household demand in rural china a two stage les aids model a complete demand system of chinese rural households is estimated using a two stage les aids model and pooled provincial and time series data from 1982 to 1990 for commodity groups food clothing fuel housing and other commodities demand is price inelastic housing and other commodities are luxury goods while clothing and food are necessities within the food group price elasticities range from 0 005 to 0 63 expenditure elasticities are lower for grains and higher for meat tobacco and alcohol the results imply a gap between food demand and supply growth therefore china will face pressure to import food

the demand for energy evidence from a cross country demand system abstract some new evidence on the income own price elasticities of demand for energy consumption by consumers is presented estimates are derived from a complete system of cross country demand equations with energy being one of the commodities considered

economic policy uncertainty and sovereign credit rating decisions panel quantile evidence for the eurozone we employ a panel quantile framework that quantifies the relative importance of quantitative and qualitative factors across the conditional distribution of sovereign credit ratings in the eurozone area we find that regulatory quality and competitiveness have a stronger impact for low rated countries whereas gdp per capita is a major driver of high rated countries a reduction in the current account deficit leads to a rating or outlook upgrade for low rated countries economic policy uncertainty impacts negatively on credit ratings across the conditional distribution however the impact is stronger for the lower rated countries in other words the creditworthiness of low rated countries takes a much bigger hit than that of high rated countries when european policy uncertainty is on the rise

aggregate consumer behaviour and the measurement of inequality this paper presents an approach to inequality measurement based on an econometric model of aggregate consumer behaviour the novel feature of this model is that systems of individual demand functions can be recovered uniquely from the system of aggregate demand functions we present methods for evaluating social welfare based on an explicit social welfare function this social welfare function incorporates measures of individual welfare based on indirect utility functions for all consumer units we develop indexes of inequality based on actual and potential levels of social welfare

an emprical model of the demand for a varied diet this study attempts to measure some aspects of the household s demand for a varied die by invesigaing how he number of individual foods consumed b he household is affeced b is preferences and food expendiure a heoriical model suggesed b household production theory is adopted to empirical data from a cross section of households it is found that the number of individual foods consumed is strongly responsive to househjold expenditure on all foods

modelling demand systems with demographic effects based on the modifying function approach abstract we follow review of economic studies 52 1985 1 approach to modify the standard consumer demand theory so that socio demographic variables can be formally incorporated into the demand systems our modified theory not only includes all previous approaches to this problem as special cases but also allows the useful interpretations of household production and subsistence expenditure

on using linear regressions in welfare economics this article consists of two parts the first part shows that the ordinary least squares regression coefficient is a weighted average of slopes between adjacent sample points when applied to a linear regression with income as the independent variable the regression coefficient depends heavily on the slopes of high income groups the weight of the highest income decile may well exceed that of the other nine deciles this may be undesirable especially if the regression is used for welfare analysis because the marginal propensities to consume attributed to the commodities are determined by the high income groups the second part of the article proposes alternative estimators the extended gini estimators that enable investigators to control the weighting scheme and to incorporate their social views into the weighting scheme of the estimators

the welfare effects of disarmament on the united states under nato and the warsaw pact this paper develops a model of disarmament by incorporating rationing theory into the economic theory of alliance in order to provide an econometric measure of welfare gain from a disarmament treaty the author employs the cost functions predicated on rationed and unrationed demand systems by combining the economic theory of foreign aid with that of alliance the author examines the impact of disarmament on the developed economies foreign aid to developing countries as a peace dividend the model is applied to the case of the u s economy under mutual disarmament between nato and the warsaw pact copyright 1996 by mit press

recovering individual preferences for non market goods a collective travel cost model traditional recreation demand models do not make a distinction between a household and an individual as the reference decision making unit thus assuming that a family maximizes a single utility function even if the family consists of different individuals such models ignore the possibility of family members divergent preferences for non market goods this study proposes a novel approach the collective travel cost model ctcm to eliciting individual preferences for a non market good such as a recreation site by using revealed preference data this approach accounts for the intra household resource allocation and the role of each household member s preferences we show that the collective travel cost model can be applied to estimating a recreation demand model that yields individual welfare estimates appropriate for policy analysis of non market goods such as the willingness to pay to access a recreation site we find that how resources are distributed within the household reflects significant differences in welfare measures

pirates and traders some economics of pirate infested seas abstract even where all agents are risk neutral merchants can insure themselves against piracy such self insurance is surprisingly invulnerable to moral hazard further there exist a patrolling intensity and or penalties for captured pirates which along with mercantile self insurance could eliminate piracy

