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

constrained efficiency in the neoclassical growth model with uninsurable idiosyncratic shocks we investigate the welfare properties of the one sector neoclassical growth model with uninsurable idiosyncratic shocks we focus on the notion of constrained efficiency used in the general equilibrium literature our characterization of constrained efficiency uses the first order condition of a constrained planner s problem this condition highlights the margins of relevance for whether capital is too high or too low the factor composition of income of the consumption poor using three calibrations commonly considered in the literature we illustrate that there can be either over or underaccumulation of capital in steady state and that the constrained optimum may or may not be consistent with a nondegenerate long run distribution of wealth for the calibration that roughly matches the income and wealth distribution the constrained inefficiency of the market outcome is rather striking it has much too low a steady state capital stock

household fuelwood demand and supply in nepal s tarai and mid hills choice between cash outlays and labor opportunity abstract subsistence households are a leading source of deforestation and their consumption of fuelwood in particular is important in many developing countries yet the empirical economic examinations of fuelwood consumption are sparse particularly for rural areas where the deforestation occurs and we would argue that forest policy is often designed without a good understanding of the potential responses of subsistence households to the new policy this paper addresses these issues with household evidence from the two major populated regions of nepal market prices labor opportunities the availability of substitutes and measure of access to the basic resource are the most reliable predictive variables for fuelwood consumption and production there are however regional differences and important distinctions between the elasticities of fuelwood collecting or purchasing households with respect to these predictive variables the difference between collecting and purchasing households is notable it recommends forestry policies that target the labor opportunity and the physical resource in regions where collecting households dominate and policies that affect the fuelwood market itself in regions where purchasing households are important a second interesting finding is that fuelwood is relatively scarcer prices are higher in the mid hills and both collecting and purchasing households in this region are beginning to respond to deforestation by using their own land for fuelwood production

nonpecuniary benefits to farming implications for supply response to decoupled payments we develop a household model wherein farmers allocate labor to maximize utility from leisure consumption and nonpecuniary benefits from farming the model shows that farmers with decreasing marginal utility of income respond to higher decoupled payments by decreasing off farm labor and increasing farm labor resulting in greater agricultural output we then estimate the difference between farm and off farm returns to labor using data from three nationally representative farm household surveys the finding of a large on farm off farm wage differential provides compelling evidence of substantial nonpecuniary benefits from farming

private information deposit interest rates and the stability of the banking system abstract the regulation of deposit interest rates has received little support from economists the same is true for the original rationale for such regulation that bank competition for deposits generates inherent instability in the banking system this paper develops an adverse selection model of banking in which this rationale is correct moreover in this model instability in the banking system can arise despite the presence of a lender of last resort and despite the absence of any need for deposit insurance however in the world described the regulation of deposit interest rates is shown to be an appropriate response to instability in the banking system finally it is argued that adverse selection models of deposit interest rate determination can confront a number of observed phenomena that are not readily explained in other contexts

controlling risk in payment systems over the past twenty years the growing integration of financial markets the development of new financial instruments and the advance of computer technology have all contributed to a remarkable growth of financial activity in the main industrialized countries one of the most significant consequences of this growth has been the unprecedented increase in the volume of trade on the largevalue interbank payment systems see table 1 which itself has resulted in a massive increase in intraday overdrafts on those systems see table 2 the central banks of the large industrialized countries concerned with the risks that this growth was creating for their banking systems have been studying the risks on interbank payment systems work that has borne fruit with the angell report bank for international settlements bis 1989 and the lamfalussy report bis 1990 both under the aegis of the bis and the padoa schioppa report european community 1992 under the aegis of the eec of particular concern is the organization of interbank large value transfer systems banks have traditionally concluded among themselves multilateral netting arrangements which settle at discrete time intervals this is the modern form of clearinghouses which still operate for small value transfers these arrangements

state contingent bank regulation with unobserved actions and unobserved characteristics abstract optimal bank regulation is studied in a model where bank quality is private information and bank portfolio choice is subject to moral hazard regulators wish to control bank risk solely because high risk adversely affects a bank incentives to improve its mean return numerical methods are developed to study the model capital regulation alone has a limited ability to separate types including ex post fines achieve separation at lower cost resulting in improved welfare low quality banks are fined on high returns in order to control risk taking high quality banks face fines on lower returns mainly to ensure truth telling by low quality banks high quality banks bear the full cost of regulation

optimal capital income taxation with incomplete markets borrowing constraints and constant discounting for a wide class of infinitely lived agent models chamley has shown that the optimal capital income tax rate is zero in the long run lucas has argued that for the u s economy there is a significant welfare gain from switching to this policy this paper shows that for the bewley class of models with incomplete insurance markets and borrowing constraints the optimal tax rate on capital income is positive even in the long run therefore cutting the capital income tax to zero may well lead to welfare losses

taxing capital not a bad idea after all we quantitatively characterize the optimal capital and labor income tax in an overlapping generations model with idiosyncratic uninsurable income shocks and permanent productivity difierences of households the optimal capital income tax rate is signiflcantly positive at 36 percent the optimal progressive labor income tax is roughly a at tax of 23 percent with a deduction of 7 200 relative to average household income of 42 000 the high optimal capital income tax is mainly driven by the life cycle structure of the model whereas the optimal progressivity of the labor income tax is attributable to the insurance and redistribution role of the tax system jel e62 h21 h24

