network regulation and regulatory institutional reform revisiting the case of australia it is well understood that the success of liberalizing the electricity supply industry depends crucially on the quality and design of the regulatory and institutional framework this paper analyses the regulatory arrangements that underpin the work of the australian energy regulator aer these arrangements are contrasted with the regulatory structure of electricity provision in norway a key difference between the reform processes in the two countries relates to the lack of privatization in norway and the co existence of private and publicly owned generators and distributors in australia this comparative analysis allows us to make several recommendations to improve regulatory arrangements in australia these include greater independence for the aer better coordination among regulatory institutions greater use of benchmarking analysis greater customer involvement and improving market transparency and privatization of government owned corporations however the success of privatization will hinge upon the effectiveness of the regulatory environment

why is corruption less harmful to income inequality in latin america summary conventional wisdom says corruption is bad for income inequality but recent research on latin america finds a trade off between corruption and inequality and suggests this is due to the large informal sector in the region using data on a large sample of countries we find that the informal sector impacts the link between corruption and inequality in particular the marginal impact of corruption becomes negative once the informal sector becomes large this is true in latin america and more generally corruption reducing policies should be accompanied by measures that help displaced informal sector workers

cliometrics and time series econometrics some theory and applications the paper discusses a range of modern time series methods that have become popular in the past 20 years and considers their usefulness for cliometrics research both in theory and via a range of applications issues such as spurious regression unit roots cointegration persistence causality structural time series methods including time varying parameter models are introduced as are the estimation and testing implications that they involve applications include a discussion of the timing and potential causes of the british industrial revolution income convergence and the long run behaviour of english real wages 1264 1913 finally some new and potentially useful developments are discussed including the mildly explosive processes graphical modelling and long memory

the use and abuse of meta analysis in environmental and natural resource economics an assessment motivated by the 2006 report of a work group appointed by the environmental protection agency epa this paper examines the present state of meta analysis in environmental economics and offers recommendations for its future use to this end we summarize and assess 140 meta analyses from 125 published and unpublished studies covering 17 topical categories in environmental and resource economics first we provide several generic meta analysis models as reference points and discuss major estimation issues five econometric issues are identified as part of a complete analysis 1 sample selection criteria 2 basic data summary 3 primary data heterogeneity 4 heteroskedasticity and 5 non independence of multiple observations from primary studies second a tabular summary is presented for the 140 meta analyses with respect to estimation methods third a narrative summary is presented for 19 meta analyses including the three value of statistical life studies examined by the epa work group and one analysis from each of 16 other categories fourth we offer a set of best practice guidelines for future meta analyses in this and other areas of economics last the paper comments on the use of meta analytic methods for benefit transfers of environmental values

long term consequences of colonial institutions and human capital investments sub national evidence from madagascar summary this study from madagascar exploits local variation in the timing and organization of colonial settlement and missionary education to distinguish long run effects of colonial institutions and human capital results indicate that only colonial institutions had robust impacts on local economic outcomes analysis of transmission mechanisms suggests that these effects are explained by higher quality property rights institutions but not by persistence in economic activities like the production of cash crops there are also indications that migration induced human capital spill overs from missionary areas contributed to superior outcomes in former settler districts

what makes growth sustained abstract we identify structural breaks in economic growth in 140 countries and use these to define growth spells periods of high growth preceded by an upbreak and ending either with a downbreak or with the end of the sample growth spells tend to be shorter in african and latin american countries than elsewhere we find evidence that growth duration is positively related to the degree of equality of the income distribution democratic institutions export orientation with higher propensities to export manufactures greater openness to fdi and avoidance of exchange rate overvaluation favorable for duration and macroeconomic stability

do property rights institutions matter at the local level evidence from madagascar abstract while several cross country studies have demonstrated that property rights institutions are crucial for economic growth empirical evidence of this relationship within countries is limited this article analyses the link between property rights institutions and development at a local level with two rounds of a unique dataset covering almost all of madagascar at a level akin to counties in the united states we find robust evidence that property rights institutions in the form of formal land titles do matter for the emergence of large firms at very low administrative levels we also find evidence that growth in enterprise development strengthens formal property rights supporting the notion that the causality between institutions and growth runs both ways even at a low administrative level