income and price elasticities of demand at low levels of real income abstract for levels of real per capita income starting at 3 of the u s per capita income in 1975 income and price elasticities of demand are tabulated the prominent role of food consumption for low income households is emphasized

a cross country tabulation of own price elasticities of demand abstract this paper tabulates frisch slutsky and cournot own price elasticities for each of 10 goods at the per capita real income levels of 30 countries ranging from india to the united states

an arrgh chy the law and economics of pirate organization this article investigates the internal governance institutions of violent criminal enterprise by examining the law economics and organization of pirates to effectively organize their banditry pirates required mechanisms to prevent internal predation minimize crew conflict and maximize piratical profit pirates devised two institutions for this purpose first i analyze the system of piratical checks and balances crews used to constrain captain predation second i examine how pirates used democratic constitutions to minimize conflict and create piratical law and order pirate governance created sufficient order and cooperation to make pirates one of the most sophisticated and successful criminal organizations in history

moody s and s p ratings are they equivalent conservative ratings and split rated bond yields we examine the relative impact of moody s and s p ratings on bond yields and find that at issuance yields on split rated bonds with superior moody s ratings are about 8 basis points lower than yields on split rated bonds with superior s p ratings this suggests that investors differentiate between the two ratings and assign more weight to the ratings from moody s the more conservative rating agency moody s becomes more conservative after 1998 and the impact of a superior moody s rating becomes stronger furthermore the differential impact of the two ratings is more pronounced for the more opaque rule 144a issues

fiscal and spending behavior of local governments identification of price effects when prices are not observed this paper analyzes local public fiscal andspending behavior in a setting where localgovernments represented by the dominantparty or coalition are treated as utilitymaximizing agents the econometricanalysis which is based on a modifiedversion of eles recognizes total spendingas well as total income as endogenousvariables identification of the priceeffects is achieved by utilizing data onenvironmental cost factors and localtastes the performance of the estimatedmodel is investigated by testing itsability to make out of sample predictionsof local government behavior

organized crime or individual crime endogenous size of a criminal organization and the optimal law enforcement i introduction organized criminal activities have been regarded as major economic and social issues since the early 1900s although there has been as pointed out by fiorentini and peltzman 1995 enormous research interest in the economics of criminal activities economists have done relatively little work on issues specifically related to the economics of organized crime we only see that much of the work has been done by following becker s 1968 framework where the target is the individual agent s allocative choice between legal and illegal activities in the face of different deterrence arrangements among the few exceptions a criminal organization is often thought of as a monopolistic firm and the theory of monopoly is predominantly used to analyze organized crimes schelling 1967 buchanan 1973 backhaus 1979 gambetta and reuter 1995 and more recently garoupa 2000 investigate the optimal public policy toward organized crimes through a welfare comparison between a monopoly organized criminals and competitive supplies individual criminals given that criminal activities are seen as social bads the monopolistic market is considered to be better than a perfectly competitive one because its output of crime is smaller 1 the monopolistic model implies that potential offenders have no other criminal choices but are forced to join the criminal organization if they decide to commit a crime clearly it is less than exhaustive in terms of describing agents choices in relation to criminal behavior in fact the criminal organization may not be monopolistic after all as argued by dick 1995 and others 2 criminologists johnson 1962 rubin 1973 and reiss 1986 observe that most criminal organizations are endemic in some particular areas and or restrictive in some particular illegal businesses these criminal activities such as bootlegging drug dealing pimping and prostitution are often less organized and would be difficult to successfully monopolize dick 1995 also points out that prostitution smuggling fencing and narcotics importation often involve substantial competition among downstream suppliers and can hardly be regarded as monopolistic businesses in other similar studies klein and crawford 1967 morash 1983 and sarnecki 1986 conclude that most youths who engage in delinquency are at most street gangsters and cannot be seen as members of a highly structured organization in reality the determination of the market structure for crime should be endogenous which has notable implications for the optimal crime enforcement policies and crime itself to recover the conventionally neglected facts and provide a more complete picture regarding organized crime this article develops a simple but more general model in this framework individual and organized crimes are coexisting alternatives to a potential offender and joining a criminal organization is seen as only one of the agent s rational choices in deciding whether to join a criminal organization the methods used to allocate the criminal organization s payoffs and the extra benefits provided by the criminal organization are given serious consideration they both play crucial roles in determining the sizes of the criminal organizations as well as in influencing the interactive relationship between the market structure for crime and the government s optimal law enforcement this study contributes to the existing literature and provides new insights in three respects first of all by allowing the agent to choose rationally between engaging in individual or organized crime we not only endogenize the size of the criminal organization but also explore the factors that determine the type high or low criminal ability of offenders that enter the criminal organization a new theoretical attempt is made in terms of providing an explanation to the observation of anderson 1995 there are considerable variations in personal qualities and values across different criminal organizations

