information acquisition and under diversification if an investor wants to form a portfolio of risky assets and can exert effort to collect information on the future value of these assets before he invests which assets should he learn about the best assets to acquire information about are ones the investor expects to hold but the assets the investor holds depend on the information he observes we build a framework to solve jointly for investment and information choices with general preferences and information cost functions although the optimal research strategies depend on preferences and costs the main result is that the investor who can first collect information systematically deviates from holding a diversified portfolio information acquisition can rationalize investing in a diversified fund and a concentrated set of assets an allocation often observed but usually deemed anomalous copyright wiley blackwell

induced innovation in american agiculture a reconsideration this paper investigates the role of induced innovation in the development of american agriculture from 1880 to 1980 the induced innovation hypothesis most closely associated with the work of hayami and ruttan argues that successful economies develop technologies in accordance with market price signals to loosen constraints on growth imposed by factor scarcities our analysis employing new state and regional level data fails to find support for hayami and ruttan s hypothesis this paper suggests that many of the fundamental generalizations about american agricultural development need to be reconsidered and redirects attention to the role of settlement changing crop patterns and biological investments in explaining changes in factor utilization in american agriculture

investor flows and the 2008 boom bust in oil prices this paper explores the impact of investor flows and financial market conditions on returns in crude oil futures markets i argue that informational frictions and the associated speculative activity may induce prices to drift away from fundamental values and may result in price booms and busts particular attention is given to the interplay between imperfect information about real economic activity including supply demand and inventory accumulation and speculative activity in oil markets furthermore i present new evidence that there were economically and statistically significant effects of investor flows on futures prices after controlling for returns in the united states and emerging economy stock markets a measure of the balance sheet flexibility of large financial institutions open interest the futures spot basis and lagged returns on oil futures the largest impacts on futures prices were from intermediate term growth rates of index positions and managed money spread positions moreover my findings suggest that these effects were through risk or informational channels distinct from changes in convenience yield finally the evidence suggests that hedge fund trading in spread positions in futures impacted the shape of term structure of oil futures prices this paper was accepted by wei xiong finance

effects of family background on earnings and returns to schooling evidence from brazil we investigate whether omitted family background variables are responsible for high returns to schooling estimated in brazil returns to schooling fall by about one third when parental schooling is added to wage equations surprisingly the schooling of fathers in law has larger effects on wages than the schooling of fathers on the basis of a model of assortative mating we interpret this as evidence that parental characteristics represent unobservable worker attributes rather than nepotism in the labor market we conclude that the family background bias in returns to schooling is modest and need not imply returns to family connections

tastes and technology in a two country model of the business cycle explaining international trade on international financial markets allows people to insure country specific risk and smooth consumption intertemporally equilibrium models of business cycles with trade on global financial markets typically yield international consumption correlations near one and excessive volatility of investment the authors incorporate nontraded goods in the model and find that the implications for aggregate consumption investment and the trade balance are consistent with business cycle properties of industrialized countries however the model driven by technology shocks alone yields counterfactual implications for comovements between consumption and prices at the sectoral level taste shocks produce price quantity relationships more consistent with the data copyright 1995 by american economic association

can nontradables generate substantial home bias the past decade has witnessed an increase in the fraction of equity portfolios invested abroad as barriers to international asset trade have significantly declined what are the long run implications of this process in this paper we investigate to what extent nontradables consumption and leisure can affect the portfolio allocation decision in otherwise integrated capital markets we find that hedging against nontradables shocks can account for only a small portfolio bias toward domestic assets these results suggest that in the near future we can expect to observe sizable additional international diversification

trying to explain home bias in equities and consumption investors hold a substantially larger proportion of their wealth portfolios in domestic assets than standard portfolio theory would suggest a phenomenon called equity home bias in the absence of this bias investors would optimally diversify domestic output risk using foreign equities therefore consumption growth rates would tend to co move across countries even when output growth rates do not empirically however consumption growth rates tend to have a lower correlation across countries than do output growth rates a phenomenon i call consumption home bias in this paper i discuss these two biases and their potential relationship as suggested by the literature

