outsourcing problems of a two echelon supply chain under the cap and trade policy and joint cap and trade and carbon tax policy enterprise operations are divided into the order stage and transportation outsourcing decision stage in the order stage the retailer sets his order schedule for the manufacturing plant for fulfillment and in the transportation outsourcing decision stage the manufacturer decides the optimal freight volume based on energy consumption furthermore we construct a basic model without a carbon policy and two extended models with carbon policies and the optimal solutions of the models are solved numerical examples are provided and the three models are compared the results indicate that the extended model with carbon policies is more beneficial for emissions reduction and the effect of emissions reduction gradually becomes smooth as the carbon price increases the joint cap and trade and carbon tax policy is more effective for emissions reduction especially when the carbon price is lower these findings will be helpful to policy makers and managers

contracting for aid abstract foreign aid is analyzed as a contract where the north gives a transfer to the south in return for poverty reduction regarded as an international public good the issue of conditionality is first discussed in a moral hazard framework and then under asymmetric information about the degree of altruism of the government of the south additional actors like local ngos and multilateral aid institutions are then added to the model the optimal contracts to avoid free riding or collusion are then presented

what do we know about carbon taxes an inquiry into their impacts on competitiveness and distribution of income abstract the kyoto protocol to the united nations framework convention on climate change unfccc has set legally binding emissions targets for a basket of six greenhouse gases and timetables for industrialised countries it has also incorporated three international flexibility mechanisms however the articles defining the flexibility mechanisms carry wording that their use must be supplemental to domestic actions this has led to the open debates on interpretations of these supplementarity provisions such debates ended at the resumed sixth conference of the parties cop to the unfccc held in bonn july 2001 and at the subsequent cop 7 in marrakesh november 2001 the final wording in the bonn agreement reaffirmed in the marrakesh accords at least indicates that domestic policies will have an important role to play in meeting annex b countries emissions commitments carbon taxes have long been advocated because of their cost effectiveness in achieving a given emissions reduction in this paper the main economic impacts of carbon taxes are assessed based on a review of empirical studies on existing carbon energy taxes it is concluded that competitive losses and distributive impacts are generally not significant and definitely less than often perceived however given the ultimate objective of the framework convention future carbon taxes could have higher rates than those already imposed and thus the resulting economic impacts could be more acute in this context it has been shown that how to use the generated fiscal revenues will be of fundamental importance in determining the final economic impacts of carbon taxes finally we briefly discuss carbon taxes in combination with other domestic and international instruments

the flypaper effect what happens to a state s spending when it receives an unconditional grant from the federal government the standard theoretical analysis predicts that the increase in spending will be the same as that generated by an equivalent increase in local incomes or roughly 5 10 percent for most states in contrast numerous empirical analyses have found that spending increases by much more with some estimates near 100 percent this result is known as the flypaper effect since the money appears to stick where it hits the authors review this evidence as well as other studies that find similar behavior in firms

environmental and gender impacts of land tenure regularization in africa pilot evidence from rwanda although increased global demand for land has led to renewed interest in african land tenure few models to address these issues quickly and at the required scale have been identified or evaluated the case of rwanda s nation wide and relatively low cost land tenure regularization program is thus of great interest this paper evaluates the short term impact some 2 5 years after completion of the pilots undertaken to fine tune the approach using a geographic discontinuity design with spatial fixed effects three key findings emerge from the analysis first the program improved land access for legally married women about 76 percent of married couples and prompted better recordation of inheritance rights without gender bias second the analysis finds a very large impact on investment and maintenance of soil conservation measures this effect was particularly pronounced for female headed households suggesting that this group had suffered from high levels of tenure insecurity which the program managed to reduce third land market activity declined allowing rejection of the hypothesis that the program caused a wave of distress sales or widespread landlessness by vulnerable people implications for program design and policy are discussed

