land tenure investment incentives and the choice of techniques evidence from nicaragua the choice of cultivation techniques is a key determinant of agricultural productivity and has important consequences for income growth and poverty reduction in developing countries household data from nicaragua are used to show that the choice of cultivation technique depends on farmers tenure status even when techniques are observable and contractible in particular tree crops are less likely to be grown on rented than on owner cultivated plots further evidence indicates that the result follows from landlords inability or unwillingness to commit to long term tenancy contracts rather than from agency costs due to risk aversion or limited liability

intratemporal substitution and government spending in this paper we examine the idea that a general model of consumption should allow for the direct effect of government expenditures in a two good permanent income model we show given an assumed preference specification that there is a cointegration restriction implied by an intraperiod first order condition of the model this restriction leads to a linear deterministic cointegration relation between government spending private consumption and their relative price that is supported by the data using this restriction to recover the preference parameters we estimate the intraperiod elasticity of substitution for both government and private consumption to be about 0 9 overall we find consistent empirical evidence in support of our model

parents discount rates for child quality contemporary discussions of economic growth make human capital or knowledge accumulation its primary engine 25 human capital as the lead component of the stock of wealth defines a developed economy becker and murphy 4 show that human capital both increases and is increased by the scope of the market its rate of return rises with the size of its stock 5 human capital also plays significant roles in models of human fertility choice 40 population and environmental degradation 11 34 capital mobility 3 and endogenous technological progress 33 a substantial portion of an adult s human capital is accumulated during childhood children as children however cannot independently contract for the resources required to support investments in this human capital though nearly every society grants parents wide discretion about the nurture they provide their children little is understood about what motivates investment by one generation in another the relative importance of different investment modes or the discount rates which parents apply whatever the motivation and the mode because of the long time span between birth and adulthood parents discount rates potentially exert great leverage upon the investment decisions they make for their children knowledge of these discount rates is a prerequisite to acquiring an improved understanding of the internal decision processes of the household a collective decision unit which economics mostly treats as a black box 1 important policy questions as well as scientific accuracy and logical consistency demand knowledge of the discount rates parents apply to investments in their children healthier better educated and wealthier children have a better chance in life but there is no evident reason to suppose that intrafamily discount rates are socially optimal 2 many of the private reactions and behaviors which reinforce or temper the intended effects of public policies are internal to the household when these intended effects have a substantial temporal dimension parental discount rates will be influential for example increased public investments in children can be neutralized

understanding heterogeneous preferences in random utility models a latent class approach a finite mixture approach toconditional logit models is developed in whichlatent classes are used to promoteunderstanding of systematic heterogeneity the model is applied to wilderness recreationin which a branded choice experiment involvingchoice of one park from a demand system wasadministered to a sample of recreationists the basis of membership in the classes orsegments in the sample involved attitudinalmeasures of motivations for taking a trip aswell as their stated preferences overwilderness park attributes the econometricanalysis suggested that four classes of peopleexist in the sample using the model toexamine welfare measures of some hypotheticalpolicy changes identified markedly differentwelfare effects than the standard singlesegment model and provided insight into thedifferential impact of alternative policies

distortionary taxes and the provision of public goods economists have long been concerned with finding an efficient level of public expenditure the classic statement of the problem was given by paul samuelson 1954 an optimal level of expenditure is where the sum of the marginal rates of substitution between the public good and a reference good equals the marginal rate of transformation between the public good and the reference good mrs mrt however samuelson s formula assumes that all of the revenue needed to finance public goods can be raised with lump sum taxes since this is not generally possible the formula must be modified to account for the distortionary effects of the tax system an appropriate modification is to multiply the cost side of the equation by a term that is commonly called the marginal cost of public funds mcf in the case of samuelson s formula where government is entirely financed with lump sum taxes the mcf would be exactly 1 0 in the traditional view of economists distortionary taxes cause the mcf to be greater than one thus raising the cost of providing public goods in this paper we discuss some cases where the mcf may be less than one we will illustrate this possibility using numerical examples for labor taxes

back to basics the comanor wilson mes index revisited the present article attempts to investigate the validity of the comanor wilson minimum efficient size mes measure the basic assumption is that firms that have exhausted scale economies are in non increasing returns to scale the same firms are also assumed to have a size greater than mes estimated on sales total turnover employment or fixed assets data envelopment analysis dea is used on a sample of firms in three greek manufacturing industries to classify firms in operation according to increasing or non increasing returns to scale on the basis of the results of the dea input oriented model the mes measure correctly predicts over 85 of the cases a probit model is applied to those cases that are not identically predicted by mes concerning returns to scale results indicate that technical efficiency size and age are the factors that compel mes to yield the same prediction as the dea approach