the induced innovation hypothesis and u s public agricultural research applicability of the induced innovation hypothesis that a change in relative input prices induces innovation to economize use of the increasingly expensive input hicks 1932 is examined for u s public agricultural research a reduced form test is developed using input prices from the agricultural production sector expenditures from the public research sector aimed at developing new technology to save specific agricultural inputs and variables to control for innovation marginal cost differences and nonhomotheticity unlike recent demand side studies that soundly reject the induced innovation hypothesis for agriculture support for the hypothesis is found for several input pairings through these tests of public agricultural research using state level panel data

consumption inequality and intra household allocations the current literature on consumption inequality treats all adults within the household equally making the implicit assumption that all consumption inequality is between not within households however increased marital sorting on earnings and the subsequent rise in the share of women s income in the household may have important implications for consumption inequality measured at the individual level we use an extension of the collective framework of chiappori to estimate a rule for assigning resources to individual household members we then construct a measure of individual level inequality by looking at implied changes in intra household allocations and explore the implications of our framework for the measurement of individual level versus household level consumption inequality our analysis which is based on households comprising one or two adults suggests that the conventional approach of ignoring intra household allocations underestimates the level of cross sectional consumption inequality by 30 and overstates the trend by two thirds our findings also indicate that increases in marital sorting on wages and hours worked can simultaneously explain virtually all of the decline in within household inequality and a substantial fraction of the rise in between household inequality in the uk since the 1970s

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

a welfare criterion for models with distorted beliefs this paper proposes a welfare criterion for economies in which agents have heterogeneously distorted beliefs instead of taking a stand on whose belief is correct our criterion asserts an allocation to be belief neutral ine cient if it is ine cient under any convex combination of agents beliefs while this criterion gives an incomplete ranking of social allocations it can identify negative sum speculation in a broad range of prominent models with distorted beliefs

asymmetric information and the lack of portfolio diversification there is pervasive evidence that individuals invest primarily in local stocks and thus hold poorly diversified portfolios the present article develops a theoretical model in which the presence of informational asymmetries introduces home equity bias the main departure from previous theoretical work is the assumption that local investors outperform nonlocal investors in identifying the correct ranking of local investment opportunities instead of possessing superior information about the aggregate performance of the local stock market the second key assumption is based on the evidence that short selling is a costly activity

heterogeneous expectations and bond markets this paper presents a dynamic equilibrium model of bond markets in which two groups of agents hold heterogeneous expectations about future economic conditions the heterogeneous expectations cause agents to take on speculative positions against each other and therefore generate endogenous relative wealth fluctuation the relative wealth fluctuation amplifies asset price volatility and contributes to the time variation in bond premia our model shows that a modest amount of heterogeneous expectations can help explain several puzzling phenomena including the excessive volatility of bond yields the failure of the expectations hypothesis and the ability of a tent shaped linear combination of forward rates to predict bond returns the author 2009 published by oxford university press on behalf of the society for financial studies all rights reserved for permissions please email journals permissions oxfordjournals org oxford university press

crime and victimization an economic perspective the recent upward trend in crime rates of developing countries has spurred widespread public concern about personal and proprietary insecurity in some countries the questions of crime violence and victimization are attracting more attention from academics and policy makers than traditional economic problems the objective of this paper is to examine the main issues related to crime and victimization from an economic perspective for this purpose the paper combines a review of the main results established in the literature with original research on the causes of crime and the risk factors of victimization the first section provides a review of the estimates of the costs of crime the main theoretical and empirical research on its causes and the relative advantages of official and survey data on crime the second section presents original work on the main causes of violent crime from a cross country perspective the empirical work starts with a basic model of the economic determinants of homicide and robbery rates in turn this empirical model is extended along five dimensions 1 deterrence factors 2 illegal drug related activities 3 demographic issues 4 income and ethnic polarization and 5 social capital the third section reviews recent case studies of latin american cities that rely on survey data to assess the empirical determinants of the probability of victimization these studies focus on three types of risk factors 1 individual characteristics 2 household characteristics and 3 community characteristics the main conclusions from the previous sections are summarized in section four

does improved local supply of schooling enhance intergenerational mobility in education evidence from jordan the impact of the growth of the local supply of public schools in the post colonial period on intergenerational mobility in education is a first order question in the arab world this question is examined in jordan using a unique dataset that links individual data on own schooling and parents schooling for adults from a household survey with the supply of schools in the subdistrict of birth at the time the individual was of age to enroll from a school census the identification strategy exploits the variation in the supply of basic and secondary public schools across cohorts and subdistricts of birth in jordan controlling for year and subdistrict of birth fixed effects and interactions of governorate and year of birth fixed effects the findings show that the local availability of basic public schools does in fact increase intergenerational mobility in education for instance a one standard deviation increase in the supply of basic public schools per 1 000 people reduces the father son and mother son associations of schooling by 18 20 percent and the father daughter and mother daughter associations by 33 44 percent however an increase in the local supply of secondary public schools does not seem to have an effect on the intergenerational mobility in education