institutional traps and economic growth this article s point of departure is that low quality institutions concentration of political power and material wealth and underdevelopment are persistent over time its analytical model views an equal distribution of political power as a commitment device to enhance institutional quality thereby promoting growth the politically powerful coalition contemplates relinquishing of its power through democratization weighing this advantageous consequence against the limit on own appropriative ability that it entails the possibility of two developmental paths is exhibited with concentration of political and economic power low quality institutions and slow growth and a more equal distribution of political and economic resources high quality institutions and faster growth

loss function assumptions in rational expectations tests on financial analysts earnings forecasts abstract prior research concludes that financial analysts do not process public information efficiently in generating their earnings forecasts the ordinary least squares ols regression based tests used in prior studies assume implicitly that analysts face a quadratic loss function in contrast we argue that analysts likely face a linear loss function and hence try to minimize their absolute forecast errors we conduct and compare rational expectations tests using these two alternative loss functions we reproduce most prior findings of forecast inefficiency with ols regressions but find virtually no evidence of forecast inefficiency with least absolute deviation regressions where we explicitly assume a linear loss function

shaping democratic practice and the causes of electoral fraud theory and evidence from pre 1914 germany why is there so much alleged electoral fraud in new democracies most scholarship focuses on the proximate cause of electoral competition this article proposes a different answer by constructing and analyzing an original dataset drawn from the german parliament s own voluminous record of election disputes for every parliamentary election in the life of imperial germany 1871 1912 after its adoption of universal male suffrage in 1871 the article analyzes the election of over 5 000 parliamentary seats to identify where and why elections were disputed as a result of election misconduct the empirical analysis demonstrates that electoral fraud s incidence is significantly related to a society s level of inequality in landholding a major source of wealth power and prestige in this period after weighing the importance of two different causal mechanisms the article concludes that socio economic inequality by making new democratic institutions endogenous to preexisting social power can be a major and underappreciated barrier to democratization even after the adoption of formally democratic rules

property rights and the political organization of agriculture we propose a general equilibrium model where the economic organization of agriculture and the political equilibrium determining the security of property rights are jointly determined in particular because the form of organization may affect the probability and distribution of benefits from future property challenges it may be shaped in anticipation of this impact property rights security may then be secured at the expense of economic efficiency the model provides a framework for understanding why in some contexts land is redistributed primarily via land sales and tenancy markets but via politics and conflict in others we test some implications of the theory using a five decade panel dataset that traces changes in the extent of tenancy and tenancy reform across 15 indian states

protection of property rights and growth as political equilibria abstract this paper presents a survey of the literature on property rights and economic growth different theoretical mechanisms that relate property rights to economic development are discussed lack of protection of property rights can result in slow economic growth through different channels expropriation of private wealth corruption of civil servants excessive taxation and barriers to adoption of new technologies the origins of property rights are also considered different theories are illustrated but more attention is paid to the social conflict view and its success and limitations the second part of the paper illustrates relevant empirical works on property rights and growth

an analysis of market access market access matters this article creates for the first time a quantitative measure of market access the market access index which enables the creation of a rank order or league table of market access for a large sample of world economies the article uses structural equation modelling and a data set from the world economic forum and provides a broader framework for the analysis of market access arguing that market access is driven by the regulatory environment public institutions and network industries the article finds that network industries are the most important contributors to market access followed by public institutions the regulatory environment covering trade policy is the least important contributor these findings have important implications for the role of trade policy in influencing greater market access

on the robustness of racial discrimination findings in mortgage lending studies that mortgage lenders have complex underwriting standards often differing legitimately from one lender to another implies that any statistical model estimated to approximate these standards for use in fair lending determinations must be misspecified exploration of the sensitivity of disparate treatment findings from such statistical models is thus imperative we contribute to this goal this article examines whether the conclusions from several bank specific studies undertaken by the office of the comptroller of the currency are robust to changes in the link function adopted to model the probability of loan approval and to the approach used to approximate the finite sample null distribution for the disparate treatment hypothesis test our evidence of discrimination findings that are reasonably robust to the range of examined link functions suggests that regulators and researchers can be reasonably comfortable with their current use of the logit link based on several features of our results we