farm household production efficiency evidence from the gambia this article investigates the economic efficiency of farm households with an application to the gambia the efficiency analysis is conducted not at the farm level but at the household level thus capturing the importance of off farm activities output based measures of technical allocative and scale efficiency are generated using nonparametric measurements an econometric analysis of factors affecting the efficiency indexes is then conducted using a tobit model technical efficiency is fairly high indicating that access to technology is not a severe constraint for most farm households the cost of scale inefficiency is modest allocative inefficiency by contrast is found to be important for the majority of farm households on the basis of the tobit results imperfections in markets for financial capital and nonfarm employment contribute to significant allocative inefficiency

agricultural payments and land concentration a semiparametric spatial regression analysis over the last twenty years both crop production and agricultural payments have shifted toward larger operations this study examines whether payments from federal farm programs contributed to increased concentration of cropland and farmland using zip code level data constructed from the microfiles of the 1987 2002 agriculture censuses we examine the association between government payments per acre and subsequent growth in land concentration a semiparametric generalized additive model gam controls for location and historical concentration sales per acre and ratio of cropland area to zip code area findings indicate both with and without nonparametric controls government payments are strongly associated with subsequent concentration growth copyright 2008 oxford university press

pricing free bank notes abstract during the pre civil war period us banks issued distinct private monies called bank notes a bank note is a perpetual risky non interest bearing debt claim with the right to redeem on demand at par in specie this paper investigates the pricing of this private money taking into account the enormous changes in technology during the period namely the introduction and rapid diffusion of the railroad a contingent claims pricing model for bank notes is proposed and tested using monthly bank note prices for all banks in north america together with indices of the durations and costs of trips back to issuing banks constructed from pre civil war travelers guides evidence is produced that market participants properly priced the risks inherent in these securities suggesting that wildcat banking was not common because of market discipline

the effect of off farm work on the intensity of agricultural production changes in agricultural production methods have been associated with environmental pressure and a loss of natural habitats this paper explores the extent to which farmer participation in off farm work an increasing phenomenon in most developed countries changes the intensity of agricultural input use focusing in particular on fertilizer and crop protection product use a sample selection model that accounts for both unobserved heterogeneity between farms and the potential simultaneity between farm operations and hours worked off farm is estimated for 2 419 farms in england and wales the econometric evidence indicates that the input intensity of products which have well established links to environmental damage can increase as well as decrease the results suggest that that fertilizer intensity may decline as off farm labor increases while the use of crop protection per hectare increases as off farm work increases

estimating the choice behavior of self employed business proprietors an application to dairy farmers the vast majority of business concerns operating in contemporary market oriented economies are owned and controlled by a single individual and perhaps family members yet little work has been performed in the area of estimating the choice behavior of self employed business proprietors particularly under conditions where production and consumption decisions are interdependent lau lin and yotopolous 16 barnum and squire 2 and others have developed models to analyze and estimate the complete choice behavior of farm households in developing nations these analyses invariably separate production and consumption decisions so that the sole link between the two sides of the model lies in the impact of farm profit on the household budget constraint this type of separability implicitly assumes the existence of perfect markets for all goods and inputs while this assumption may be a valid approximation for many farm households in developing economies it is not generally applicable to self employed proprietors especially those operating in more advanced economies 8 19 21 26 to my knowledge only two prior empirical studies have been performed which attempt to analyze the choice behavior of self employed business proprietors under conditions where production and consumption decisions are interdependent brown and lapan 4 employ aggregate u s time series data to estimate physician labor and output supply responses to changes in output price their estimation procedure centers on a single reduced form output supply equation parameter estimates are interpreted in the context of the theoretical framework assuming constant returns to scale technology and homothetic preferences they conclude that while the physician labor supply curve is backward bending the output supply curve is positively sloped lopez 19 formulates a model analyzing the interdependent production and labor supply decisions of households that own and operate a farm his framework integrates output input and labor supply choices and allows for differences in preferences between on farm and off farm work imposing constant returns to scale and using cross section canadian data aggregated by census division he jointly estimates output supply input demand on farm and off farm labor

estimating labor supply of farm households under nonseparability empirical evidence from nepal abstract this paper examines the labor supply of farm households in nepal using a recently developed methodology that accounts for the simultaneity between production and consumption decisions of the households estimates of marginal products of male and female labor or shadow wages are obtained from an agricultural production function an instrumental variable approach is then used to recover the household s structural labor supply from variations in the shadow wages and income as well as other household characteristics the findings reveal that both male and female total labor supply are sensitive to changes in shadow wages and income human capital embodied in education is found to exert a significant positive effect on output but has no statistically significant impact on total labor supply of individuals the results also rejects the existence of efficient labor markets in rural nepal

a system comparison approach to distinguish two nonseparable and nonnested agricultural household models this study distinguishes two nonseparable agricultural household models for a self employed farm household one assumes heterogeneity of farm and nonfarm labor and a competitive market for nonfarm labor the other assumes homogeneity of the two types of labor and a restricted market for nonfarm labor we compare demand systems that are derived from them which have different dependent variables and different numbers of equations we apply a cox type test to compare these complicated nonnested systems results show clearly that the former is better for japanese rice farming households comparison of price elasticities for those models verifies the importance of that test copyright 2008 oxford university press