the takeover deterrent effect of open market share repurchases this paper examines whether open market share repurchases deter takeovers we model pre repurchase takeover probability as a latent variable and examine its impact on the firm s decision to repurchase shares given specification tests reject the tobit model we turn to the censored quantile regression method of powell 1986 journal of econometrics 32 143 155 we find a significantly positive relation between open market share repurchases and takeover probability and we reconcile empirical findings in previous studies that contradict predictions repurchase activity is inversely related to firm size consistent with smaller firms having greater information asymmetry and is related to temporary but not permanent cash flows

the energy efficiency paradox revisited through a partial observability approach the present paper examines the energy efficiency paradox demonstrated in greek manufacturing firms through a partial observability approach the data set used has resulted from a survey carried out among 161 energy saving technology firm adopters maximum likelihood estimates that arise from an incidental truncation model reveal that the adoption of the energy saving technologies is indeed strongly correlated to the returns of assets that are required in order to undertake the corresponding investments the source of the energy efficiency paradox lies within a wide range of factors policy schemes that aim to increase the adoption rate of energy saving technologies within the field of manufacturing are significantly affected by differences in the size of firms finally mixed policies seem to be more effective than policies that are only capital subsidy or regulation oriented

the impact of federal government expenditures in the 1930s there is no shortage of explanations for the depressed conditions of the 1930s most of the recent literature has focused on the causes and severity of the great depression of 1929 33 but the failure of production to expand much beyond its 1929 peak by 1937 and the sharp 1937 38 recession have also received attention at the heart of the discussion has been the debate over monetary versus nonmonetary forces and the role of the federal reserve yet among possible nonmonetary forces little attention has been given to the role of federal government expenditures to cite only one example in the comprehensive study of this era edited by brunner 9 the role of government spending is ignored or at best mentioned only in passing in the volume s seventeen papers and comments

factors determining participation of the elderly in supplemental security the same low participation rates which plague many welfare programs have been observed among the elderly eligible for supplemental security income ssi a number of hypotheses have been offered to explain the low enrollment but none has attracted universal acceptance in this paper i use the survey of income and program participation sipp to examine the participation of the elderly in ssi because of the high quality of the data i am able to determine eligibility more accurately than in most previous studies in this sample only 56 percent of those whom i determine to be eligible for ssi are presently receiving benefits i model the decision to participate as a probit equation but modify the likelihood function to account for measurement error in the expected benefit the results indicate that participation is primarily determined by the financial situation of the eligible individuals although all those eligible for ssi are poor those with little in the way of other resources are significantly more likely to participate this finding differs from widespread beliefs that eligible individuals are discouraged by the difficulty of the application process or that many are uninformed about the program

uncertain altruism and investment in children the authors discuss the concept of parental uncertainty about their childrens altruism and the consequences for investment in childrens human capital in this paper we show that if parents are uncertain about their childrens altruism but are at least sure that they will receive some support from their children then the unique optimal investment is the efficient one uncertainty over the exact level of the retirement gift does not alter the conclusion of the perfect certainty case even when parents are risk averse alternatively parents may not know enough about their childrens altruism to feel completely confident that some gift will be forthcoming regardless of the size of their investment under this assumption we show that the optimal investment must be less than the efficient amount excerpt

the optimal composition of public spending in a deep recession abstract we study optimal fiscal policy in an economy plunged into a deep recession characterized by a liquidity trap and in which the government can allocate spending both to consumption and investment goods public investment increases the stock of public capital subject to a time to build constraint the zero lower bound on the nominal interest rate binds as a result of a large shock that increases households desire to save in the risk free asset pushing the natural rate of interest below zero under nominal rigidities and sub optimal monetary policy the shock leads to a large decline in private consumption and investment we show that the optimal response to such a shock is to temporarily raise public spending above the level that would be dictated by classical principles and to tilt its composition towards public investment this compositional shift lasts well after the natural rate has ceased to be negative our results suggest that the american recovery and reinvestment act of 2009 was insufficiently oriented towards public investment

information power and war ultimatum bargaining models of international interactions suggest that when conflict is costly and the actors are fully informed the probability of conflict goes to zero however conflict occurs with some positive probability when the challenger is uncertain about the defender s reservation value i employ a simple ultimatum game of bargaining to evaluate two traditional power centric theories of world politics balance of power and power transition theory the formal and empirical analyses demonstrate that as states approach power parity information asymmetries are greatest thus enhancing the probability of militarized conflict uncertainty is a central cause of conflict emergence and is correlated with the distribution of observable capabilities recognizing the relationship between the distribution of power and the uncertainty offers a more sophisticated interpretation of power centric explanations of world politics