demographic variables in demand analysis in this paper the authors discuss five procedures for incorporating demographic variables into theoretically plausible demand systems translating scaling and the gorman reverse gorman and implicit prais houthakker procedures these five procedures are used to incorporate a single demographic variable the number of children in a household into the generalized ces demand system using household budget data for the united kingdom for the period 1966 1972 excerpt

sovereign credit rating determinants a comparison before and after the european debt crisis this paper compares the importance of different sovereign credit rating determinants over time using a sample of 90 countries for the years 2002 2015 applying the composite marginal likelihood approach we estimate a multi year ordered probit model for each of the three major credit rating agencies after the start of the european debt crisis in 2009 the importance of the financial balance the economic development and the external debt increased substantially and the effect of eurozone membership switched from positive to negative in addition gdp growth gained a lot of importance for highly indebted sovereigns and government debt became much more important for countries with a low gdp growth rate these findings provide empirical evidence that the credit rating agencies changed their sovereign credit rating assessment after the start of the european debt crisis

green recovery policies for the covid 19 crisis modelling the impact on the economy and greenhouse gas emissions the covid 19 pandemic induces the worst economic downturn since the second world war requiring governments to design large scale recovery plans to overcome this crisis this paper quantitatively assesses the potential of government investments in eco friendly construction projects to boost the economy and simultaneously realise environmental gains through reduced energy consumption and related greenhouse gas emissions the analysis uses a computable general equilibrium model that examines the macroeconomic impact of the covid 19 crisis in a small open economy belgium subsequently the impact of the proposed policy is assessed through comparative analysis for macroeconomic parameters as well as co2 equivalent emissions for four scenarios our findings demonstrate that the covid 19 pandemic damages economies considerably however the reduction in emissions is less than proportionate still well designed public policies can reverse this trend achieving both economic growth and a disproportionally large decrease in emissions moreover the positive effect of such a decoupling policy on gdp is even stronger during the pandemic than compared to the pre covid 19 period this is the result of a targeted investment induced green transition towards low energy intensive economic activities finally this paper describes how the net effect on the government budget is positive through the indirect gains of the economic uptake

determinants of price elasticities for private labels and national brands of cheese an almost ideal demand system model is developed and used to estimate price elasticities for us cheese sold at retail growing consumption of cheese coupled with fierce competition between private labels and national brands serves as motivating factors for this study per capita consumption of cheese grew by 75 during 1980 2004 and private labels captured a rising share of this growth private labels today account for 35 of market share national brands for the remaining 65 kraft accounts for 45 of national brands but price increases for kraft brands led to a sizeable price gap between its brands and private labels this gap helped to stimulate growth of private labels marketing managers seek to capitalize on both growing cheese sales and price gaps for brands relevant information for marketing managers is consumer sensitivity to price changes this study uses 69 weeks of scanner data with consumers segmented by income levels to derive price elasticities for both lower and higher income consumer

determinants of food consumption in rural sierra leone abstract this paper reports the application of a quadratic expenditure system with demographic variables to the household consumption leisure choice component of a household firm model a system of seven commodities is estimated including five foods non food and leisure appropriate for such a level of disaggregation a demand system is used the quadratic expenditure system which allows for a flexible relationship between full income and commodity expenditures without sacrificing parsimony in parameters demographic data on households are explicitly incorporated into the model allowing for a richer specification than can be achieved by using per capita variables the data are from a cross section survey of households in rural sierra leone price variation exists by region permitting estimation of a complete demand system engel curves are found to be significantly non linear with marginal expenditure on rice the major staple declining with higher income most foods are found to be reasonably price responsive with sizeable own price substitution effects declining with higher income aggregate labor supply is found to be price inelastic

the economics of organized crime and optimal law enforcement this article extends the optimal law enforcement literature to organized crime i model the criminal organization as a vertical structure where the principal extracts some rents from the agents through extortion as long as extortion is a costless transfer from individuals to the criminal organization not only the existence of extortion is social welfare improving because it makes engaging in a criminal offense less attractive but it also allows the government to reduce expenditures on law enforcement when extortion is costly because the criminal organization resorts to threats and violence the existence of extortion is social welfare diminishing and may lead to higher expenditures on law enforcement