geographic aggregation and induced innovation in american agriculture the induced innovation hypothesis is tested for the usa and western regions using cointegration procedures an error correction model separates short run and long run effects of relative price changes a significant difference in the elasticities of factor substitution along the isoquant and the innovation possibility curve implies induced innovation the estimated results support the hypothesis for washington the pacific northwest and the western region but not for the nation corroborative tests of weak exogeneity fail to support the hypothesis in any of the geographic units changes in output level and research investment do not significantly bias agricultural technology in the usa

gross capital flows and asymmetric information abstract this paper shows that the behavior of gross capital flows can identify the nature of information asymmetries in international equity markets information asymmetry between foreign and domestic investors implies a correlation between net flows and returns information asymmetry within groups of foreign and domestic investors implies that gross flows and absolute returns are correlated i find that the correlation between gross flows and absolute returns is stronger than the correlation between net flows and returns suggesting that information asymmetries within countries are more important than those between countries

internationalization and the evolution of corporate valuation by documenting the evolution of tobin s q before during and after firms internationalize the authors provide evidence on the bonding segmentation and market timing theories of internationalization using new data on 9 096 firms across 74 countries over the period 1989 2000 they find that tobin s q does not rise after internationalization even relative to firms that do not internationalize instead q rises significantly before internationalization and during the internationalization year but then q falls sharply in the year after internationalization quickly relinquishing the increases of the previous years to account for these dynamics the authors show that market capitalization rises before internationalization and remains high while corporate assets increase during internationalization the evidence supports models stressing that financial internationalization facilitates corporate expansion but challenges models stressing that internationalization produces an enduring effect on q by bonding firms to a better corporate governance system

why is child labor illegal abstract we present a theory of the emergence of laws restricting child labor or imposing mandatory education that is consistent with the fact that poor parents tend to oppose such laws we find that if altruistic parents are unable to commit to educating their children child labor laws can increase the welfare of higher income parents in an ex ante sense on the basis of an empirical analysis of latin american household surveys we demonstrate that per capita income in the country of residence has the predicted effect on child labor supply even after controlling for other household characteristics

does industrial structure explain the benefits of international diversification abstract we examine the influence of industrial structure on the cross sectional volatility and correlation structure of country index returns for 12 european countries between 1978 and 1992 we find that industrial structure explains very little of the cross sectional difference in country return volatility and that the low correlation between country indices is almost completely due to country specific sources of return variation diversification across countries within an industry is a much more effective tool for risk reduction than industry diversification within a country

agricultural productivity revisited this paper describes production accounts for agriculture output is defined as gross production leaving the farm as opposed to real value added inputs are not limited to capital and labor but include intermediate inputs as well we derive index numbers of gross output capital labor and intermediate inputs these data are used to construct indexes of total factor productivity we then compare the contributions of input growth and productivity growth to economic growth the important role of productivity growth in agriculture becomes immediately apparent

international real business cycles we ask whether a two country real business cycle model can account simultaneously for domestic and international aspects of business cycles with this question in mind we document a number of discrepancies between theory and data the most striking discrepancy concerns the correlations of consumption and output across countries in the data outputs are generally more highly correlated across countries than consumptions in the model we see the opposite

why do forecasters disagree lessons from the term structure of cross sectional dispersion abstract key sources of disagreement among economic forecasters are identified by using data on cross sectional dispersion in forecasters long and short run predictions of macroeconomic variables dispersion among forecasters is highest at long horizons where private information is of limited value and lower at short forecast horizons moreover differences in views persist through time such differences in opinion cannot be explained by differences in information sets our results indicate they stem from heterogeneity in priors or models differences in opinion move countercyclically with heterogeneity being strongest during recessions where forecasters appear to place greater weight on their prior beliefs