grants versus loans for development banks in recent years economists have increasingly debated whether multilateral development banks such as the world bank should switch from making subsidized loans to giving outright grants it is no small question the combined loans of the world bank group and brethren regional entities such as the asian and inter american development banks approach 300 billion their funds constitute a main channel through which rich country governments provide assistance to developing country governments in bulow and rogoff 1990 we first developed the case for a shift to outright grants we argued that under the status quo a vastly disproportionate share of aid goes to middle income countries via disguised interest subsidies rather than to the poorest countries we also argued that a shift to grants would protect donor banks from sometimes having to play a bad cop role when trying to collect net repayments rather than fully rolling over loans the meltzer commission international financial institution advisory commission 2000 report on government sponsored international lending institutions famously took a similar view supporters of the status quo often argue that development bank loans to middle income countries are in fact highly profitable and are essential for allowing institutions like the world bank to subsidize aid to poor countries we shall argue that the bank s profitability is an accounting artifice that greatly underestimates the risks of the bank s portfolio another argument for loans is that multilateral development banks have a superior enforcement technology that helps international debt markets to function more efficiently thus loans allow financially strapped governments including in middle income countries to borrow more than they could otherwise we will argue that this benefit too is an illusion in those cases when official lending does expand a developing country government s borrowing capacity it effectively enables the government to commit the country to repayment levels beyond that supported by domestic political consensus creating moral hazard for shortsighted rulers in theory better credit access to finance say public infrastructure projects can be highly beneficial in practice however the increased risk of debt crisis all too often outweighs any gain ordinary citizens might enjoy from the loans furthermore moral hazard on the part of lenders who may be able to induce rich countries into subsidizing the bailout of troubled middle income borrowers may mean that aggregate lending is excessive even if multilaterals merely displace equivalent private debt we do not argue for eliminating assistance to middle income countries on the contrary we would favor expanding aid in general albeit in far greater proportion to the world s poorest countries note that in principle any country with market access could use grant flows to help defray interest rate costs on loans if it so chose but development banks would never need to assume a bad cop role in enforcing debt

the hard challenge of aid coordination aid coordination is a constant theme of discussion among national and international aid agencies in their search for more effectiveness and efficiency in delivering development assistance this paper seeks to clarify some of the arguments currently made in support of aid coordination and to precise unavoidable trade offs born of the existence of political costs it is anchored in the available literature on aid delivery while focusing on the implementation problems of aid coordination among donor countries in particular it deals with a the issue of consistently and collectively handling possible governance failures in recipient countries and b the impact of heterogeneity of donor countries on the effectiveness of aid coordination

altruism within the family reconsidered do nice guys finish last this paper criticizes the view that altruism either increases the benefits of group interactions or improves the allocation of resources within families the authors identify a variety of circumstances in which members of a group would prefer to interact with less altruistic individuals and in which the efficiency of resource allocation is inversely related to the prevailing degree of altruism reasons that altruism might be a counter productive social force include 1 it can alter the social utility possibility frontier in surprising and sometimes unfortunate ways 2 it can entail exploitability causing family members to behave in ways that leave all parties worse off 3 altruists may take inefficient actions to preempt exploitation and 4 family members may establish efficient resource allocation by punishing selfish behavior a rise in the level of altruism may lead to the exclusion of certain punishment strategies on the grounds of credibility 1 general positive result is that sufficiently high levels of altruism almost always lead to efficient resource allocation one should not necessarily expect to find strong altruistic linkages between spouses nor should altruism necessarily contributed to marital stability in addition to the connections between this work and the literature on family behavior this analysis has broader implications concerning the role of altruism in society and the evolution of social conscience

just luck an experimental study of risk taking and fairness choices involving risk significantly affect the distribution of income and wealth in society this paper reports the results of the first experiment to our knowledge to study fairness views about risk taking specifically whether such views are based chiefly on ex ante opportunities or on ex post outcomes we find that even though many participants focus exclusively on ex ante opportunities most favor some redistribution ex post many participants also make a distinction between ex post inequalities that reflect differences in luck and ex post inequalities that reflect differences in choices these findings apply to both stakeholders and impartial spectators