misintermediation and macroeconomic fluctuations abstract individuals plan consumption and production for different point in the future using interest rates of various maturities as a guide however the financial intermediaries individuals work through traditionally do not match the maturity structure of their assets and liabilities as a result aggregate production plans and aggregate consumption plans for each period in the future need not coincide the resulting discrepancy will eventually appear as a recession or boom involving an unanticipated change in interest rates and production inside the original intertemporal production possibilities frontier maturity transformation is therefore not an essential function of financial intermediation but rather a mis function one which we call misintermediation

idiosyncratic risk and financial policy in economies subject to uninsurable idiosyncratic risks competitive equilibrium allocations are constrained inefficient reallocations of assets support pareto superior allocations this is the case even if the asset market for the allocation of aggregate risks is complete

money is an experience good competition and trust in the private provision of money the interplay between competition and trust as efficiency enhancing mechanisms in the private provision of money is studied with commitment trust is automatically achieved and competition ensures efficiency without commitment competition plays no role trust does play a role but requires a bound on efficiency stationary inflation must be non negative and therefore the friedman rule cannot be achieved the quality of money can be observed only after its purchasing capacity is realized in this sense money is an experience good

national wage trends and migration in a chinese village economy a micro level modeling approach based on a composite utility function china s economy is experiencing a regime shift away from a fully elastic supply of labor from a large pool of rural surplus labor and toward a situation of increasing labor scarcity and rising wage rates moreover faster wage increases in the regions of origin of many rural urban migrants are likely to affect the dynamics of inter regional migration these wage trends have implications at the local level in particular in a setting in which migration connects rural communities to the national labor market and in which migration is of high importance for the livelihoods of rural households taking a village perspective this article develops a village computable general equilibrium model to study local impacts of current wage trends in china as a central piece of the model the role of access to migration for household livelihoods is recognized access to migration is linked to household demographics and included in the model through a composite utility function that captures household preferences and disutilities associated with alternative off farm activities simulation results illustrate how households utility considerations affect migration responses to national wage changes statements about possible impacts on village level labor supply land use and agricultural production are made when migration wages and local off farm wages are simulated to increase an overall increase in household and village migration and a higher supply of labor to local off farm labor markets is accompanied by a contraction of farm production although land is reallocated between households with different migration responses total agricultural output declines

estimating labor supply and production decisions of self employed farm producers abstract this paper proposes a model oriented towards integrating farm households production and consumption decisions into a unified theoretical and econometric framework it is argued that in contrast with other forms of economic organization farm households utility and profit maximization decisions are not likely to be independent econometric estimation of a farm household model using canadian data suggests that utility and profit maximizing decisions are not indeed independent and moreover that there are significant gains in explanatory power and efficiency by estimating the consumption and production equations jointly

how valuable is on farm work to farmers in this article we estimate a rural household model that allows specific tastes for working on farm and can fit the data as well as the general model of lopez we use two samples that are matched by individual characteristics and adopt the method for matched surveys proposed by arellano and meghir we replicate using french data the empirical finding of elhorst who reports evidence that implicit wages of on farm family labor are significantly below off farm wages we then provide estimates of the lower bounds for preferences for on farm work for males and females which are significant and positive

supply and demand functions for multiproduct u s cash grain farms biases caused by research and other policies this study presents new estimates of supply and demand elasticities for u s multiproduct cash grain farms and estimates of input and output bias effects caused by public and private crop research extension and farmers schooling the study also shows that the social rate of return to public crop research is large about 62 percent

optimal taxation in life cycle economies abstract we use a very standard life cycle growth model in which individuals have a labor leisure choice in each period of their lives to prove that an optimizing government will almost always find it optimal to tax or subsidize interest income the intuition for our result is straightforward in a life cycle model the individual s optimal consumption work plan is almost never constant and an optimizing government almost always taxes consumption goods and labor earnings at different rates over an individual s lifetime one way to achieve this goal is to use capital and labor income taxes that vary with age if tax rates cannot be conditioned on age a nonzero tax on capital income is also optimal as it can imperfectly mimic age conditioned consumption and labor income tax rates journal of economic literature classification numbers e62 h21

an incentive approach to banking regulation we examine the optimal design of a risk adjusted deposit insurance scheme when the regulator has less information than the bank about the inherent risk of the bank s assets adverse selection and when the regulator is unable to monitor the extent to which bank resources are being directed away from normal operations toward activities that lower asset quality moral hazard under a socially optimal insurance scheme 1 asset quality is below the first best level 2 higher quality banks have larger asset bases and face lower capital adequacy requirements than lower quality banks and 3 the probability of failure is equated across banks perihaps t he most troubling aspect of the current deposit insurance system is the distortions caused by the pervasive use of an insurance premium that is independent of risk the undesirable incentives that result when such a system is employed in a world with imperfect information have long been recognized in the literature of particular concern is the incentive banks have to increase the risk of their portfolio in order to maximize the value of the deposit insurance provided in some respects this problem is similar to the incentives generated by corporate debt however the solution to this problem may be different in a banking context because the creditors include the deposit insurer who has the power to regulate the banks conceivably regulation may be able to mitigate the informational problem at hand in this paper we examine some of the tradeoffs that arise in the design of a regulatory system for banks