output effects of government purchases the theoretical analysis focuses on the distinction between temporary and permanent movements in government purchases under plausible conditions the temporary case involves an output response that is positive less than one to one with the change in government purchases and larger than that generated by an equal sized but permanent shift in purchase the equilibrium real rate of return rise in the temporary case but changes little in the permanent one defense purchases are divided empirically into permanent and temporary components by considering the role of temporary wars no temporary shifts in nondefense purchases were isolated empirical results verify an expansionary output effect for temporary purchases that exceeds that of permanent purchases the results for some other expectational hypotheses are found to be generally supportive of the theory

ethnic enclaves and immigrant labor market outcomes quasi experimental evidence i examine the effects of the ethnic enclave size on labor market outcomes of immigrants i account for ability sorting into enclaves by exploiting a danish spatial dispersal policy under which refugees were randomly dispersed across locations first i find strong evidence that refugees with unfavorable unobserved characteristics self select into ethnic enclaves second a relative standard deviation increase in the ethnic enclave size increases annual earnings by 18 on average irrespective of skill level third further findings are consistent with the explanation that ethnic networks disseminate job information which increases the job worker match quality and thereby the hourly wage rate

fiscal policy in good and bad times in this paper we analyze whether the effect of fiscal policy differs across the business cycle to tackle this question we use a regime switching error correction framework where nonlinearities are only modeled in the short run and have no impact on the long run equilibrium regime specific shocks to government revenue and government purchases are identified using sign restrictions linear combinations of the impulse responses of these basic shocks are used to construct a deficit spending shock and a deficit financed tax cut shock we find that active spending policies have a stronger impact in recession with multipliers exceeding unity and should be preferred to deficit financed tax cuts

is there an energy paradox in fuel economy a note on the role of consumer heterogeneity and sorting bias abstract from the previous literature it can be found that consumers tend to undervalue discounted future energy costs in their purchase decisions for energy using durables we show that this finding could in part result from ignoring consumer heterogeneity in empirical analyses as opposed to true undervaluation

the impact of collective bargaining legislation on disputes in the u s public sector no legislation may be the worst legislation this article estimates the impact of collective bargaining legislation on disputes during labor negotiations in the u s public sector we use a large national sample of u s state and local government contracts to compare the incidence and intensity of disputes by similar workers under different forms of collective bargaining legislation the breadth of our data allows us to examine the impact of five different forms of legislation our principal finding is that dispute costs are highest in jurisdictions that provide no explicit framework for bargaining or dispute resolution strikes are as frequent and as long when they are illegal and employers are not required to bargain with employees as when they are legal but employers are required to bargain arbitration is most frequently used when formal institutions for arbitration have been provided

the impact of attribute preferences on adoption timing the case of photo voltaic pv solar cells for household electricity generation we are concerned with micro generation individual households generating electricity using a renewable technology we focus on modeling the adoption probability of photo voltaic solar panels by households using data from ontario canada where a generous feed in tariff is available to households generating electricity from solar panels we measure household level preferences for panels and use these preferences along with household characteristics to predict adoption time intentions we use discrete choice experiments to measure household level preferences and establish a causal link between the attributes of the technology and adoption time intentions using discrete time survival mixture analysis significant preferences included lower cost greater energy savings and lower fossil fuel inflation the conditional hazard probability of adoption at a particular time given no previous adoption showed that the attribute preferences had intuitively reasonable effects the hazard probabilities allow us to compute the cumulative probability of adoption over a 10 year period per household technology awareness has a significant effect on the adoption probability reinforcing the need for effective education our approach indicates the level of heterogeneity in preferences particularly high for investment criteria and co2 emissions these findings suggest that education campaigns should explain more about investment criteria feed in tariffs and environmental effects

american ambivalence towards abortion policy development of a heteroskedastic probit model of competing values theory using elaboration likelihood models and insights from the recent core beliefs literature we show that conflicting core beliefs lead to ambivalence about policy choices hypotheses policy choices about abortion are heterogeneous this heterogeneity across individuals is a function of the underlying conflict in their beliefs about the role of women and the sanctity of human life methods a heteroskedastic probit model is developed to test the hypotheses results heterogeneity is observed for six of seven abortion policy choices when core values conflict respondents are more ambivalent in their policy responses and more difficult for our standard models to predict

selectivity and distributional assumptions in static labor supply models the technique of estimating labor supply models has drastically changed since the early 1970s while early studies 28 23 estimated a single labor supply equation the occurrence of nonworkers soon became an issue of concern that complicated both the model estimated and the estimation technique people choose to work or not to work based on their opportunity set workers are therefore special they have poorer than average alternatives or better than average wage offers 15 the sample of workers is not random anymore but rather self selected ols estimators are biased and inconsistent and new estimation techniques are needed to correct that deficiency this realization led to an expansion of the labor supply model with a wage equation as wage offers of non workers are generally unobservable 9 while at the same time an array of new econometric techniques came forth to deal with problems of self selection and dichotomous endogenous variables two step and maximum likelihood are standard estimation methods nowadays stimulated by work of heckman and others 18 19 in turn these improved techniques allowed for more sophisticated labor supply models involving tax and transfer schedules 8 cost of labor force entry and institutional constraints 12 16 29 and wage rates interactively determined by labor hours 30 all of these new studies have one assumption in common the random disturbances are assumed to be generated by the normal distribution in an appeal to the familiar central limit theorem this theorem states roughly that the combined influence of numerous independent neglected factors may be represented by a single disturbance term that is approximately normally distributed