the world bank at the millennium in the aftermath of world war ii and in the wake of the great depression surely one of the underlying causes of the war itself the countries of the world created three international institutions designed to facilitate economic cooperation the general agreement on tariffs and trade gatt the international monetary fund imf and the international bank for reconstruction and development ibrd gatt which has since evolved into the world trade organisation was to work on lowering trade barriers among nations and on preventing the beggar thy neighbour trade policies that were seen as a contributing factor to the breadth and depth of the great depression the imf was to provide liquidity and to sustain the international payments system the gold standard that was reinstituted after the war and the ibrd known more generally as the world bank was primarily to facilitate the reconstruction of war damaged europe and then to reach beyond that to aid in the development of what later became known as the third world it is now more than fifty years since the creation of these institutions over that half century they have evolved enormously especially in response to changing economic circumstances and changing needs the 1971 abandonment of the gold standard by the united states and subsequently by the rest of the world clearly necessitated a change in the functioning and perhaps in the very role of the imf the collapse of the soviet union posed a new set of challenges to the international institutions namely facilitating the transition of the former communist countries to a market economy the fiftieth anniversary of the bretton woods institutions imf and world bank was marked by criticism from a vocal international group dedicated to the notion that fifty years is enough reflecting a view among certain groups that these institutions had done as least as much or more harm than good as the world bank has the views presented here are solely those of the author and not those of any institution with which he is or has heen affiliated the author would like to acknowledge the helpful comments and assistance

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

positioning the world bank this article examines the rationale for the world bank and explores whether its objective is best served by its current mix of activities we are critical of the bank s reliance on conditionality and advocate evolution into a knowledge bank which would lend with few conditions to countries with good policies and good institutions and would concentrate on the provision of knowledge and technical assistance rather than lending in countries where the policy framework is poor we also advocate an expansion in the bank s role as a provider of global public goods we critically examine the banks role in relation to financial crises

efficiency enhancing signalling in the samaritan s dilemma suppose an altruistic person a is willing to transfer resources to a second person b if b comes upon hard times if b anticipates that a will act in this manner b will save too little from both agents point of view this is the samaritan s dilemma this paper shows that the undersaving result is mitigated if we relax the standard assumption of complete information because if a is uncertain about how big b s need for support is b will have an incentive to signal that he is in great need by saving more than he otherwise would have done

the illusion of sustainability this brief summarizes the results of a gender impact evaluation study entitled the illusion of sustainability conducted during the time period 1998 to 2001 in kenya the study observed that deworming is a public good since much of its social benefit comes through reduced disease transmission people were less likely to take deworming if their direct first order or indirect second order social contacts were exposed to deworming the introduction of a small fee for deworming drugs led to an 80 percent reduction in treatment rates take up was not sensitive to the exact price level suggesting that it is particularly counter productive to charge small positive prices for the treatment of infectious diseases an intensive school health education had no impact on worm prevention funding for the study derived from world bank nih fogarty international center berkeley center for health research

samaritan versus rotten kid another look abstract we set up a two stage game with sequential moves by one altruist and n selfish agents the samaritan s dilemma rotten kid theorem states that the altruist can only reach her first best when the selfish agents move after before the altruist we find that in general the altruist can reach her first best when she moves first if and only if a selfish agent s action marginally affects only his own payoff the altruist can reach her first best when she moves last if and only if a selfish agent cannot manipulate the price of his own payoff

allowance price drivers in the first phase of the eu ets abstract in the first phase of the eu emissions trading scheme eu ets the price per ton of co 2 initially rose to over 30 the price then collapsed to essentially zero by mid 2007 by deriving a structural model of the allowance price under the assumption of efficient markets i examine the extent to which this variation in price can be explained by marginal abatement costs i then gradually relax the model by allowing for delayed adjustment of price to fundamentals as well as by introducing lagged lhs variables the pattern of results suggests that while prices were not initially driven by marginal abatement costs this inefficiency was largely corrected after the accounting of 2005 emissions in april 2006

law regulation and the business climate the nature and influence of the world bank doing business project the importance of a well functioning legal and regulatory system in creating an effective market economy is now widely accepted one flagship project that tries to measure the environment in which businesses operate in countries across the world is the world bank s doing business project which was launched in 2002 this project gathers quantitative data to compare regulations faced by small and medium size enterprises across economies and over time the centerpiece of the project is the annual doing business report it was first published in 2003 with five sets of indicators for 133 economies and currently includes 11 sets of indicators for 189 economies the report includes a table that ranks each country in the world according to its scores across the indicators the doing business project has become a major resource for academics journalists and policymakers the project also enjoys a high public profile with close to ten million hits on its website each year with such interest it s no surprise that the doing business report has come under intense scrutiny in 2012 following discussions by its board the world bank commissioned an independent review panel to evaluate the project on which i served as a member in this paper i first describe how the doing business project works and illustrate with some of the key findings of the 2015 report next i address what is valuable about the project the criticisms of it and some wider political economy issues illustrated by the report