hidden effects of bank recapitalizations abstract given the importance of capital regulation in the banking industry how and why a bank s behavior reacts to a recapitalization has profound consequences to this end we investigate the effects of 306 seasoned equity offerings seos conducted by listed european banks between 2002 and 2014 we use propensity score matching and find that seos lead to asset expansion as opposed to any deleveraging further we find a decrease in lending in the short term followed by a subsequent increase a reduction in profitability and an increase in systemic risk regulators might not have fully considered this last negative externality when they imposed the tougher basel iii capital requirements the effects of seos strongly depend on the reasons behind the recapitalizations

separation hypothesis tests in the agricultural household model in an agricultural household model farmers production decisions can be either separated or nonseparated from preferences since previous studies on agricultural household behavior and policy effects have shown that the model with separation yields different results than the model with nonseparation it is important to have a test to identify the correct model this paper provides new tests that extend current tests in two directions first the new tests avoid issues that current tests have to address such as simultaneity bias and the estimation of the production function second the new tests make use of more information implied from the separation hypothesis than current tests

what s different about banks abstract negotiable certificates of deposit cd s trade in the capital market in competition with other securities like commercial paper and bankers acceptances if cd s must pay lenders competitive monetary interest the reserve tax on cd s is borne by bank borrowers viability of the tax means there must be something special about bank loans that makes some borrowers willing to pay higher interest rates than those on other securities of equivalent risk moreover there must be something special about banks that prevents other intermediaries from competing to assure that it never pays to finance loans with cd s

redistributive taxation in a simple perfect foresight model abstract we investigate the redistributive potential of capital taxation in an intertemporal maximizing model of capital formation first even unanticipated redistributive capital taxation is severely limited in its effectiveness since it depresses wages second under any convergent redistributive tax policy which maximizes a paretian social objective the capital income tax will converge to zero independent of the factor supply elasticities these results are independent of workers holdings of capital

causal pathways of the productive impacts of cash transfers experimental evidence from lesotho abstract this paper has the double aim to study whether unconditional cash transfers have an impact on farm production and to look into the causal mechanisms through which government transfers produce productive impacts we use mediation analysis to identify the total effect of transfers on farm production and to isolate the influence of the labour channel from other transmission channels in particular we analyze whether changes in farm production are caused by transfer induced changes in the use of farm labour either by reallocating family labour between off and on farm work or by changes in the demand for hired labour or if other transmission channels are at work we find that cash transfers have a sizable impact on farm production but they do not lead to increased use of family or hired labour on the farm which implies that the productive impacts of cash transfers flow through other channels different from the labour one

nepotism discrimination and the persistence of utility maximizing owner operated firms reply much debate in the discrimination literature surrounds whether employers with biased preferences can persist in the market 7 10 this issue is a natural extension of the broader literature on owner operated firms which focuses on the consistency of utility and profit maximization 12 13 14 18 26 27 theories of owner operated firms which have a long history in economics model the entrepreneur as both a producer and consumer of goods that determines the level of production and consumption jointly through utility maximization 2 9 16 22 31 this approach is applied in this paper to examine employer discrimination and nepotism our analysis provides necessary conditions for utility maximizing firms to persist in the market and shows how biased preferences can yield seemingly uneconomic input and output choices that are in fact rationally inefficient empirical results using data on family farms support the prediction that utility maximizing entrepreneurs trade profit for nonmarket goods and do not hire inputs to maximize profits competitive neoclassical theories of the labor market do not provide a clear theoretical resolution to the issue of persistence of employer nepotism and discrimination the employer discrimination model proposed by becker 4 5 and extended by arrow 1 postulates that entrepreneurs maximize utility that increases with profit but decreases with a nonmarket attribute of some workers e g race ethnicity or gender these models predict that white male workers may initially have better market opportunities than comparable minority or female workers however entrepreneurs who hire based on nonproductive attributes are also predicted to earn less than a normal rate of return and because they derive disutility from an aspect of owning and operating a firm can improve their welfare by leaving the industry and converting firm assets to those that do not require employment decisions e g stocks and bonds this result has the important policy implication that market intervention may not be necessary to improve the relative pay and employment of disadvantaged groups when employers are the source of the discrimination alternatively goldberg 15 uses the arrow 1 framework but postulates that employers

household own consumption and grain marketable surplus in china this paper explores the interrelationships between chinese grain prices farm households income their own consumption of grain and their marketable surplus supply during the rural reform era a gorman polar indirect utility function is employed from which a set of household grain supply and consumption functions are estimated the integrated modelling approach recognizes the interdependence of household supply and consumption decisions a set of compensated elasticities are derived to show the effects of grain prices farm income and full household income on grain consumption and on farm labour supply the impact of own consumption on marketable surplus supply is then gauged by estimating conditional and unconditional price elasticities of marketable surplus supply the results point to the relatively strong positive effect of off farm income on household s own consumption of grain and the negative influence this has had on the marketable surplus of grain in china during the reform era