home bias in open economy financial macroeconomics standard theory would predict that investors hold a well diversified portfolio of equities across the world but despite the process of financial globalization investors still hold a disproportionate share of local equities in their portfolio the equity home bias french and poterba 1991 we review the various explanations of this puzzling phenomenon in the context of recent developments in macroeconomic modelling that have allowed to incorporate sophisticated international portfolio choices in standard two country general equilibrium models we refer to this literature as open economy financial macroeconomics we focus on three broad classes of explanations i hedging motives in frictionless financial markets real exchange rate and non tradable income risk ii asset trade costs in international financial markets such as transaction costs differences in tax treatments between national and foreign assets iii informational frictions and behavioural biases these recent developments raise the need for new portfolio facts beyond the equity home bias and we will present some new evidence on cross border asset holdings across different types of assets equities bonds and bank lending we also present some new micro data on institutional holdings of equity at the fund level these data should inform macroeconomic modelling of the open economy and a growing literature of models of delegated investment

international equity flows and returns a quantitative equilibrium approach this paper models trading by foreign and domestic investors in developed country equity markets the key assumptions are that i both the foreign and domestic investor populations contain investors of different sophistication and ii investor sophistication matters for performance in both public equity and private off market investments a quantitative model with these assumptions delivers a unified explanation for three stylized facts about us investors international equity trades that have been documented in the literature i trading by us investors occurs in bursts of simultaneous buying and selling ii americans build and unwind foreign equity positions gradually and iii us investors increase their market share in a country when stock prices there have recently been rising

families schools and primary school learning evidence for argentina and colombia in an international perspective this article presents evidence on the associations between family background school characteristics and student performance in primary school in argentina colombia and several comparison countries as a general pattern educational performance is strongly related to family background weakly to some institutional school features and hardly to schools resource endowments in an international perspective family background effects are relatively large in argentina and relatively small in colombia a specific argentine feature is the lack of performance differences between rural and urban areas a specific colombian feature is the lack of significant between gender performance differences nonnative students and students not speaking spanish at home perform particularly weak in both countries in argentina students perform better in schools with a centralized curriculum and ability based class formation

what can explain the apparent lack of international consumption risk sharing recent research in international business cycles finds that international consumption comovements do not match the risk sharing predictions of standard complete markets models in this paper i ask whether two different types of explanations can help explain this result 1 nonseparabilities between tradables and nontradable leisure or goods and 2 the effects of capital market restrictions on consumption risk sharing i find that risk sharing cannot be resolved by either explanation alone however when i allow for both nonseparabilities and certain market restrictions risk sharing among unrestricted countries cannot be rejected this evidence suggests that a combination of these two effects may be necessary to explain consumption risk sharing across countries

differential interpretation of public signals and trade in speculative markets most models of trade in speculative markets assume that agents interpret public information identically we provide empirical evidence on the relation between the volume of trade and stock returns around public announcements and we argue that the evidence is inconsistent with this assumption we then develop a model of trade around public announcements that incorporates differential interpretations and is consistent with the observed volume return relation then we test the standard model of belief revision underlying most models of trade using stock brokerage research analysts earnings forecasts the hypthesis of identical interpretations seems inconsistent with the forecast revisions in these data

the informational content of surnames the evolution of intergenerational mobility and assortative mating we propose a new methodology for measuring intergenerational mobility in economic well being our method is based on the joint distribution of surnames and economic outcomes it circumvents the need for intergenerational panel data a long standing stumbling block for understanding mobility it does so by using cross sectional data alongside a calibrated structural model to recover the traditional intergenerational elasticity measures our main idea is simple if inheritance is important for economic outcomes then rare surnames should predict economic outcomes in the cross section this is because rare surnames are indicative of familial linkages if the number of rare surnames is small this approach will not work however rare surnames are abundant in the highly skewed nature of surname distributions from most western societies we develop a model that articulates this idea and shows that the more important is inheritance the more informative will be surnames this result is robust to a variety of different assumptions about fertility and mating we apply our method using the 2001 census from catalonia a large region of spain we use educational attainment as a proxy for overall economic well being a calibration exercise results in an estimate of the intergenerational correlation of educational attainment of 0 60 we also find evidence suggesting that mobility has decreased among the different generations of the 20th century a complementary analysis based on sibling correlations confirms our results and provides a robustness check on our method our model and our data allow us to examine one possible explanation for the observed decrease in mobility we find that the degree of assortative mating has increased over time overall we argue that our method has promise because it can tap the vast mines of census data that are available in a heretofore unexploited manner

