political influence motives and the choice between tariffs and quotas abstract tariffs and quotas are not symmetric under a variety of circumstances this paper pursues the implications of one such circumstance domestic market power for the political choice of protectionist instrument in the context of a political support maximization model tariffs dominate quotas in the political model in the absence of revenue seeking motives in the presence of revenue seeking ambiguity arises but limits can be placed on the range of tariff or quota levels also some welfare implications emerge

inequality and endogenous trade policy outcomes abstract an enduring puzzle in international economics is why trade interventions are biased in favor of import competing rather than export sectors and therefore restrict trade in this paper we show that if the government s objective reflects a concern for inequality then trade policy generally exhibits an anti trade bias importantly under neutral assumptions the mechanism that we analyze generates the anti trade bias independently of whether factors are specific or mobile across sectors the mechanism also generates an anti trade bias between large countries even after they sign reciprocal trade agreements that eliminate any terms of trade motivation for the use of trade protection

the political economy of declining industries senescent industry collapse revisited many observers have noted a strong tendency for protection once it is instituted to persist over time this paper first shows that persistent protection arises whenever lobbying is an alternative to costly adjustment with endogenous protection the level of tariffs is an increasing function of past tariffs the more an industry lobbies the greater the current protection it receives and the less it adjusts and the less the industry adjusts the more effective it is as a lobby in the future when the costs of lobbying and adjustment are fully variable declining industries contract more slowly over time and never fully adjust however the paper shows that adding a fixed cost of lobby formation or maintenance is sufficient to generate an endogenous collapse of protection such as that predicted by cassing and hillman 1986 american economic review 76 516 523 in which an industry abruptly terminates its lobbying and loses its protection finally the paper examines the well documented bias against growing industries in the lobbying process

the economics of poverty traps and persistent poverty an asset based approach abstract longitudinal data on household living standards open the way to a deeper analysis of the nature and extent of poverty while a number of studies have exploited this type of data to distinguish transitory from more chronic forms of income or expenditure poverty this paper develops an asset based approach to poverty analysis that makes it possible to distinguish deep rooted persistent structural poverty from poverty that passes naturally with time due to systemic growth processes drawing on the economic theory of poverty traps and bifurcated accumulation strategies this paper briefly discusses some feasible estimation strategies for empirically identifying poverty traps and long term persistent structural poverty as well as relevant extensions of the popular foster greer thorbecke class of poverty measures the paper closes with reflections on how asset based poverty can be used to underwrite the design of persistent poverty reduction strategies

targeting maps an asset based approach to geographic targeting summary proper targeting of policy interventions requires reasonable estimates of the benefits of the alternative options to inform such decisions we develop an integrated approach stemming from the small area estimation literature that estimates the marginal returns to a range of assets across geographically defined subpopulations we create a series of maps that can be overlaid with traditional poverty maps to identify strong candidate areas for intervention though an efficiency equity tradeoff sometimes exists we apply our method using recent ugandan data results are consistent with independent empirical findings and suggest asset specific transfer schemes would improve with a spatially targeted strategy

lobbying counterlobbying and the structure of tariff protection in poor and rich countries a political economy model of protection is used to determine endogenously the intersectoral patterns of protection three propositions are derived that are consistent with the stylized patterns of tariff protection in rich and poor countries nominal protection rates escalate with the degree of processing protection is higher on average in poor countries and rich countries protect agriculture relatively more than they protect manufacturing whereas poor countries do the reverse numerical simulations for archetypal rich and poor economies confirm that the endogenously determined structure of protection is broadly consistent with observed patterns of protection

the pricing and optimal strategies of callable warrants in this paper we introduce a valuation model of callable warrants under a setting of the optimal stopping problem between the holder investor and the issuer firm a warrant is the right to purchase new shares at a predetermined price when the new stocks are issued the value of the stock is diluted we consider the model taking the dilution into account after identifying optimal policies for the issuer and the investor we explore the analytical properties of the optimal exercise and call boundaries for the holder and the issuer respectively furthermore the value of such a callable warrant and the optimal critical prices are examined numerically using the binomial method

the analytic valuation of american options no analytic solutions exists for the valuation of american options written on futures contracts and foreign currencies for which early exercise may be optimal this article formulates the american option valuation problem in economically and mathematically meaningful ways this enables us to derive valuation formulas for american options the properties associated with the optimal exercise boundary are examined and a numerical technique to implement the valuation formulas is presented article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

rainfall shocks and within community wealth inequality evidence from rural ethiopia summary household level impacts of environmental shocks are often negative but may vary considerably due to heterogeneous vulnerability this paper considers how differential vulnerability among households affects inequality within rural communities in ethiopia this study makes novel use of the demographic and health surveys dhs and a nasa agro climatology dataset results show that rainfall deficits have an equalizing effect on within community livestock inequality in parts of ethiopia but regional differences are observed a non significant effect is observed with respect to asset inequality as an initial study on this topic this paper outlines an agenda for future data collection and analysis efforts