the utility maximizing self employed physician we estimate a model of utility maximizing physician behavior our model accounts for the interdependence of physician input output and work leisure choices and includes an endogenous virtual wage for physician own time in the medical practice we find that solo practitioners respond to increases in marginal hourly earnings and nonpractice income by allocating less time to medical practice activities our results also suggest that fee reductions induce the substitution of physician own time for auxiliaries and the net effect of this adjustment is reduced patient loads and a decrease in supply from the existing stock of solo practitioners

quasi maximum likelihood estimation of multivariate probit models farm couples labor participation joint estimation of farmers farm and off farm work participation requires a multivariate probit model in which the number of equations is twice the number of household members where there are more than two such equations i suggest a quasi maximum likelihood method which requires only two levels of numerical integration the method maximizes the use of sample information given this numerical feasibility condition it is used for estimating a joint participation model of farm couples farm and off farm work the model yields conclusions about comparative advantages of men and women in farm off farm and housework which cannot be obtained with a more limited setup

valuing soil conservation benefits of agroforestry contour hedgerows in the eastern visayas philippines abstract trees can be considered as investments made by economic agents to prevent depreciation of natural assets such as stocks of top soil and water in agroforestry systems farmers use trees in this manner by deliberately combining them with agricultural crops on the same unit of land although advocates of agroforestry have asserted that soil conservation is one of its primary benefits empirical estimates of these benefits have been lacking due to temporal and spatial complexity of agroforestry systems and the nonmarket aspect of soil capital assets this study designs and applies a bio economic framework for valuing the soil conservation benefits of agroforestry the framework is tested with econometric analysis of data from surveys of households in eastern visayas philippines where usaid government of philippines introduced contour hedgerow agroforestry in 1983 by constructing a weighted soil quality index that also incorporates measures of soil fertility texture and color in addition to erosion we extend previous economic studies of soil resources this index is regressed on a variety of farming and site specific bio physical variables next we use a cobb douglas profit function to directly relate agricultural profits and soil quality thus the value of soil conservation is measured as a quasi rent differential or the share of producer surplus associated with a change in soil quality because this framework assumes the existence of markets the assumption is tested by analysing the statistical significance of consumption side variables e g number of household members on production side variables e g profits instrumental variables are used to handle the endogeneity of the soil index in the profit equation seemingly unrelated regression sur analysis is used to accommodate correlation of errors across the soil and profit equations regression results reveal the importance of agroforestry intensity private ownership land fragmentation and familiarity with soil conservation as positive covariates of soil quality analysis of production data indicate the importance of market prices education farming experience farm size topography and soil quality as positive covariates of household profits investments in agroforestry to improve or maintain soil capital can increased annual agricultural profits by us 53 for the typical household which is 6 of total income however there are significant up front costs given that small farmers in tropical uplands are important players in the management of deteriorating soil and forest resources policy makers may want to consider supporting farmers in the early years of agroforestry adoption

the future of farm policy analysis a household perspective farms farmers farm families and even farm policy have changed since the new deal now it is time to bring the methods of farm policy analysis and the scope of data collection up to date agricultural economics by tradition an empirical discipline can once again offer important insights into the design implementation and effectiveness of policy to succeed in this century though requires an emphasis on understanding microeconomic behavior at the farm household level

the labour supply behaviour of self employed solo practice physicians this paper investigates the empirical labour supply behaviour of self employed solo practice physicians the specification of the empirical labour supply equation is based on a model of constrained utility maximizing behaviour that recognizes the physician makes work leisure choices based on an endogenous shadow wage and faces a nonlinear budget constraint the findings suggest that the typical self employed solo practice male physician operates on the upward sloping portion of the labour supply curve and is relatively unresponsive to changes in marginal hourly medical practice earnings and non practice income

disease microdams and natural resources in tigray ethiopia impacts on productivity and labour supplies we examine the effects of water microdams and ensuing waterborne diseases on household decisions in tigray ethiopia where the government implemented a water resource development programme two decades ago we find microdams increase productivity of both fuelwood collection and crop production but the costs of these dams to households can be significant in villages close to dams disease prevalence is higher and all household labour categories spend more time sick and more time is spent by male and female adults caring for sick family members these can cost the household anywhere in the region of 150 250 birr per season depending on the type of labour diversion and the productivity of labour males are most significant here removing their time from production results in 40 60 per cent higher productivity and income losses compared to diversion of female labour sick households also spend significantly more money on health care especially when male and female adults are sick

has government any role in money abstract recent interest in monetary reform has been sparked by the emergence of a world irredeemable paper money system in light of this interest we review the current validity of four good reasons friedman advanced in 1960 to rationalize government intervention we conclude that the forces that produced government involvement in the past will persist deregulation of financial intermediaries is desirable on grounds of market efficiency though it is an open question whether government should continue as lender of last resort we expect that the present world fiat money standard will neither degenerate into hyperinflation nor revert to a commodity standard