two trees with heterogeneous beliefs spillover effect of disagreement in a model where investors disagree about the fundamentals of two stocks the state price density depends on investor disagreements for both stocks especially the larger stock this implies that disagreement among investors in a large firm has a spillover effect on the pricing of other stocks owned by these investors the pricing effects of investor disagreements crucially depend on the average belief biases empirical findings support the novel model prediction of a disagreement spillover effect and help reconcile some mixed evidence in the literature

belief dispersion in the stock market we develop a dynamic model of belief dispersion with a continuum of investors differing in beliefs the model is tractable and qualitatively matches many of the empirical regularities in a stock price its mean return volatility and trading volume we find that the stock price is convex in cash flow news and increases in belief dispersion while its mean return decreases when the view on the stock is optimistic and vice versa when pessimistic moreover belief dispersion leads to a higher stock volatility and trading volume we demonstrate that otherwise identical two investor heterogeneous beliefs economies do not necessarily generate our main results

capital services in u s agriculture concepts comparisons and the treatment of interest rates this paper begins with a review of the methods and assumptions used to measure capital service flows two data series on capital inputs in u s agriculture are briefly described and compared we show that measures of capital services are sensitive to the treatment of interest rates notably the use of fixed versus variable market rates significantly affects measures of the quantity and productivity of agricultural capital in the united states we conclude that when calculating capital usage in u s agriculture the use of a fixed interest rate generates more plausible estimates than the use of an annual market rate

the lucas orchard this paper investigates the behavior of asset prices in an endowment economy in which a representative agent with power utility consumes the dividends of multiple assets the assets are lucas trees a collection of lucas trees is a lucas orchard the model generates return correlations that vary endogenously spiking at times of disaster since disasters spread across assets the model generates large risk premia even for assets with stable cashflows very small assets may comove endogenously and hence earn positive risk premia even if their cashflows are independent of the rest of the economy i provide conditions under which the variation in a small asset s price dividend ratio can be attributed almost entirely to variation in its risk premium

differences of opinion endogenous liquidity and asset prices this paper studies how investors differences of opinion affect liquidity and asset prices in our economy excessively optimistic investors are subject to an endogenous funding constraint that prevents default due to ex ante limited commitment when the funding constraint binds optimists use their savings to increase their consumption share deterring default this allows them to place speculative trades increasing market liquidity their losses on these trades make them prone to default leading to a renewed binding of the funding constraint this feedback between funding illiquidity disagreement and market liquidity is consistent with several empirical features of liquidity and financial asset prices

on the valuation of long dated assets i show that the pricing of a broad class of long dated assets is driven by the possibility of extraordinarily bad news this result does not depend on any assumptions about the existence of disasters nor does it apply only to assets that hedge bad outcomes indeed it applies even to long dated claims on the market in a lognormal world if the market s sharpe ratio is higher than its volatility as appears to be the case in practice

the structure of u s agricultural technology 1910 78 this paper utilizes 1910 78 time series data and a single product aggregate translog profit function to measure the structure of u s agricultural technology duality relations are used to devise a multifactor measure of biased technical change a measure of nonhomotheticity is introduced which indicates the effects scale change has had on aggregate cost shares the empirical analysis finds that different nonhomothetic technologies characterized the prewar and postwar periods differing technical change biases are consistent with relative price trends during the two periods showing that the long run structure of u s agricultural technology has been consistent with the hayami ruttan induced innovation theory

a model of competitive stock trading volume a model of competitive stock trading is developed in which investors are heterogeneous in their information and private investment opportunities and rationally trade for both informational and noninformational motives i examine the link between the nature of heterogeneity among investors and the behavior of trading volume and its relation to price dynamics it is found that volume is positively correlated with absolute changes in prices and dividends i show that informational trading and noninformational trading lead to different dynamic relations between trading volume and stock returns

testing the induced innovation hypothesis an error correction model of south african agriculture abstract this paper applies cointegration techniques to a model of induced innovation based on the two stage constant elasticity of substitution ces production function this approach results in direct tests of the inducement hypothesis which are applied to data for south african commercial agriculture for the period 1947 1991 south african data is used because the policy changes have been substantial enough that the factor and price ratios have turning points rather than being monotonic the time series properties of the variables are checked cointegration is established and an error correction model ecm constructed allowing factor substitution to be separated from technological change finally the ecm formulation is subjected to causality tests which show that both the factor price ratios and r d and extension expenditures are granger prior to the factor saving biases of technological change thus each stage of the analysis corroborates the inducement hypothesis however straightforward price inducement is only part of the explanation of changes in factor ratios policy induced innovation in response to tax concessions and subsidised credit is also present