a new data set measuring income inequality this article presents a new data set on inequality in the distribution of income the authors explain the criteria they applied in selecting data on gini coefficients and on individual quintile groups income shares comparison of the new data set with existing compilations reveals that the data assembled here represent an improvement in quality and a significant expansion in coverage although differences in the definition of the underlying data might still affect inter temporal and international comparability based on this new data set the authors do not find a systematic link between growth and changes in aggregate inequality they do find a strong positive relationship between growth and reduction of poverty

cursed by resources or institutions natural resource abundant countries constitute both growth losers and growth winners and the main difference between the success cases and the cases of failure lays in the quality of institutions with grabber friendly institutions more natural resources push aggregate income down while with producer friendly institutions more natural resources increase income such a theory finds strong support in data a key question we also discuss is if resources in addition alter the quality of institutions when that is the case countries with bad institutions suffer a double resource curse as the deterioration of institutions strenghtens the negative effect of more natural resources

inflation tax rules and investment some econometric evidence this paper presents econometric evidence on the effect of tax incentives on business investment in the united states in the period from 1953 through1978 the analysis emphasizes that the interaction of inflation and existing tax rules has contributed substantially to the decline of business investment since the late 1960 s because the investment process is far too complex for any simple econometric model to be convincing i have estimated three quite different models of investment behavior the strength of the empirical evidence rests on the fact that all three specifications support the same conclusion more generally the analysis and evidence show that theoretical models of macroeconomic equilibrium should specify explicitly the role of distortionary taxes especially taxes on capital income the failure to include such tax rules can have dramatic and misleading effects on the qualitative as well as the quantitative properties of macroeconomic theories this paper was presented as the fisher shultz lecture at the fourth world congress of the econometric society 29 august 1980 in aix en province this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this abstract was borrowed from another version of this item

is land titling in sub saharan africa cost effective evidence from madagascar formalizing land rights has been promoted as a way to encourage agricultural investment and stimulate land markets yet little is known about the benefits of such policies in sub saharan africa where the preconditions for success are less favorable the analysis uses a large sample of plots from an intensively titled rice growing area of madagascar and compares land specific investments land productivity and land values for titled and untitled plots cultivated by the same household having a title has no significant effect on plot specific investment and correspondingly little effect on land productivity and land values these results are broadly consistent with a simulation of a theoretical model of investment under expropriation risk calibrated to the same data a cost benefit analysis suggests that the current system of formal titling should not be extended in rural madagascar and that any new system of land registration will have to be quite inexpensive to be worthwhile

the standard error of regressions statistical significance as used in economics has weak theoretical justification in particular it merges statistical and substantive significance the 182 papers using regression analysis in the american economic review in the 1980s were tested against 19 criteria for the accepted use of statistical significance most some three quarters of the papers did poorly likewise textbooks in econometrics do not distinguish statistical and economic significance statistical significance should not be the focus of empirical economics

applied econometrics without sinning one must offer a cautious welcome to any paper kennedy 2001 discussing the problems confronting the implementation of econometrics to empirical data especially from someone who has written an elementary econometrics textbook see kennedy 1985 and later editions there is a considerable gulf between the elementary and inappropriate methodology inherent in many such textbooks and what applied econometricians need to do in practice to model economic data there is some good advice in his paper but also some which is bad kennedy fails to formalize the issues is unclear at key points and neither draws essential distinctions nor defines central terms consequently although some of his recommendations should help to narrow the theory applications gap others could exacerbate the difficulties the remainder of this note amplifies these comments first the topic is in fact addressed in some textbooks albeit none of which are cited by kennedy see inter alia hendry and doornik 2001 and earlier editions especially chs 11 and 15 hendry 1995a provides extensive analyses of the problems of matching theory and evidence empirical modelling and data measurement issues as well as de emphasizing estimation and highlighting the role of graphs spanos 1986 analyzes the difficulties inherent in the conventional paradigm and clearly explains an alternative approach now exposited in his introductory textbook spanos 1999 and charemza and deadman 1997 describe the practice of modelling non stationary time series also see hendry and wallis 1984 ch 1 for an earlier general discussion there are too many relevant papers on methodology to list additional to those kennedy mentions but mizon 1995 and hendry 1997 clarify some of his difficulties second the theory and practice of model building has advanced spectacularly in the last few years see e g hoover and perez 1999 2000 krolzig and hendry 2001 hendry and krolzig 2001b many of the so called sins turn out to be false accusations while others formulating and checking the ingredients of the basic specification remain essential if anything useful is to result from empirical modelling thus considerable revision of the ten econometric commandments