are agricultural markets more developed around cities testing for urban heterogeneity in separability in tanzania abstract a key question for policymakers concerned about feeding sub saharan africa s ssa rapidly growing cities is whether or not nearby farms benefit from improved agricultural markets evidence from case studies and agricultural location theory suggest so but urban heterogeneity has not yet been found in a common economic test of functioning agricultural markets the separability result the test is based on a key insight of the agricultural household model which finds that a farm s profit should be maximized independently from household utility given perfect factor markets i e separability but not so if the household faces at least two market failures i e non separability in this paper i test for geographic heterogeneity in separability between rural peri urban and urban districts using 2014 15 data from the world bank s living standards measurement study and integrated surveys on agriculture lsms isa from tanzania i find strong evidence that the correlation between pre harvest labor demand and household size implying non separability in rural areas is significantly weaker in three of tanzania s five largest cities dar es salaam arusha and mbeya given certain assumptions this can be interpreted as evidence of increased agricultural market functionality around these cities relative to rural areas overall these results contribute to the debate on how to achieve urban food security in ssa and give some validity to agricultural location theory and the separability test as tools to help policymakers characterize the nature of agricultural factor markets

intraday management of bank reserves the effects of caps and fees on daylight overdrafts the federal reserve system imposes caps and charges fees on the negative intraday balances in banks reserve accounts i e on daylight overdrafts our empirical results suggest that caps alone did little to reduce daylight overdrafts in the aggregate by contrast the 1994 imposition of fees reduced the average daily maximum overdraft on the fedwire system by about 93 billion and the average aggregate overdraft at any time during the day by about 43 billion we also found statistical evidence that higher beginning of day reserve balances lower aggregate dollar values of securities related transfers over fedwire and lower shares of banks assets funded with federal funds and repurchase agreements reduced daylight overdrafts copyright 1996 by ohio state university press

preferences in a communal economic system a voluntary communal economic system differs from most types of economic organizations in that its members prefer to carry out certain activities collecti vely and significant production and consumption activities take plac e within it communal systems are analytically modeled in the article as household production units or centrally planned economies the mo del is employed to evaluate the source of changes in consumption of i sraeli kibbutzim between 1955 and 1965 by focusing on changes in pric es technologies resources and preferences evaluating the stability of preferences hypothesis raised by g stigler and g becker 1977 copyright 1987 by the review of economic studies limited

household composition labor markets and labor demand testing for separation in agricultural household models this paper tests the separation of farm labor supply and labor demand decisions using the observation that household composition is an important determinant of farm labor use with nonseparation after assessing the conditions under which the test has power against several alternatives an empirical model is developed to test the proposition that farm employment is independent of family composition the model is estimated on a data set from rural java the null hypothesis that farm labor allocation decisions are independent of household structure is not rejected the results are robust to different specifications of the labor demand function copyright 1992 by the econometric society

agricultural intensification common property resources and the farm household this paper evaluates the impact of agricultural price and intensification policies for common property resources and welfare of rural communities in developing countries in doing so we develop a new model for the farm household that has analytical advantages over the traditional one and that has significant potential for empirical application the major findings are technical assistance that increase productivity of land intensive agricultural outputs cereals livestock etc cause degradation of the communal resources and may cause immiserization policies that increase the prices of these goods cause identical effects by contrast similar policies applied to labor intensive outputs vegetables tubers etc contribute to improve the common resources and to increase the welfare of the rural communities

interpreting new evidence about china and u s silver purchases abstract this paper offers a reinterpretation of the influence on china of america s silver policy in the early 1930 s recently compiled evidence about events in china are described and interpreted in light of a model of free banking under a commodity standard our interpretation is that the u s silver purchase program did not set off a chain of bad economic events which eventually forced china off silver and onto a fiat standard rather china was forced off silver by its own government which wanted to make itself the beneficiary of the capital gain associated with the appreciation of silver and to relieve itself of the restrictions that are imposed on government finance by a commodity standard

the gender gap in agricultural productivity the role of market imperfections abstractthis paper hypothesises that labour and credit market imperfections by discouraging off farm income generating activities and restricting access to inputs respectively affect female farm productivity more deeply than male productivity the paper develops a theoretical model which decomposes the contribution of various market imperfections to the gender productivity gap empirically we show that agricultural labour productivity is on average 44 per cent lower on female headed plots than on those managed by male heads 34 per cent of this gap is explained by differences in labour market access and 29 per cent by differences in credit access

capital requirements and the behaviour of commercial banks abstract i study the consequences of capital regulations on the portfolio choices of commercial banks elaborating on previous work by kareken and wallace 1978 koehn and santomero 1980 and kim and santomero 1988 i obtain the following results if the objective of commercial banks is maximization of the market value of their future profits value maximizing banks capital regulations cannot prevent banks from choosing very specialized and very risky portfolios risk based insurance premia are in fact the relevant instrument for that purpose on the other hand if banks behave as portfolio managers utility maximizing banks capital regulations can be effective but only if the weights used in the computation of the ratio are proportional to the systematic risks of the assets their betas because of limited liability of commercial banks a minimum capital regulation or a closing rule may become necessary as well to prevent failing banks from betting for resurrection