takeover activity among financial mutuals an analysis of target characteristics abstract this paper presents an empirical investigation of the merger process among mutuals using a large pooled cross section time series sample of uk building societies between 1981 and 1993 the financial services industry is probably unique in having a substantial mutual sector coexisting with and competing against joint stock firms however given the severely attenuated system of ownership claims in the financial mutual it has been widely predicted that this form will exhibit strong behavioural differences from the stock sector it is surprising therefore that despite the important governance role accorded to mergers in the corporate literature the merger process among financial mutuals has been almost totally ignored this paper explores the mutual merger process via an examination of the targets characteristics it finds little support for the natural selection view of mutual acquisitions but it does reveal the importance of the regulatory process above all the results show a surprising similarity to those from studies of the merger process in joint stock firms

macroeconomic effects from government purchases and taxes for u s annual data that include world war ii the estimated multiplier for temporary defense spending is 0 4 0 5 contemporaneously and 0 6 0 7 over 2 years if the change in defense spending is permanent gauged by ramey s defense news variable the multipliers are higher by 0 1 0 2 since all estimated multipliers are significantly less than 1 greater spending crowds out other components of gdp particularly investment the lack of good instruments prevents estimation of reliable multipliers for nondefense purchases multipliers in the literature of two or more likely reflect reverse causation from gdp to nondefense purchases increases in average marginal income tax rates measured by a newly constructed time series have significantly negative effects on gdp when interpreted as a tax multiplier the magnitude is around 1 1 the combination of the estimated spending and tax multipliers implies that the balanced budget multiplier for defense spending is negative we have some evidence that tax changes affect gdp mainly through substitution effects rather than wealth effects

optimal public expenditure with inefficient unemployment this article proposes a theory of optimal public expenditure when unemployment is inefficient the theory is based on a matching model optimal public expenditure deviates from the samuelson rule to reduce the unemployment gap the difference between current and efficient unemployment rates such optimal stimulus spending is described by a formula expressed with three sufficient statistics the unemployment gap the unemployment multiplier the decrease in unemployment achieved by increasing public expenditure and the elasticity of substitution between public and private consumption when unemployment is inefficiently high and the multiplier is positive the formula yields the following results 1 optimal stimulus spending is positive and increasing in the unemployment gap 2 optimal stimulus spending is zero for a zero multiplier increasing in the multiplier for small multipliers largest for a moderate multiplier and decreasing in the multiplier beyond that 3 optimal stimulus spending is zero if extra public goods have no value it becomes larger as the elasticity of substitution increases and it completely fills the unemployment gap if extra public goods are as valuable as extra private goods

taxes and the timing of births because the tax savings of having a child are a realized only if the birth takes place before midnight january 1 the incentives for the marginal birth are substantial using a sample of children from the national longitudinal survey of youth we find that the probability that a child is born in the last week of december rather than the first week of january is positively correlated with tax benefits we estimate that increasing the tax benefit of having a child by 500 raises the probability of having the child in the last week of december by 26 9 percent

willingness to pay for agricultural land preservation and policy process attributes does the method matter this article examines relationships between willingness to pay for land preservation and policy process attributes the approach departs from traditional welfare assessments in that it does not constrain attributes of the policy process to be utility neutral results indicate policy process attributes may influence utility in some circumstances even after controlling for the influence of land use outcomes often correlated with specific policy techniques results further imply that in some cases even comprehensive specification of land use outcomes by stated preference instruments may be insufficient to prevent systematic shifts in willingness to pay related to unspecified yet assumed policy process attributes

house prices borrowing constraints and monetary policy in the business cycle i develop a general equilibrium model with sticky prices credit constraints nominal loans and asset prices changes in asset prices modify agents borrowing capacity through collateral value changes in nominal prices affect real repayments through debt deflation monetary policy shocks move asset and nominal prices in the same direction and are amplified and propagated over time the financial accelerator is not constant across shocks nominal debt stabilises supply shocks making the economy less volatile when the central bank controls the interest rate i discuss the role of equity debt indexation and household and firm leverage in the propagation mechanism finally i find that monetary policy should not target asset prices as a means of reducing output and inflation volatility