in search of the holy grail policy convergence experimentation and economic performance we consider a model of policy choice in which appropriate policies depend on a country s own circumstances but the presence of a successful leader generates an informational externality and results in too little policy experimentation corrupt governments are reined in while honest governments are disciplined inefficiently our model yields distinct predictions about the patterns of policy imitation corruption and economic performance as a function of a country s location vis aa vis successful leaders in particular it predicts a u shaped pattern in economic performance as we move away from the leader in the relevant space of characteristics close neighbors should do very well distant countries moderately well on average with considerable variance and intermediate countries worst of all an empirical test with the experience of post socialist countries provides supportive results

the future of the imf and world bank panel discussion i it undertakes surveillance of the global economy and the economies of its members reporting to its membership most of these reports are published ii it provides technical assistance to its members the fund staff draws on an unparalleled range of experience about what has worked in practice and this assistance is generally regarded as highly valuable iii it serves in the words of the articles of agreement as a permanent institution which provides the machinery for consultation and collaboration on international monetary problems virtually all international monetary problems end up for discussion and often for implementation in the imf iv it lends to its member countries

empirical age earnings profiles the human capital earnings function in which earnings are expressed as a quadratic in potential experience is probably the most widely accepted empirical specification in economics in spite of its widespread acceptance the human capital earnings function provides a very poor approximation of the true empirical relationship between earnings and experience the standard formulation understates early career earnings growth by about 30 50 and overstates midcareer growth by 20 50 however simple alternative specifications that fit the data are available

managing carbon footprints in inventory management abstract there is a broad consensus that mankind must reduce carbon emissions to mitigate global warming it is generally accepted that carbon emission trading is one of the most effective market based mechanisms to curb the amount of carbon emissions this paper investigates how firms manage carbon footprints in inventory management under the carbon emission trading mechanism we derive the optimal order quantity and analytically and numerically examine the impacts of carbon trade carbon price and carbon cap on order decisions carbon emissions and total cost we make interesting observations from the numerical examples and provide managerial insights from the analytical results

understanding declining mobility and inter household transfers among east african pastoralists we model interhousehold transfers between nomadic livestock herders as the state dependent consequence of individuals strategic interdependen ce resulting from the existence of multiple opposing externalities a public good security ext ernality among individuals sharing a social e g ethnic identity in a potentially hostile en vironment creates incentives to band together self interested interhousehold wealth transfers fro m wealthier herders to poorer ones may emerge endogenously within a limited wealth space as a mea ns to motivate accompanying migration by the recipient the distributional reach and size o f the transfer are limited however by a resource appropriation externality related to the use of com mon property grazing lands when this effect dominates it can induce transfers from households who want to relieve grazing pressures caused by others herds our model augments the extant li terature on transfers and is perhaps more consistent with the limited available empirical evi dence on heterogeneous and changing transfers patterns among east african pastoralists the core principles of our model possibly apply more broadly for example to long distance migrants or e ven among foot soldiers in street gangs

do poverty traps exist assessing the evidence why did per capita incomes not increase in burundi haiti and nicaragua countries one possible explanation is a poverty trap which can be understood as a set of self reinforcing mechanisms whereby countries start poor and remain poor poverty begets poverty so that current poverty is itself a direct cause of poverty in the future it implies that much poverty is needless in the sense that a different equilibrium is possible and also that one time policy efforts that break the poverty trap may have lasting effects the concept of a poverty trap at the level of national economies is related to and sometimes based on microeconomic foundations that argue for the existence of poverty traps at the household level the authors discuss behavioral poverty traps as a recent area of research for which the evidence is just starting to accumulate and geographic poverty traps as the most likely form of a trap the policy prescriptions that result are then quite different from the calls for a big push in aid or expansion of microfinance to allow people to overcome credit constraints