effects of the internal wage on output supply a structural estimation for japanese rice farmers farmers are offered a higher wage rate by their off farm employers than the rate of remuneration they receive for their labor on their own family farms in japan however it is not possible for them to work for as many hours as they want for their off farm employers at the offered wage rate hence they perceive that they face an imperfectly competitive market for labor with only limited opportunities for wage employment see for example arayama 1986 kang and maruyama 1992 markets for their output and factors of production are observed to be perfectly competitive thus the state of the markets they face proves to be similar to the one producer consumer households face in the circumstances addressed in section 2 2 of the preceding chapter since the market for labor is not a perfectly competitive one because it offers only limited opportunities for wage employment the market wage rate ceases to be relevant in organizing their family farms and in making their choice over their level of consumption they are obliged to form an internal wage rate on their own for these purposes within their households the analytical results in section 2 2 show that the internal wage rate proves to be lower than the market rate and renders their supply of output and their demand for factors of production less elastic than in the instance in which all relevant markets are perfectly competitive in extreme cases it gives rise to a downward sloping supply function of output and upward sloping demand functions for the factors of production

supermarkets wholesalers and tomato growers in guatemala the article shows the asset related determinants and the impacts of the participation of small farmers in supermarkets versus traditional market channels in guatemala compared to farmers selling only to the traditional market channels farmers selling to supermarket channels are larger but are in the upper tier of the small farmer category have more capital and are much more specialized in commercial horticulture in general and in tomatoes in particular while they have higher yields they also have higher input use including use of chemicals in fact they severely overuse pesticides and fungicides moreover these greater input expenditures mean that their profit rates are roughly similar to those of farmers in the traditional market channel supermarket channel farmers prefer the more demanding wholesale supermarket channel because it offers lower risks and lower transaction costs to market a variety of quality grades of tomatoes all year long in turn the supermarkets who do not buy direct but rather source from a few specialized dedicated wholesalers rely on this year round supply lower transaction costs and consistency of quality

modeling farm households price responses in the presence of transaction costs and heterogeneity in labor markets we develop a farm household model to analyze price responses of farm households this model incorporates various types of transaction costs as well as labor heterogeneity nonproportional variable transaction costs or labor heterogeneity imply that production and consumption decisions become nonseparable even when the household buys or sells labor an empirical model is estimated using data from midwest poland the results show that nonproportional variable transaction costs and labor heterogeneity significantly influence household behavior not all price elasticities however change significantly if these are neglected

the effects of china s sloping land conversion program on agricultural households in the late 1990s china aimed to mitigate environmental degradation from agricultural production activities by introducing the world s largest payments for environmental services pes program the sloping land conversion program slcp in order to analyze its effects on agricultural households we develop a microeconomic agricultural household model ahm which can model the production consumption and non farm labor supply decisions of agricultural households in rural china in a theoretically consistent fashion based on this theoretical model we derive an empirical specification that we use to econometrically estimate the effects of the slcp and other exogenous factors using a large longitudinal farm household survey data set we estimate the empirical model with the hausman taylor estimation method the empirical results are generally consistent with the results of our theoretical comparative static analysis e g that the slcp significantly decreases agricultural production while the slcp increases non farm labor supply and total consumption in the yellow river basin these effects could not be observed in the yangtze river basin the recent reduction of the slcp compensation payment rates has had some notable but generally small effects

moving toward markets labor allocation in rural china abstract china s economic reforms have brought rapid growth in rural off farm employment raising questions about the assumption that rural china is labor surplus and has poorly functioning factor markets we investigate this by testing for separability between household labor demand and supply using panel data we find that separability is rejected overall indicating that factor markets remain underdeveloped nonseparability however is associated with labor surplus in some areas and labor shortage in others moreover separability holds where substantial employment opportunities exist in the wider township suggesting that such employment promotes competitive allocation within villages as well as the inter village movement of resources

the impact of coupled and decoupled government subsidies on off farm labor participation of u s farm operators with the 1996 farm act the united states introduced payments that were designed to be decoupled labor allocation choices are likely to be affected by receipt of payments and income from off farm jobs has been the major source of income for most farm households for sometime this article examines whether the 1996 change has affected the off farm labor participation of farm households we conclude that the observed increase in off farm participation of farm operators who received payments was not the result of the 1996 policy change government payments whether coupled or decoupled have a negative effect on off farm labor participation

shadow wages and peasant family labour supply an econometric application to the peruvian sierra a striking feature of developing economies is the large proportion of the work force that is self employed lack of widespread labor market participation in the agricultural sector can pose a major obstacle to the empirical implementation of economic models of the peasant household whether because wage data are simply not available or because the assumptions required to make use of wage data stretch the bounds of credulity this paper develops a methodology for estimating a structural labor supply model for primarily self employed peasant households which holds under a general agricultural technology and set of labor market conditions the unique feature of the approach is that the opportunity cost of time or shadow wage of household workers is explicitly estimated from an agricultural production function and is subsequently used to identify a set of structural labor supply parameters recent household survey data from rural peru is employed to estimate and perform various diagnostic tests on the model the empirical findings lend support to the hypothesis that peasant households allocate their members time as if to maximize a family utility function and moreover demonstrate the tractability of the shadow wage methodology and its usefulness in estimating more elaborate time allocation models

taxing capital is a good idea the role of idiosyncratic risk in an olg model abstract we investigate an overlapping generations olg model in which agents who live for two periods receive idiosyncratic productivity shocks when they are old we show that around zero tax equilibria we can always construct a combination of a small capital tax and a lump sum transfer that are pareto improving as davila et al econometrica 2012 show a capital reduction in one period raises the welfare level of agents who are old in that period but lowers that of the young agents because it reduces their wages we show that the government can compensate for these wage losses by additionally taxing the old agents such that their welfare gains remain positive our result is unchanged when earnings are uncertain at young age