social interaction at work abstract stock market investment decisions of individuals are positively correlated with those of coworkers sorting of unobservably similar individuals to the same workplaces is unlikely to explain this pattern as evidenced by the investment behavior of individuals who move between plants purchases made under stronger coworker purchase activity are not associated with higher returns moreover social interaction appears to drive the purchase of within industry stocks overall we find a strong influence of coworkers on investment choices but not an influence that improves the quality of investment decisions

if you have the flu symptoms your asymptomatic spouse may better answer the willingness to pay question evidence from a double bounded dichotomous choice model with heterogeneous anchoring the small sample size of contingent valuation cv surveys conducted in patients may have limited the use of the single bounded sb dichotomous choice format which is recommended in environmental economics in this paper we explore two ways to increase the statistical efficiency of the sb format 1 by the inclusion of proxies in addition to patients 2 by the addition of a follow up dichotomous question i e the double bounded db dichotomous choice format we found that patients n 223 and spouses n 64 answering on behalf of the patient had on average a similar willingness to pay for earlier alleviation of flu symptoms however a patient was significantly more likely to anchor his her answer on the first bid as compared to a spouse finally our original db model with shift effect and heterogeneous anchoring reconciled the discrepancies found in willingness to pay statistics between sb and db models in keeping with increased statistical efficiency

optimal provision of public goods a synthesis the standard approach to the optimal provision of public goods highlights the importance of distortionary taxation and distributional concerns a new approach neutralizes distributional concerns by adjusting the income tax schedule we demonstrate that both approaches are derived from the same basic formula we also take the new approach further by deriving an intuitive formula for the optimal level of public goods without imposing strong assumptions on preferences this formula shows that distortionary taxation has a role to play as in the standard approach however the main determinants of optimal provision are different and the modified samuelson rule is likely to lead to underprovision

taking a new look at empirical models of adoption average treatment effect estimation of adoption rates and their determinants this article shows that the observed sample adoption rate does not consistently estimate the population adoption rate even if the sample is random it is proved that instead the sample adoption rate is a consistent estimate of the population joint exposure and adoption rate which does not inform about adoption per se likewise it is shown that a model of adoption with observed adoption outcome as a dependent variable and where exposure to the technology is not observed and controlled for cannot yield consistent estimates of the determinants of adoption the article uses the counterfactual outcomes framework to show that the true population adoption rate corresponds to what is defined in the modern policy evaluation literature as the average treatment effect ate which measures the effect or impact of a treatment on a person randomly selected in the population in the adoption context a treatment corresponds to exposure to the technology the article uses the ate estimation framework to derive consistent nonparametric and parametric estimators of population adoption rates and their determinants and applies the results to consistently estimate the population adoption rates and determinants of the nerica new rice for africa rice varieties in c ote d ivoire the ate methodological approach developed in the article has significant policy implications with respect to judging the intrinsic merit of a new technology in terms of its potential demand by the target population independently of issues related to its accessibility and in terms of the decision to invest or not in its wide scale dissemination

the distribution of income shocks during crises an application of quantile analysis to mexico 1992 95 moving beyond the simple comparisons of averages typical of most analyses of household income shocks this article employs quantile analysis to generate a complete distribution of such shocks by type of household during the 1995 crisis in mexico it compares the distributions across normal and crisis periods to see whether observed differences were due to the crisis or are intrinsic to the household types alternatively it asks whether the distribution of shocks during normal periods was a reasonable predictor of vulnerability to income shocks during crises it finds large differences in the distribution of shocks by household types both before and during the crisis but little change in their relative positions during the crisis the impact appears to have been spread fairly evenly households headed by people with less education poor single mothers or people working in the informal sector do not appear to experience disproportionate income drops either in normal times or during crises

flexible mixture distribution modeling of dichotomous choice contingent valuation with heterogenity abstract this paper considers the performance of a model of mixture normal distributions for dichotomous choice contingent valuation data which allows the researcher to consider unobserved heterogeneity across the sample the model is flexible and approaches a semi parametric model since the normality assumption can be removed by augmenting the number of mixture distributions bayesian inference allows for simple estimation of the model and is particularly appropriate for conducting inference with finite data sets the proposed model is compared with other semi parametric and parametric approaches using monte carlo simulation under alternative assumptions regarding heteroskedasticity and heterogeneity in sample observations it is found that the mixture normal model reduces bias and improves performance with respect to an alternative semi parametric model particularly when the sample is characterized by heterogeneous preferences the application of the model to empirical data on the recreational value of natural areas in the canary islands confirmed the expected results

on the power of dickey fuller tests against fractional alternatives abstract we examine the properties of dickey fuller unit root tests under fractionally integrated alternatives and find that these tests have quite low power