determining the generalized discount rate for risky projects it is widely recognized that the evaluation of risky projects critically depends on how the riskiness of future benefits is treated standard discounting theories are based on the assumption that risks that are uncorrelated with aggregate risk are diversified so that projects idiosyncratic risk is not priced however this may not be true for long term risky projects such as those with persistent idiosyncratic shocks in this study we investigate the impact of both aggregate risk and nondiversifiable idiosyncratic risk on the discount rate for risky projects we extend the generalized discount rate to the case of persistent shocks a particular advantage of the generalized discount rate is that it can be applied in the setting of incomplete markets we show that nondiversifiable idiosyncratic risk reduces the discount rate and increases the present value of projects future uncertain benefits we further apply our findings to the evaluation of emissions reduction projects

how much does sorting increase inequality some commentators argue that increased sorting into internally homogeneous neighborhoods schools and marriages is radically polarizing society calibration of a formal model however suggests that the steady state standard deviation of education would increase only 1 7 percent if the correlation between neighbors education doubled and would fall only 1 6 percent if educational sorting by neighborhood disappeared the steady state standard deviation of education would grow 1 percent if the correlation between spouses education increased from 0 6 to 0 8 in fact marital and neighborhood sorting have been stable or even decreasing historically sorting has somewhat more significant effects on intergenerational mobility than on inequality

the effects of market segmentation and investor recognition on asset prices evidence from foreign stocks listing in the united states non u s firms cross listing shares on u s exchanges as american depositary receipts earn cumulative abnormal returns of 19 percent during the year before listing and an additional 1 20 percent during the listing week but incur a loss of 14 percent during the year following listing we show how these unusual share price changes are robust to changing market risk exposures and are related to an expansion of the shareholder base and to the amount of capital raised at the time of listing our tests provide support for the market segmentation hypothesis and merton s 1987 investor recognition hypothesis the globalization of u s capital markets has accelerated dramatically in the past decade increasing numbers of companies from overseas have chosen to either raise capital through global equity issues or prepare for future capital raising by way of cross listings on u s exchanges as of 1997 about 1 300 non u s companies have listed their shares for trading on the new york stock exchange nyse the american exchange amex the national association of securities dealers automation quotation nasdaq system or

the dynamics of international equity market expectations this paper develops a noisy rational expectations model of the way in which international investors adjust their expectations of asset payoffs in a given country in response not only to public information signals but also to private information signals whose precision differs across investors the model predicts that the perceptions of investors in one country about the future market returns in another country are related differently to realized past returns depending on their informational disadvantage relative to other investors the greater is that informational disadvantage the greater is the change in perception associated with returns the predictions are confirmed by monthly survey data of institutional money managers investing in developed markets from 1995 to 2000

induced bias of technical change in agriculture the united states and japan 1880 1980 because of extreme differences in factor endowments and price ratios among factors between the united states and japan both countries have experienced sharply different patterns of factor use and productivity growth in agriculture for the past 100 years of modern economic growth in this study the method of testing the hicksian hypothesis of induced innovation was developed using the two level ces production function the model was applied to the historical data of u s and japanese agricultural development for 1880 1980 the results were consistent with the hypothesis that different patterns of technical change in the two countries were induced by differences in the levels and the movements in relative factor prices

technological progress mobility and economic growth this paper analyzes the relationship between technological progress wage inequality intergenerational earnings mobility and economic growth in periods of major technological inventions a decline in the relative importance of initial conditions raises inequality enhances mobility and generates a larger concentration of high ability individuals in technologically advanced sectors stimulating future technological progress and growth however once technologies become more accessible mobility is diminished and inequality decreases but becomes more persistent the reduction in the concentration of ability in technologically advanced sectors diminishes the likelihood of technological breakthroughs and slows future growth user friendliness therefore becomes unfriendly to future economic growth copyright 1997 by american economic association