retail store density and the cost of greenhouse gas emissions the density size and location of stores in a retailer s network influences both the retailer s and the consumers costs with stores few and far between consumers must travel a long distance to shop whereas shopping trips are shorter with a dense network of stores the layout of the retail supply chain is of interest to retailers who have emission reduction targets and urban planners concerned with sprawl are small local shops preferred over large big box retailers a model of the retail supply chain is presented that includes operating costs such as fuel and rent for floor space as well as a cost for environmental externalities associated with carbon emissions a focus on exclusively minimizing operating costs may substantially increase emissions by 67 in one scenario relative to the minimum level of emissions a price on carbon is an ineffective mechanism for reducing emissions the most attractive option is to improve consumer fuel efficiency doubling the fuel efficiency of cars reduces long run emissions by about one third whereas an improvement in truck fuel efficiency has a marginal impact on total emissions this paper was accepted by yossi aviv operations management

a fresh look at the rotten kid theorem and other household mysteries gary becker s rotten kid theorem asserts that if all family members receive gifts of money income from a benevolent household member then even if the household head does not precommit to an incentive plan for family members it will be in the interest of selfish family members to maximize total family income i show by examples that the rotten kid theorem is not true without assuming transferable utility i find a simple condition on utility functions that is necessary and sufficient for there to be the kind of transferable utility needed for a rotten kid theorem while restrictive these conditions still allow one to apply the strong conclusions of the rotten kid theorem in an interesting class of examples

altruism the samaritan s dilemma and government transfer policy this paper shows that altruism provides an efficiency rationale for public provision of insurance to the poor the framework is one in which there are rich altruists and risk averse poor who face some possibility of loss the government represents the rich and makes transfers on their behalf with unconditional transfers the poor may forgo insurance and rely on private charity to bail them out in the event of loss this reliance on private charity has adverse efficiency effects these may be avoided if the government makes in kind transfers of insurance copyright 1995 by american economic association

where do the poor live this paper argues that the distribution of global poverty has changed and that most of the world s poor no longer live in countries officially classified as low income countries lics it is estimated that the majority of the world s poor or up to a billion people live in middle income countries mics this pattern is largely as a result of the recent graduation into the mic category of a number of populous countries the paper discusses the trends in the distribution of global poverty and opens a wider discussion on the potential implications for aid and development cooperation

the future of the imf and the world bank the bretton woods sisters the international bank for reconstruction and development henceforth the world bank and the inter national monetary fund imf were set up in 1944 the original purpose of the former was to help post world war ii reconstruction the purpose of the latter was to help revive global trade while averting the beggar thy neighbor exchange rate policies that characterized the interwar years over the years the world bank has refocused on helping poor countries grow while the fund broadly attempts to foster coun try policies that ensure macroeconomic stabil ity and limit adverse spillovers to the rest of the world it still is in the world s self interest to reduce

the political economy of conditionality an empirical analysis of world bank loan disbursements abstract traditional aid conditionality has been attacked as ineffective in part because aid agencies notably the world bank often fail to enforce conditions this pattern undermines the credibility of conditionality weakening incentives to implement policy reforms the standard critique attributes this time inconsistency to bureaucratic factors within the aid agency such as pressure to lend defensive lending or short sighted altruism pressure from powerful donors provides another potential explanation for lax enforcement this paper presents an empirical analysis of the political economy of conditionality in international organizations using the case of the world bank and the united states the analysis examines panel data on world bank disbursements to 97 countries receiving structural adjustment loans between 1984 and 2005 using un voting as an indicator of alignment with the u s the paper presents evidence that world bank structural adjustment loan disbursements are less dependent on macroeconomic performance in countries aligned with the united states

international charity under asymmetric information abstract international charity is often subject to moral hazard and adverse selection problems we show that the burden of informational asymmetries are borne by the most needy countries even when charities design incentive contracts which limit the rents that some countries can extract

public pensions as optimal social contracts abstract a simple overlapping generations model is modified to allow for an externality experienced by the young from consumption by the elderly this sets up a game between generations in which one generation s strategy may be to save too little and rely on gifts from the young e g public assistance for retirement income social security can therefore be viewed as a pareto optimal contract to restore efficient intertemporal allocation a funded public pension plan corresponds to forced saving but is vulnerable in that the next young generation may stop contributing rely on its children for retirement assistance and meanwhile reap the consumption externality from the current elderly s social security benefits this suggests a forced giving or pay as you go type of compulsory pension plan such as exists in most nations which also has the advantage of aiding the initial old generation and therefore generating an immediate consumption externality for the initial young the approach can also be used to explain other aspects of existing social security