taxes and transfers their effects on the decision to end a marriage abstract the transfer system typically has large marriage disincentives while the income tax system is likely to subsidize marriage for many low income families in other words the tax system may offset an increase in transfer benefits associated with marital separation the interaction of the transfer system with the income tax system has largely been overlooked the income tax system has become more relevant for low income families with the recent expansion of the earned income tax credit which filers may be eligible for even if their tax liability is zero this paper uses family level measures of the change in transfer benefits and tax liability associated with a change in family structure to consider the effect of these financial incentives on separation decisions

the distribution of income shocks during crises moving beyond the simple comparisons of averages typical of most analyses of household income shocks this article employs quantile analysis to generate a complete distribution of such shocks by type of household during the 1995 crisis in mexico it compares the distributions across normal and crisis periods to see whether observed differences were due to the crisis or are intrinsic to the household types alternatively it asks whether the distribution of shocks during normal periods was a reasonable predictor of vulnerability to income shocks during crises it finds large differences in the distribution of shocks by household types both before and during the crisis but little change in their relative positions during the crisis the impact appears to have been spread fairly evenly households headed by people with less education poor single mothers or people working in the informal sector do not appear to experience disproportionate income drops either in normal times or during crises

second moments in speculative attack models panel evidence abstract the paper tests two popular asset based models of speculative attacks and in particular their emphasis on the second moments of monetary aggregates analyzing monthly panels of appropriate countries in three regions it finds evidence for the importance of money reserve ratios predicted by both models as well as the variance of the ratio of m2 to reserves

employment based health insurance and job mobility is there evidence of job lock the majority of privately insured americans obtain their health insurance through their own or a family member s employment the rationale for employers to provide health insurance is straightforward by pooling the risks of individuals employers can reduce adverse selection and lower administrative expenses in addition they benefit from tax laws allowing businesses to deduct their health insurance costs these advantages of employer provision however must be weighed against the distortions they may generate in individual labor market decisions in particular health insurance may distort job mobility if employees decide to keep jobs they would rather leave for fear of losing coverage for preexisting conditions a possibility that has been termed job lock this paper attempts to quantify the effect of employer provided health insurance on the labor market mobility of individuals the link between employer provided health insurance and

net campaign contributions agricultural interests and votes on liberalizing trade with china we consider the potential influence of contributions from interest groups to political rivals in the voting behavior of us legislators on international trade policy issues our application addresses the determinants of the permanent normal trade relations with china decision and focuses particular attention on the agriculture agribusiness lobby a simultaneous voting net contributions model suggests that these contributions were very effective relative to organized labor and other corporate groups despite their relatively small dollar value possible explanations arising from differences in targeting strategies are explored

the random walk in canadian output this paper examines the time series properties of canadian real output for the years 1870 to 1985 in doing so tests for unit roots in the univariate time series representation of the series are performed the testing procedures are based on recent work by pierre perron 1989 and allow for trend breaks

engel s law and cointegration a time series counterpart of engel s law is that the expenditure share on food declines as the economy grows the main purpose of this paper is to test whether houthakker s addilog utility function can simultaneously explain this time series observation and cross sectional observations concerning engel s law ogaki and park s cointegration approach is used to estimate parameters of the utility function from time series data total expenditure elasticities implied by the estimated addilog utility function are compared with estimates of the elasticities from cross sectional data

a political economy theory of fiscal policy and unemployment this paper presents a political economy theory of fiscal policy and unemployment the underlying economic model is one in which unemployment can arise but can be mitigated by tax cuts and public spending increases such policies are fiscally costly but can be financed by issuing government debt policy decisions are made by a legislature consisting of representatives from different political districts the theory provides a positive account of the simultaneous determination of fiscal policy and unemployment the most important implication of the theory is that debt and unemployment levels should be positively correlated some evidence in support of this prediction is provided using data from a panel of developed countries

fiscal dependence on trade taxes and economic development additional results and a reconciliation of the empirical evidence using brazilian data spanning the period 1910 75 new evidence is presented on the hypothesis that a country s fiscal dependence on trade taxes is inversely related to her level of economic development at least once the latter passes a certain threshold unlike previous studies this study uses methods which highlight the dynamic and temporal nature of the underlying relationships the results indicate strong support for the hypothesis and also suggest that the conflicting time serious evidence can be reconciled

fiscal dependence on trade taxes and the level of economic development a comment 1993 fiscal dependence on trade taxes and the level of economic development a comment applied economics vol 25 no 11 pp 1393 1397

how oil price changes affect car use and purchase decisions survey evidence from chinese cities abstract china s automobile sector has entered a period of rapid development and has resulted in huge oil consumption oil price fluctuation will change consumers behavior understanding how changes in oil price affect the use and purchase of private cars is valuable to formulating price and emissions mitigation policies in this paper we use survey data from four cities beijing shanghai guangzhou and shenzhen and a total of 715 responses were deemed used for the analyses the results show that the sensitivity of low income consumers to oil price is significantly higher than high income consumers compared with low income consumers high income consumers would drive less only when oil price rise to a higher level in addition for the high income consumers with a potential purchase intention only when oil price rise to more than 10 yuan will they change the purchase intension and choose a lower emission car or as we called purchase lower