pirational choice the economics of infamous pirate practices abstract this paper investigates the economics of infamous pirate practices two closely related economic theories the theory of signaling and the theory of reputation building explain these practices first i examine the pirate flag jolly roger which pirates used to signal their identity as unconstrained outlaws enabling them to take prizes without costly conflict second i consider how pirates combined heinous torture public displays of madness and published advertisement of their fiendishness to establish a reputation that prevented costly captive behaviors pirates infamous practices reduced their criminal enterprise s costs and increased its revenues enhancing the profitability of life on the account

search for a theory of organized crimes abstract casual empirical observations reveal no systematic relationship between the overall crime rate and organized criminal activity we develop a search theoretic framework to study the interactions not only between formal labor and crime sectors but also between individual and organized crimes in equilibrium individual and organized criminals face different arrest risks success rates reward structures and outside options we characterize agents occupational choices the gang s hierarchical structure and the responses of unemployment crime rates and crime composition to changes in labor market conditions and crime deterrence policies we further assess the effectiveness of arrest versus punishment policies in deterring individual and organized crimes

frich s conjecture and the own price elasticity of the demand for food abstract frich s 1959 conjecture on the behavior of the income elasticity of the marginal utility of income is tested by means of cross country data particularly in relation to the behavior of the frisch own price elasticity of the demand for food

is there curvature in the slutsky matrix d o the poor substitute among commodities more flexibly than the rich when relative prices change even when compensated for the income effects of the price changes is it necessary to add a third dimension to the slutsky substitution matrix to identify household income in short do the terms of the slutsky elasticity matrix curve smoothly from poor households to rich households in such a way that equation 1 is meaningful

pirates and fishermen is less patrolling always bad abstract motivated by the somali fishermen pirates i explore the time allocation decision of potential pirates between piracy and an alternative non violent occupation fishing when the returns of both piracy and fishing are sensitive to patrolling intensity for a range of parameters the static model yields multiple equilibria an efficient one with no patrolling and low piracy a less efficient equilibrium with intermediate levels of both piracy and patrolling and a highly inefficient high patrolling high piracy equilibrium analyzing the dynamic analogue i obtain the surprising result that sufficiently low patrolling can be a good strategy

horizontal equity income taxation and self selection with an application to income tax credits abstract this paper investigates the relationship between utilitarianism and horizontal equity in models of income taxation in particular and self selection in general an example involving well behaved individual preferences is constructed in which a maximization of a utilitarian social welfare function leads via income taxation to horizontal inequities sufficient conditions for utilitarianism to bring horizontal equity are derived the results are applied to the question of whether income tax credits are an appropriate way to treat differences in family size

has the crisis affected the behavior of the rating agencies panel evidence from the eurozone we examine the determinants of credit ratings for the eurozone countries over the period 2002 2013 within a panel framework that allows for cross sectional dependence we find that government debt and the cumulative current account exert a stronger impact on ratings post 2008 compared to the period before

have rating agencies become more conservative implications for capital structure and debt pricing rating agencies have become more conservative in assigning corporate credit ratings over the period 1985 to 2009 holding firm characteristics constant average ratings have dropped by three notches this change does not appear to be fully warranted because defaults have declined over this period firms affected more by conservatism issue less debt have lower leverage hold more cash are less likely to obtain a debt rating and experience lower growth their debt spreads are lower than those of unaffected firms with the same rating which implies that the market partly undoes the impact of conservatism on debt prices this evidence suggests that firms and capital markets do not perceive the increase in conservatism to be fully warranted

the household s decision to accept or reject a conditional transfer offer households deemed by society to have insufficient resources to purchase an adequate commodity bundle are often offered aid i e additional resources conditional upon the households purchasing a given level of some commodity e g food fuel or housing such conditional transfers attempt to modify the households normal behavior i e if the households would normally purchase the required level of the designated commodity upon receipt of the transfer the constraint would not be necessary how these incentives and constraints interact to affect the households behavior determines in large part the number and type of eligibles aided by the program aggregate program costs given payment levels and the types of commodity bundles purchased by the recipient households clearly understanding the decision to accept or reject a conditional transfer offer has widespread implications for the costs of the transfer program the impact on eligible households and the attainment of society s objectives numerous studies have investigated the size and distribution of recipient benefits in conditional transfer programs 1 3 6 8 9 14 16 21 to this author s knowledge however no analysis has estimated a model of the household s decision to participate in a conditional transfer program using household data and a theoretically appropriate measure for the household s net gain to overcome this gap in our understanding of the household s

income elasticities at different price vectors abstract cross country data are used to evaluate the income elasticities of the demand for ten broad groups of goods at two different price vectors the observed prices of separate countries and the geometric means of these prices across all countries the major effect is on the income elasticity of the demand for food using observed rather than geometric mean prices results in lower elasticity values for the more affluent countries