asymmetric information and optimal bank reserves one traditional argument in favor of bank reserve requirements holds that since a b ank and its depositors are asymmetrically informed as to the bank s reserve position and its portfolio the bank will hold too few reserves and too risky a port folio this being the case presumably a central banking authority is equipped t o impose and to monitor a minimal reserve requirement yielding a pareto superior outcome this paper analyzes this position in the context of a formalmodel and shows that at least for some parameters of the model there is such a case for a minimal reserve requirement copyright 1987 by ohio state university press

the impact of farmers health and nutritional status on their productivity and efficiency evidence from ethiopia this article focuses on the link between agricultural productivity and health and nutrition status of peasants in ethiopia the data come from the first round of the ethiopian rural household survey conducted in 1994 the sites selected were those in which farmers practice ox plow cultivation of cereals a stochastic frontier approach was adopted for the agricultural production the findings of the study show that the distance to the source of water as well as nutrition and morbidity status affect agricultural productivity the market wage rate is also very responsive to the weight for height as well as the body mass index and height in a context where separability between consumption and production decisions of the household is rejected elasticities of labor productivity with respect to nutritional status are noted to be strong and similar in technology estimates and wage equations moreover returns to investment in nutrition are clearly high in the ethiopian context overall the results indicate substantial loss in output due to technical inefficiency even after accounting for the health and nutrition of workers

optimal taxation of capital income in general equilibrium with infinite lives this paper analyzes the optimal tax on capital income in general equilibrium models of the second best agents have infinite lives and utility functions which are extensions from the koopmans form the population is heterogeneous the important property of the models is the equality between the social and the private discount rates in the long run i find that the optimal tax rate is zero in the long run for a special case of additively separable utility functions i then determine the tax rates along the dynamic path and conditions that are sufficient for the local stability of the steady state

the welfare cost of factor taxation in a perfect foresight model this paper examines the marginal efficiency cost of various factor taxes in a dynamic general equilibrium model the au thor solves for the excess burden of anticipated and unanticipated t emporary and permanent tax policies using a range of estimates for taste and technology parameters he finds excess burdens larger than those indicated by previous studies that use static models these exc ess burdens are sensitive to parameter values and timing however th e rankings of alternative tax policies turn out to be insensitive to structural parameter values copyright 1987 by university of chicago press

the emancipation proclamation confederate expectations and the price of southern bank notes we examine the behavior of a semimonthly series of the confederate dollar price of bank notes these notes traded at par with confederate dollars from october of 1861 until november 5 1862 we use a model of the demand for two currencies to argue that this departure from par results from altered southern expectations after the 1862 congressional elections assured the enactment of the emancipation proclamation previously southerners believed a win or a negotiated settlement would allow a return to the union intact when these expectations changed bank notes appreciated against confederate dollars in addition our empirical work shows that notes appreciated following northern victories

solvency regulations and the management of banking risks abstract in the recent years international banking authorities have succeeded implementing harmonized solvency regulations however two stages can be distinguished 1 up to 1993 a rigid approach has prevailed with the cooke ratio for credit risks and the standardized approach to market risks 2 since then a movement towards flexibility has been acknowledged notably with the validation of internal models of the var type and the precommitment proposal of kupiec and o brien the objective of this article is to discuss the pros and cons of these different approaches within a coherent conceptual framework that applies contract theory to the regulation of banking

interbank lending and systemic risk systemic risk refers to the propagation of a bank s economic distress to other economic agents linked to that bank through financial transactions banking authorities often prevent systemic risk through an implicit insurance of interbank claims or by reducing interbank transactions and centralizing banks liquidity management this paper investigates whether the flexability afforded by decentralized bank interactions can be preserved while protecting the central banks from the necessity of conducting undesired rescue operations it develops a model in which decentralized interbank leading is motivated by peer monitoring in this context the paper derives the optimal prudential rules and in particular looks at the impact of interbank monitoring on the solvency and liquidity ratios of borrowing and lending banks last it provides conditions which a too big to fail policy is or is not justified and studies the possibility of propagation of a bank s liquidity shock throughout the financial system copyright 1996 by ohio state university press

explaining the demand for free bank notes abstract this paper explains why the risky notes of banks established during the free banking era 1837 1863 were demanded even when relatively safe specie gold and silver coin was an alternative free bank notes were demanded because they were priced to reflect the expected value of their backing the empirical evidence supports this explanation specifically in new york wisconsin and indiana the expected value of backing was sufficient for free bank notes to circulate at par which they did in minnesota the backing for notes was very poor they exchanged well below par being treated as small denomination securities

bank panics government guarantees and the long run size of the financial sector evidence from free banking america governments attempt to increase the confidence of financial market participants by making implicit or explicit guarantees of uncertain credibility confidence in these guarantees presumably alters the size of the financial sector but observing the long run consequences of failed guarantees is difficult we look to america s free banking era and compare the consequences of a broken guarantee during the indiana centered panic of 1854 to the panic of 1857 in which guarantees were honored our estimates of a model of endogenous market structure indicate substantial negative long run consequences to financial depth when panics cast doubt upon a government s ability to honor its guarantees