history lessons institutions factor endowments and paths of development in the new world the explanations offered for the contrasting records of long run growth and development among the societies of north and south america most often focus on institutions the traditional explanations for the sources of these differences in institutions typically highlight the significance of national heritage or religion we in contrast argue that a hemispheric perspective across the wide range of colonies established in the new world by the europeans suggests that although there were many influences factor endowments or initial conditions had profound and enduring effects on the long run paths of institutional and economic development followed by the respective economies

slow development and special interests this article argues that a natural implication of an innovation based theory of growth is that slow development facilitates the formation of special interest groups we demonstrate this in a growth model where innovations take the form of new goods and new production processes and where factor suppliers in individual industries can organize to form rent extracting special interest groups we then examine the effect these groups have on an economy s subsequent development we find that these groups can retard an economy s development for extended periods but not permanently their long run effect is to increase the volatility of the development process

institutions and the resource curse countries rich in natural resources constitute both growth losers and growth winners we claim that the main reason for these diverging experiences is differences in the quality of institutions more natural resources push aggregate income down when institutions are grabber friendly while more resources raise income when institutions are producer friendly we test this theory building on sachs and warner s influential works on the resource curse our main hypothesis that institutions are decisive for the resource curse is confirmed our results contrast the claims of sachs and warner that institutions do not play a role

landownership concentration and the expansion of education we study the relationship between large landownership concentration and the expansion of mass education in nineteenth century prussia cross sectional estimates show a negative association between landownership concentration and enrollment rates fixed effects panel estimates indicate that regions with an initially stronger landownership concentration exhibit increasing enrollment rates this relationship is not driven by differences in the supply of schooling we argue that the implementation of agricultural reforms including the stepwise abolition of serfdom is an important driver of the change in enrollment the results are consistent with the interpretation that emancipation from labor coercion increased the private demand for education

the world trade organisation s doha cotton initiative a tale of two issues four west african nations have demanded that the world trade organization s doha development agenda include a cotton initiative that involves two issues cutting cotton subsidies and tariffs and assisting farm productivity growth in africa the authors provide estimates of the potential economic impacts of 1 complete or partial removal of cotton subsidies and import tariffs globally and 2 cotton productivity growth through the adoption of genetically modified gm cotton varieties they use the latest version of the gtap database and model their results confirm that unlike for other agricultural subsidies and tariffs for cotton it is subsidy reductions rather than tariff cuts that would make by far the largest impact for sub saharan africa the potential gains are huge relative to the effects on that region of reforming other merchandise trade policies and they could be more than doubled if that reform provided the cash for farmers to take advantage of the biotechnology revolution and adopt gm cotton varieties but those potential gains and the affordability of switching to costly gm seed depend crucially on the extent to which high income countries are willing to lower domestic support to their cotton farmers

the varieties of resource experience natural resource export structures and the political economy of economic growth many oil mineral and plantation crop based economies experienced a substantial deceleration in growth following the commodity boom and bust of the 1970s and early 1980s this article illustrates how countries dependent on point source natural resources those extracted from a narrow geographic or economic base such as oil and minerals and plantation crops are predisposed to heightened economic and social divisions and weakened institutional capacity this in turn impedes their ability to respond effectively to shocks which previous studies have shown to be essential for sustaining rising levels of prosperity analysis of data on classifications of export structure controlling for a wide array of other potential determinants of governance shows that point source and coffee and cocoa exporting countries do relatively poorly across an array of governance indicators these governance effects are not associated simply with being a natural resource exporter countries with natural resource exports that are diffuse relying primarily on livestock and agricultural produce from small family farms do not show the same strong effects and have had more robust growth recoveries