comparing the accuracy of default predictions in the rating industry for different sets of obligors abstract we generalize the refinement ordering for well calibrated probability forecasts to the case were the debtors under consideration are not necessarily identical this ordering is consistent with many well known skill scores used in practice we also add an illustration using default predictions made by the leading rating agencies moody s and s p

estimation of complete demand systems from household budget data the linear and quadratic expenditure systems in this paper we explore two issues in empirical demand analysis the estimation of complete systems of demand equations using household budget data section i and the incorporation of demographic characteristics into such systems section ii although there are numerous studies which use time series data to estimate complete demand systems and many which estimate engel curves from household budget data there are virtually none which combine budget data from different periods to estimate complete systems since each budget study corresponds to a single price situation one might conjecture that estimation of complete systems would not be possible unless budget studies were available from a large number of periods this is incorrect in section i we argue that interesting complete demand systems can be estimated from a small number of budget studies despite the limited price variability represented in such data to demonstrate this we use budget study data for two periods to estimate a pair of related demand systems the familiar linear expenditure system les and a quadratic expenditure system qes a generalization of les in which the demand equations are quadratic in total expenditure the inclusion of demographic variables in the analysis of household consumption patterns is desirable because there are likely to be systematic differences in the consumption behavior of households with different demographic characteristics but the effects of demographic characteristics have seldom been studied within the framework of complete demand systems in section ii we propose translating as a general method for incorporating demographic variables into complete systems of demand equations this method has not previously been discussed as a general technique for bringing demographic variables into demand systems although it has been employed in several studies to improve the estimates of the les and the qes presented in section i we reestimate these two systems using translating to incorporate family size

verifying a demand system by simulation abstract an intriguingly small value of the asymptotic standard error of the estimate of the income flexibility inspired us to simulate the demand system the procedure used should have more general applicability

the efficiency of housing search previous research in the housing market has largely focused on housing market outcomes e g the quantity of housing services demanded or supplied or the determination of equilibrium prices scant attention has been directed at the processes producing these outcomes recently economists have developed models of buyer and seller search processes in housing markets 6 22 but almost no empirical testing of these models has been done the importance of search in economic markets has been discussed by lippman and mccall 15 the difficulties encountered by deterministic theories of economic markets in explaining different prices for identical commodities and persistent positive levels of unemployed resources are overcome when search is introduced search may be of even greater importance in housing markets than in most other economic markets housing generally accounts for the largest item of consumption for most households for homeowners housing is usually the household s largest asset housing is a heterogeneous commodity that is traded in highly decentralized markets 2 the costs of moving can be substantial reducing the gains from relocation the consumption of housing also involves externalities that add to the heterogeneity of the consumption bundle finally recent theoretical work by courant 6 suggests that the rational search behavior of households facing discrimination in housing markets might act to perpetuate adverse market conditions facing such households given the importance of housing as a consumption commodity and as an asset and the above characteristics of housing and housing markets previous descriptive examinations

a household production specification of demographic variables in demand analysis empirical investigations into the expenditure and time allocation decisions of households usually allow the variation in demographic characteristics across households in particular the number and ages of dependent children to affect these decisions the motivation for allowing such demographic effects is two fold first it permits the researcher to pool observations from households with differing demographic characteristics secondly it has been argued that it allows the researcher to construct an index normally called an equivalence scale to show the full income required by a household with some given composition to attain the same level of utility as some reference household and hence permits comparisons of welfare levels across households there are two areas of controversy surrounding this literature which directly relate to its two sources of motivation first what is the appropriate demographic specification second can the estimated parameters be used to undertake welfare comparisons a series of demand studies including barten 1964 blundell 1980 blundell and walker 1982 gorman 1976 muellbauer 1974 1977 hurd and pencavel 1981 pollak and wales 1978 1981 and ray 1983 have attempted to answer the first problem by considering the current allocation of goods and in some cases household time conditional on demographic structure this literature treats demographic variables as exogenous whereas in contrast the neoclassical fertility literature see for example the contributions in schultz 1973 treats the numbers and ages of children as endogenous nonmarket goods within a lifecycle optimising framework the second problem has been raised by pollak and wales 1979 who argue convincingly whether household composition is the result of endogenous decisions or not it is impossible to compare the welfare of households with different compositions using the results of empirical demand analysis since market decisions do not reveal how the households feel about the presence or absence of children thus estimated equivalence scales are necessarily based on the households preferences conditional on their demographic compositions the object of this paper is to suggest a new approach to the problem of demographic specification and to show that this approach both highlights the problem of making welfare comparisons and at least in part resolves it