unemployment fiscal multipliers we estimate the effects of fiscal policy on the labor market in us data an increase in government spending of 1 percent of gdp generates output and unemployment multipliers respectively of about 1 2 percent at one year and 0 6 percentage points at the peak each percentage point increase in gdp produces an increase in employment of about 1 3 million jobs total hours employment and the job finding probability all rise whereas the separation rate falls a standard neoclassical model augmented with search and matching frictions in the labor market largely fails in reproducing the size of the output multiplier whereas it can produce a realistic unemployment multiplier but only under a special parameterization extending the model to strengthen the complementarity in preferences to include unemployment benefits real wage rigidity and or debt financing with distortionary taxation only worsens the picture new keynesian features only marginally magnify the size of the multipliers when complementarity is coupled with price stickiness however the magnification effect can be large

can defaults save the climate evidence from a field experiment on carbon offsetting programs individual preferences for environmental policies can be influenced by the frame in which choices and decisions are presented in this paper we present results of a field experiment on the contributions to carbon offsetting programs under two alternative treatments for the default option the opt in treatment asked subjects to pay for the policy proposal while the opt out treatment asked subjects if they wanted to be excluded from payment for the policy proposal the results show that the frame of the default option had a significant effect on the amount of money paid for the policy proposal subjects were more likely to accept the policy proposal if the default option was the opt out treatment the results have implications for the design of environmental policies

modeling preference heterogeneity in stated choice data an analysis for public goods generated by agriculture stated choice models based on the random utility framework are becoming increasingly popular in the applied economics literature the need to account for respondents preference heterogeneity in such models has motivated researchers in agricultural environmental health and transport economics to apply random parameter logit and latent class models in most of the published literature these models incorporate heterogeneity in preferences through the systematic component of utility an alternative approach is to investigate heterogeneity through the random component of utility and covariance heterogeneity models are one means of doing this in this article we compare these alternative ways of incorporating preference heterogeneity in stated choice models and evaluate the sensitivity of estimated welfare measures to which approach is selected we find that a latent class approach fits our data best but all the models perform well in terms of out of sample predictions finally we discuss what criteria a researcher can use to decide which approach is most appropriate for a given data set

population and the environment a parable of firewood and other tales the author analyzes the relationship between population and the environment with a focus on the role which environmental degradation and natural resources depletion may play in producing the population pressure which lies behind such degradation and depletion especially in developing countries the principal conclusion of this analysis is that the possibilities for a stable equilibrium between human population and its environment are quite limited i show that parental altruism toward their children can only make matters worse if socially unchecked by leading to an increase of the birthrate in every environmental state in comparison with that which would occur in its absence excerpt

fiscal policy in general equilibrium this paper studies four classic fiscal policy experiments within a quantitatively restricted neoclassical model the authors main findings are as follows 1 permanent changes in government purchases can lead to short run and long run output multipliers that exceed one 2 permanent changes in government purchases induce larger effects than temporary changes 3 the financing decision is quantitatively more important than the resource cost of changes in government purchases and 4 public investment has dramatic effects on private output and investment these findings stem from important dynamic interactions of capital and labor absent in earlier equilibrium analyses of fiscal policy copyright 1993 by american economic association

testing for misspecification in the referendum contingent valuation approach binary choice models are frequently used in the analysis of referendum contingent valuation data because omitted regressors heteroskedasticity and distribution asymmetry in these models result in inconsistent parameter estimates it is important that misspecification tests be undertaken in this article conditional moment tests for these problems are presented and applied to data from two referendum contingent valuation studies results show that some models have misspecification problems and that these problems affect the estimation of welfare measures

supersized votes ballot length uncertainty and choice in direct legislation elections voters in polities that make heavy use of direct democracy are frequently confronted with ballots that contain a multitude of propositions claims that direct legislation elections overwhelm voters with choices they are not competent to make should particularly apply to such demanding settings yet evidence on the effects of lengthy ballots on voting behavior is scant this study reviews theories of decision making under uncertainty and tests their predictions in a mixed heteroscedastic model of vote choice that is fitted to a unique collection of survey and contextual data on swiss referendums increasing ballot length is demonstrated to interfere with the voters ability to translate their political preferences into consistent policy choices