kinship incentives and evolution we analyze how family ties affect incentives with focus on the strategic interaction between two mutually altruistic siblings the siblings exert effort to produce output under uncertainty and they may transfer output to each other with equally altruistic siblings their equilibrium effort is non monotonic in the common degree of altruism and it depends on the harshness of the environment we define a notion of local evolutionary stability of degrees of sibling altruism and show that this degree is lower than the kinship relatedness factor numerical simulations show how family ties vary with the environment and how this a ects economic outcomes

a simple dynamic decentralized leadership model with private savings and local borrowing regulation abstract this paper considers a simple dynamic decentralized leadership model with local borrowing and regional productivity enhancing investment in this model the central government is benevolent but cannot commit to ex post intergovernmental transfer policies while local governments act strategically after accounting for the ex post motives of the central government we then investigate inefficiency in the subgame perfect equilibrium we analyze the effect of central control on local borrowing and show that central control is of no benefit because ex ante local taxation works to offset it we find the model yields different policy implications that central control is effective when extended to the case of residential mobility

the world bank of the future even in today s world of burgeoning private capital markets there is much that an organization like the world bank can contribute toward realizing the dream of a world without poverty first of course there is emergency relief at any point of time there are people in the world who are in the middle of an acute crisis and need emergency relief while delivering relief effectively is not easy there is broad agreement that it is a worthwhile goal however the world bank believes rightly that this is not enough as we see it there are at least three important ways it can contribute to the broader project

bequest motives social security and economic growth junxi zhang this article conducts a systematic analysis of four bequest motives in a simple model of endogenous growth it analyzes how bequest motives affect fertility savings growth and the effects of pay as you go social security it is found that altruistic and exchange motives give equivalent outcomes if the discount factors are set the same the outcome under the joy of giving motive may involve a higher bequest ratio higher saving and better growth rates than that under altruism if bequests are accidental the equilibrium values will depend on the probability of survival moreover the results provide testable implications on bequest motives jel d1 d9 h55 j1 i introduction although the importance of bequests in aggregate savings has been established by kotlikoff and summers 1981 who reported that 80 of u s household wealth is inherited wealth what bequest motives lead to inheritance remains an unsolved problem yet it is well known that bequest motives have important implications for the behavior of financial markets the macroeconomic impacts of fiscal policies and the intergenerational transmission of inequality in the distribution of wealth at least four hypotheses for the existence of bequests have been discussed in the literature 1 bequests may arise from intergenerational altruism that is parents obtain utility from their heirs utility as well as from their own consumption barro 1974 2 the prospect of bequests is used by parents to induce children to behave as desired by parents bernheim et al 1985 3 bequests may arise from the joy of giving that is parents leave bequests simply because they obtain utility directly from the bequest yaari 1964 1 and 4 bequests may be the unintentional by product of precautionary savings and a stochastic date of death in the absence of an annuity market abel 1985 following barro 1974 and becker 1974 the altruistic bequest motive has been used most frequently however the enormous empirical work using micro data has not led to conclusive evidence on the one hand bernheim et al 1985 cox 1987 and cox and rank 1992 show that bequests are more consistent with exchange than altruism altonji et al 1992 1997 also show that altruism is decisively rejected moreover wilhelm 1996 finds little support for an altruistic theory of bequests on the other hand a recent reexamination of the exchange motive by perozek 1998 shows that the finding of bernheim et al is not robust laitner and juster 1996 find some evidence of altruistic bequests therefore a definite conclusion on bequest motives seems far from over indeed though altruism has not been supported by most of those empirical studies it remains a plausible hypothesis and continues to be used frequently see e g coate 1995 and davies and zhang 1995 abel 1985 argues theoretically that although the simple life cycle model without bequest motives is an inadequate description of the savi ng behavior in the united states as found in kotlikoff and summers 1981 accidental bequests by selfish consumers can account for a sizable fraction of aggregate wealth however little formal empirical work has been done to test whether bequests are accidental or arise from joy of giving given the lack of consensus on bequest motives it is interesting to conduct a systematic theoretical analysis of different bequest motives in a particular context becker et al 1990 and caballe 1995 assume altruism in their models of economic growth wiedmer s 1996 analysis of social security and growth does not consider bequests except ihori 1994 there seems to be no analysis of other bequest motives in the context of economic growth the purpose of this article is to analyze how different bequest motives affect fertility savings and economic growth the article will also examine how the effects of pay as you go social security depend on bequest motives