literacy sharing assortative mating or what labour market advantages and proximate illiteracy revisited abstract this paper explores the relationship between household literacy and the labour market outcomes of illiterate household members which basu narayan and ravallion 2002 report using household income and expenditure data from bangladesh bnr attribute a considerable wage premium for proximate illiterate women in off farm employment to labour productivity gains from intra household literacy sharing this wage premium also suggests that women may be more efficient recipients of literacy externalities than men we propose that any such relationship might not be due to higher labour productivity but may have other explanations such as systematically different and unobserved attributes of illiterate females married into literate households we also pay attention to the negative selection of illiterate females into non farm wage employment which contrary to received wisdom suggests that household literacy may not be unambiguously progressive for females we propose that the widely reported finding that

latin america in the rearview mirror abstract latin american countries are the only western countries that are poor and that are not gaining ground on the u s this paper evaluates why latin america has not replicated western economic success we find that this failure is primarily due to tfp differences latin america s tfp gap is not plausibly accounted for by human capital differences but rather reflects inefficient production we argue that competitive barriers are a promising channel for understanding low latin tfp we document that latin america has many more international and domestic competitive barriers than do western and successful east asian countries we also document a number of microeconomic cases in latin america in which large reductions in competitive barriers increase latin american productivity to western levels

mortgage lending to minorities where s the bias this paper examines mortgage lending and concludes that studies based on data created by the boston fed should be reevaluated a detailed examination of these data indicates that irregularities in these data when combined with the most commonly used research methodology appear to have biased previous research toward a finding of discrimination against minority applicants when the most severe data irregularities are eliminated evidence to support a hypothesis of discrimination disappears the currently fashionable flexible underwriting standards of mortgage lenders may have the unintended consequences of increasing defaults for the beneficiaries of these policies

the costs of global tariff barriers on wool products 1997 2005 the doha round of multilateral trade negotiations commits world trade organization wto members to improving market access for both agricultural and nonagricultural goods tariff barriers on wool products represent a small but important subset of these negotiations to inform the debate on the round we analyze the distortionary effects of recent 1997 2005 tariff barriers on wool products using a model that applies a comprehensive analytical approach with regard to the production trade and consumption of wool products we also account for any indirect effects of wool tariff barriers on the nonwool economy by incorporating the production trade and consumption of nonwool products that is the framework is a comparative static global general equilibrium model with a detailed representation of the world wool market changes in wool tariffs over 1997 2005 lead to positive welfare effects for most regions italy china and the uk are estimated to have gained the most from the changes the results indicate that the nature of recent wool tariffs severely distort the size of wool industries in different regions the changes in the output of wool commodities are extreme reflecting the discriminatory nature of the tariffs

the craft of labormetrics using a wide array of examples from the literature and from original estimates the author examines the pitfalls that make good empirical research in labor economics at least as much craft as statistical technique among the subjects discussed are the appropriateness and cleanliness of data problems of extreme observations the validity of attempts to produce exogeneity using instrumental variables natural experiments and structural models and the treatment of selectivity and unobservable individual effects the author stresses the importance of testing empirical results to ensure that they make sense and of presenting them clearly and economically