government debt government spending and private sector behavior reply and update the preceding articles by martin feldstein and douglas elmendorf and by franco modigliani and arlhe sterling give us a welcome opportunity to return to the effects of fiscal policy on private consumption at stake in this debate we believe is a potential paradigm change from what kormendi 1983 termed the standard approach which bases private consumption on disposable personal income to what he termed the consolidated approach which bases consumption on aggregate income government spending and transfer payments each with separate effects the standard approach excludes ricardian equivalence a priori the consolidated approach not only incorporates ricardian equivalence but in its augmented form allows one to nest the various hypotheses associated with the two approaches feldstein and elmendorf argue that kormendi s 1983 results and implicitly those of kormendi and meguire 1986 which reject the standard approach in favor of the consolidated ricardian alternative are not robust to the exclusion of data from world war ii and other specification changes modigliani and sterling argue that accounting for temporary taxes reverses our rebuttal of their 1986 comment we first take up the challenge of feldstein and elmendorf before turning to modigliani and sterling we then assess the validity of our preference for estimating in differences by testing whether consumption income and the fiscal variables are cointegrated finally we summarize what can be learned from the debate i feldstein and elmendorf

aggregate demand idle time and unemployment this paper develops a model of unemployment fluctuations the model keeps the architecture of the barro and grossman 1971 general disequilibrium model but replaces the disequilibrium framework on the labor and product markets by a matching framework on the product and labor markets both price and tightness adjust to equalize supply and demand there is one more variable than equilibrium condition on each market so we consider various price mechanisms to close the model from completely flexible to completely rigid with some price rigidity aggregate demand influences unemployment through a simple mechanism higher aggregate demand raises the probability that firms find customers which reduces idle time for firms employees and thus increases labor demand which in turn reduces unemployment we use the comparative statics predictions of the model together with empirical measures of quantities and tightnesses to re examine the origins of labor market fluctuations we conclude that 1 price and real wage are not fully flexible because product and labor market tightness fluctuate significantly 2 fluctuations are mostly caused by labor demand and not labor supply shocks because employment is positively correlated with labor market tightness and 3 labor demand shocks mostly reflect aggregate demand and not technology shocks because output is positively correlated with product market tightness

fiscal dependence on trade taxes and trade policy reform the article focuses on fiscal implications of structural adjustment loans sals from an a priori standpoint and by reference to the experience of five countries three of these countries have had revenue enhancement after trade policy reforms and the other two cases experienced revenue depletion the central point which emerges from the study is that it is not clear that trade liberalisation leads to fiscal enhancement or fiscal depletion both a priori the orising and country analyses demonstrate that a range of outcomes is possible depending upon initial conditions and the components of any reform package

intratemporal substitution between private and government consumption the case of japan abstract in this paper we use japanese quarterly data to examine the relationship between private and government consumption we apply a two step estimation procedure and find additional evidence that the two types of consumption may be complements or unrelated

factors influencing the privatisation of urban solid waste collection in spain this paper analyses some of the organisational aspects of urban solid waste collection it starts by discussing some of the theoretical issues of contracting out then an explanatory model is spec

employment efficiency and sticky wages evidence from flows in the labor market i consider three views of the labor market in the first wages are flexible and employment follows the principle of bilateral efficiency workers never lose their jobs because of sticky wages in the second wages are sticky and inefficient layoffs do occur in the third wages are also sticky but employment governance is efficient i show that the behavior of flows in the labor market strongly favors the third view in the modern u s economy recessions do not begin with a burst of layoffs unemployment rises because jobs are hard to find not because an unusual number of people are thrown into unemployment

semiparametric distribution free testing of the expectations hypothesis in a parimutuel gambling market the expectations hypothesis maintains that a current forward or futures price should be an unbiased forecast of the expected future price this article tests the expectations hypothesis in the parimutuel gambling market for greyhound racing using parametric and semiparametric estimators parimutuel gambling markets are similar to speculative asset markets in many regards conventional maximum likelihood tests of asset pricing require a priori specification of the statistical distribution governing agents expectations distributional misspecifications may bias conventional tests the semiparametric estimators applied in this article overcome these problems and in addition maintain consistency under heteroscedasticity the results reject the expectations hypothesis

the evolution of internal market structure we present a dynamic factor analytic choice model to capture evolution of brand positions in latent attribute space our dynamic model allows researchers to investigate brand positioning in new categories or mature categories affected by structural change such as entry we argue that even for mature categories not affected by structural change the assumption of stable attributes may be untenable we allow for evolution in attributes by modeling individual level time specific attributes as arising from dynamic means the dynamic attribute means are modeled as a bayesian dynamic linear model dlm the dlm is nested within a factor analytic choice model our approach makes efficient use of the data by leveraging estimates from previous and future periods to estimate current period attributes we demonstrate the robustness of our model with data that simulate a variety of dynamic scenarios including stationary behavior we show that misspecified attribute dynamics induce temporal heteroskedasticty and correlation between the preference weights and the error term applying the model to a panel data set on household purchases in the malt beverage category we find considerable evidence for dynamics in the latent brand attributes from a managerial perspective we find advertising expenditures help explain variation in the dynamic attribute means