differential interpretations and trading volume this study provides evidence that differential interpretations are an important stimulus for speculative trading we measure differential interpretations using data on analysts revisions of forecasts of annual earnings after the announcement of quarterly earnings that are components of those annual earnings numbers we find two conditions under which differential interpretations play a significant role in explaining trading first we present empirical evidence supporting kandel and pearson s 1995 argument that trading coincident with small price changes reflects investors differential interpretations of information this evidence is important because it is inconsistent with conventional models of trade that assume homogeneous interpretations second we also find that differential interpre tations explain a significant amount of the trading occurring in a sample where trading volume is higher than the firm specific non announcement period average this result is consistent with informed traders acting on their differential interpretations when there is enough liquidity trading to help camouflage their own information based trades in sum the study s results confirm bachelier s 1900 intuition that differential interpretations are an important stimulus for trading

social mobility and preferences for redistribution in latin america this paper has two parts the first part presents an overview of the evidence concerning intergenerational mobility in latin america the second part studies the correlation between mobility perceptions and political preferences the results show first that educational mobility is much lower in latin american countries than in the united states and that latin americans are quite pessimistic about their own mobility experiences and social equality in general second the results show that preferences for redistribution are stronger i among poor individuals ii among those who believe that they were unable to surpass their parents socioeconomic status and iii among those who think that market outcomes are unfair a similar result applies with respect to the support for both market outcomes and the privatization of state owned enterprises

induced innovation in u s agriculture time series direct econometric and nonparametric tests the hypothesis of induced innovation is tested for u s agriculture using a high quality state level panel data set and three disparate testing techniques time series direct econometric and nonparametric we find little support for the hypothesis that conclusion is robust across testing techniques however as with all empirical tests of this hypothesis conducted to date ours focus only on the demand side of the hypothesis the hypothesis could have been rejected simply because the marginal cost of developing and implementing input saving technologies for the relatively expensive inputs is greater than for the relatively cheap inputs copyright 2009 oxford university press

intergenerational mobility and the process of development this paper offers an explanation for some evidence that intergenerational earnings mobility is higher in more developed economies and that mobility is positively correlated with wage equality in the model mobility promotes economic growth via its effect on the accumulation and allocation of human capital growth influences mobility via its effect on incentives to acquire education and its effect on liquidity constraints upon such acquisition in the process of development mobility increases and the distribution of education becomes better correlated with ability redistributive policy has a negative effect on growth in developed economies and a positive effect in developing economies

an analysis of the source and nature of technical change the case of u s agriculture this paper proposes a methodology to investigate the process of technical change with a focus on the dynamic effects of r d investments on productivity and on the induced innovation hypothesis for both inputs and outputs the approach builds on a nonparametric representation of the underlying technology an application to u s agriculture is presented by distinguishing between private and public r d investments the analysis provides useful insights into the source and the dynamic nature of technical progress

sorting and long run inequality many social commentators have raised concerns over the possibility that increased sorting in society may lead to greater inequality to investigate this we construct a dynamic model of intergenerational education acquisition fertility and marital sorting and parameterize the steady state to match several basic empirical endings we end that increased sorting will signiecantly increase income inequality four factors are important to our endings a negative correlation between fertility and education a decreasing marginal effect of parental education on children s years of education wages that are sensitive to the relative supply of skilled workers and borrowing constraints that affect educational attainment for some low income households

differences of opinion and international equity markets we develop an international financial market model in which domestic and foreign residents differ in their beliefs about the information content in public signals we determine how informational advantages of domestic investors in the interpretation of home public signals affect equity markets we evaluate the ability of our model to generate four international finance anomalies i the co movement of returns and capital flows ii home equity preference iii the dependence of firm returns on home and foreign factors and iv abnormal returns around foreign firm cross listing in the home market their relationships with empirical differences of opinion proxies are consistent with the model received january 15 2011 editorial decision may 16 2016 by editor geert bekaert

on price recognition and computational complexity in a monopolistic model a single seller of an indivisible good operates in a market with many consumers who differ in their ability to process information the consumers constraints are modeled in two submodels the first in terms of the limits on the number of sets in the partition of the price space and the second in terms of the limits on the complexity of the operation he can use to process a price offer for the construction of the second submodel the tool of a perceptron is borrowed from the parallel computation literature assuming a negative correlation between the seller s cost of supply of the good and the consumer s ability to process information i demonstrate that the heterogeneity of consumer s abilities can be used by the seller to profitably discriminate among them