foreign aid and the question of fungibility this paper analyzes whether the foreign assistance provided for specific categories of expenditure is shifted among them contrary to the wishes of donors it also considers whether aid reduces the tax effort of recipient governments econometric results are presented for the dominican republic that show that the fungibility of aid has resulted in a thwarting of the intentions of donors an attempt is made to account for the observed differences in behavior of individual countries in altering expenditures copyright 1993 by mit press

the impact of carbon policies on supply chain design and logistics of a major retailer abstract the energy used to move freight comprised about 17 of all the energy consumed in the united states in 2010 this percentage was an increase from 8 7 in 1970 even though fuel efficiency gradually improved over the period one major reason of this phenomenon is that the longer supply chains of many industries caused by globalization increase freight movement various carbon policies have been discussed and even implemented for some industry sectors in the european union to reduce carbon emissions however the emissions of surface transportation have not been well studied this paper investigates three of the most common carbon policies carbon emission tax inflexible cap and cap and trade the impact on a company may include the redesign of its supply chains and different choices of transportation modes truck rail or waterway this paper proposes optimization models for major retailers who make a huge contribution to freight movement to design their supply chains under various carbon policies the results from the models can help policy makers to predict the impact of policies on overall emissions in the freight transportation sector the model may also be incorporated into the integrated assessment models for climate change analyses furthermore a sensitivity analysis is conducted to study the impact of the policy parameters on carbon emissions and logistics cost this research uses the supply chain of a major u s retailer i e wal mart to demonstrate how to use the models and conduct the sensitivity analysis in order to realize significant emission reduction a redesign of supply chains of major retailers is necessary and will be triggered only by a high carbon tax rate a high carbon price or a very strict carbon cap which all may involve high social and or economic complexity numerical experiments show that different policies have different impacts on the costs and the effectiveness of emission reduction how to choose policy parameters is critical to the effectiveness of a carbon policy the different sensitivity also implies different challenges during the implementation of the policies such as the high cost preventing retailers from accepting any carbon taxes and the difficulty of reaching an agreement on the carbon caps between retailers and policy makers

insurance design in the presence of safety nets abstract safety net assistance and insurance exist to manage risk and improve welfare this shared goal may lead to crowding out in a new approach this paper analyzes the interaction of assistance with two dimensions of insurance design level of coverage and types of risks covered in a society of risk averse vulnerable individuals and risk neutral assistance providers pareto improvements in welfare are achieved through incompleteness in the types of risks covered the results imply that safety nets promote demand for and the emergence of incomplete insurance these results have a wide application to insurance markets where safety nets are available including health care disaster aid and social welfare

imperfect commitment altruism and the family evidence from transfer behavior in low income rural areas in this paper we examine empirically whether risk pooling is more advantageous among altruistic compared to selfish agents in a framework where individuals cannot make binding commitments in particular we incorporate altuism into a model of risk sharing under imperfect commitment and use simulation methods to establish tests of the roles of both altruism and commitment problems in determining the extent of insurance and the intertemporal movements in interhousehold transfers the tests are carried out using three panel data sets from two countries of rural south asia that provide detailed information on transfers and enable the measurement of income shocks the estimates provide strong support for the notion that imperfect commitment substantially constrains informal transfer arrangements whether kin based or not but also provide evidence that altruism plays an important role in ameliorating commitment constraints and thus in increasing the gains from income pooling

basic versus supplementary health insurance moral hazard and adverse selection this paper introduces a tractable model of health insurance with both moral hazard and adverse selection we show that government sponsored universal basic insurance should cover treatments with the biggest adverse selection problems treatments not covered by basic insurance can be covered on the private supplementary insurance market surprisingly the cost effectiveness of a treatment does not affect its priority to be covered by basic insurance