cotton in a free trade world i introduction cotton has been at the center of much of the controversy surrounding the inability of the world trade organization wto membership to reach consensus regarding significant agricultural trade reform in 2003 four african countries benin burkina faso chad and mali circulated a proposal presented as their negotiating position for the cancun ministerial conference wto 2003 this proposal called for the elimination of cotton subsidies worldwide due to its status as a special product essential for agricultural and economic development in many less developed countries ldc support for this proposal solidified among other developing countries referred to as the group of 21 g 21 with a leading role played by the nation of brazil which had filed its own grievance against u s cotton programs in 2003 failure on the part of developed countries to meet the demands of the g 21 resulted in a collapse of the cancun meetings at the recently concluded hong kong ministerial declaration language was included in the ministerial declaration that reaffirms the intent of the wto 2005 to specifically reform the global trading rules for cotton while the text of this intent appears in brackets indicating that it does not represent complete consensus on the issue by all negotiating parties it is consistent with the wording of the july agreement and the cotton initiative s call for an early harvest of cotton as noted by wto 2004 cotton has been described as the litmus test seatini 2004 for the ideals of the doha development agenda to deliver on its commitments to correct and prevent restrictions and distortions in world agricultural markets wto 2001 agreement on meaningful reform of the cotton trade might break the impasse that currently exists in agriculture negotiations failure to do so may threaten gains made in the doha round itself as noted by andrews 2005 while the commodity support programs of developed countries in general have been criticized in global trade talks only recently has the legality of u s commodity programs been directly and specifically challenged with a particular emphasis on cotton attention on cotton is predicated by the fact that in 2002 2003 the united states accounted for 40 of world cotton exports and 63 of world cotton subsidies as noted in goreaux 2004 but cotton production is subsidized in other countries as well in the european union eu greece and spain produce 2 5 of the world s cotton yet receive 18 5 of the world s cotton subsidies as observed by goreaux 2004 as shown in table 1 subsidies to eu cotton growers are approximately 1 per pound of lint compared to 20 cents per pound in the united states in china the world s largest cotton producer the estimate of per pound assistance for cotton growers is 8 cents other per pound subsidies offered to cotton producers include egypt at 14 cents mexico at 8 cents and 6 cents in turkey in addition to the trade distorting effect of domestic support offered to producers many importing countries have been using tariffs to restrict imports china the world s largest importer of raw cotton has as wto mandated two tier tariff structure on cotton imports known as a tariff rate quota trq the in quota tariff rate for cotton to china is 1 while the out of quota tariff rate is 40 for any imports above 890 000 metric tons about 4 million bales 1 other import tariffs rates by major cotton importers include india at 10 mexico at 9 7 excluding tariff free imports from the united states as part of the north american free trade agreement and pakistan at 5 table 1 also provides a comparison of these cotton import tariff rates across importing countries as noted by the overseas development institute odi 2004 many studies have attempted to quantify the impacts of both united states and other countries subsidies on world cotton prices and production

poverty and the political economy of public education spending evidence from brazil a large body of literature has emphasized the elite capture of democratic institutions as the explanation for the low levels of spending on public education in many low income democracies this paper provides an alternative to that longstanding hypothesis motivated by new cross country facts and evidence from brazilian municipalities we hypothesize that many democratic developing countries might invest less in public education spending because poor decisive voters prefer the government to allocate resources elsewhere one possible explanation is that low income voters could instead favor redistributive programs that increase their incomes in the short run such as cash transfers to test for this possibility we design and implement an experimental survey and an incentivized choice experiment in brazil the findings from both interventions support our hypothesis

sinning in the basement what are the rules the ten commandments of applied econometrics unpleasant realities of real world data force applied econometricians to violate the prescriptions of econometric theory as taught by our textbooks leamer 1978 vividly describes this behavior as wanton sinning in the basement with sinners metamorphizing into high priests as they ascend to the third floor to teach econometric theory but this sinning is not completely wanton applied econometricians do or should follow some unwritten rules of behavior in effect bounding the sinning and promoting a brand of honor among sinners this paper exposits these rules and culls from them an unauthorized list of the ten commandments of applied econometrics

estimating tuition elasticities of resident and non resident enrolments at south eastern public universities abstractdue to increased reliance on tuition revenue universities must be cognizant of the impacts tuition changes have on enrolment in economics the law of demand indicates that price increases tuition cause quantity demanded enrolments to decrease the impacts of tuition increases on revenue depend on the magnitude of these two changes the contribution of this article is the methodology used to control for competitor pricing in enrolment elasticity models for resident enrolment we included other in state 4 year public universities for non resident enrolment we used weighting schemes based on enrolment patterns by school and by state to incorporate competitors tuition rates and relevant economic and demographic information we applied these methodologies to universities in the south eastern u s from 2003 to 2010 we found that tuition elasticities of both resident and non resident enrolments at 4 year public universities varied from inelastic resident enrolments to elastic non resident enr