welfare dynamics in rural kenya and madagascar this paper presents comparative qualitative and quantitative evidence from rural kenya and madagascar in an attempt to untangle the causality behind persistent poverty we find striking differences in welfare dynamics depending on whether one uses total income including stochastic terms and inevitable measurement error or the predictable structural component of income based on a household s asset holdings our results suggest the existence of multiple dynamic asset and structural income equilibria consistent with the poverty traps hypothesis furthermore we find supporting evidence of locally increasing returns to assets and of risk management behaviour consistent with poor households defence of a critical asset threshold through asset smoothing

labor versus capital in trade policy the role of ideology and inequality abstract trade policy depends on the extent to which the government wants to redistribute income as well as on a country s overall factor endowments and their distribution while the government s desire to redistribute income itself is dependent on asset distribution it is to a large extent also driven by the partisan nature of the government i e whether it is pro labor or pro capital using cross country data on factor endowments inequality and government orientation we find that conditional on inequality left wing pro labor governments will adopt more protectionist trade policies in capital rich countries but adopt more pro trade policies in labor rich economies than right wing pro capital ones also holding government orientation constant higher inequality is associated with higher protection in capital abundant countries while it is associated with lower protection in labor abundant countries these results are consistent with the simultaneous presence of both inequality as well as ideology as determinants of protection within a two factor two sector heckscher ohlin framework overall various statistical tests support an umbrella model that combines both the ideology and inequality models over each of the individual models

all or nothing climate policy when assets can become stranded abstract this paper develops a new perspective on stranded assets in climate policy using a partial equilibrium model of the energy sector political economy related aspects are considered in the government s objective function lobbying power of firms or fiscal considerations by the government lead to time inconsistency the government will deviate from a previously announced carbon tax which creates stranded assets under rational expectations we show that a time consistent policy outcome exists with either a zero carbon tax or a prohibitive carbon tax that leads to zero fossil investments an all or nothing policy although stranded assets are crucial to such a bipolar outcome they disappear again under time consistent policy which of the two outcomes all or nothing prevails depends on the lobbying power of owners of fixed factors land and fossil resources but not on fiscal revenue considerations or on the lobbying power of renewable or fossil energy firms

rural poverty dynamics in kenya structural declines and stochastic escapes we use panel survey data and household event histories to explore patterns of rural poverty dynamics in kenya over the period 2000 2009 we find substantial mobility across poverty categories using economic transition matrices drawing on asset based approaches we distinguish stochastic from structural poverty transitions few households successfully escaped poverty through asset accumulation up to 35 of the upwardly mobile while a large proportion of households up to 66 declining into poverty experienced structural transitions using household event histories we find significant differences across structural poverty transition classes in livelihood strategies household level shocks and other factors

unprotective tariffs ineffective liberalization and other mysteries an investigation of the endogenous dimensions of trade policy formation in australia 1 introductionsince its formation as a federation in 1901 australia embraced a fairly comprehensive tariff schedule in relation to imported manufactures 1 tariff rates fluctuated considerably over the years however over the course of the century they remained sufficiently high to earn australian manufacturing the reputation of one of the most heavily protected manufacturing sectors in the industrialized world 2 in recent years a number of liberalization waves have surfaced the most notable of these took place in 1973 1977 1988 1991 and most recently in 1994 with the signing of the uruguay round of the gatt agreement still tariffs remain a principal actor in australia s menu of industrial policies in a recent edition of the annual report of the productivity commission 3 published in november 1999 it is noted that although tariffs have dropped considerably since 1994 they remain an important form of assistance tariff assistance still accounts for around 90 of measured effective assistance to the manufacturing sector 4 p 52 given the pervasiveness of australian tariff policy the significant welfare implications of changes in that policy and the particular importance of international trade for this country ensuing from its idiomorphic cultural resource endowment and geographic characteristics 5 considerable research effort has been invested in the examination of various dimensions of this issue at the forefront of pertinent empirical research two items have attracted considerable interest 1 the host of determinants of the highly dispersed tariff concessions and 2 the impact of liberalization on imports research that falls in the category that examines the former including anderson 1980 conybeare 1984 aislabie 1988 and feaver and wilson 1998 is consistent at varying degrees with the theory of endogenous trade policy formation 6 according to the foundations of this theory tariff concessions may be viewed as public outcomes that facilitate a political equilibrium the mechanics are rather elementary when the profit loss that arises from import competition exceeds the transaction cost of a successful lobbying campaign for protection private interests will undertake such lobbying activities the higher the loss from foreign competition the more fervent the lobbying effort hence an increase in import penetration is likely to trigger greater protection7 trefler 1993 p 139 unlike this line of inquiry the critical causal relationship of interest to studies that fall in the category that investigates item 2 including simmons and smith 1994 relates to the effects of tariff changes on imports rather than the reverse the causal directions of the nature examined by studies that investigate issues 1 and 2 are of course not mutually exclusive higher import penetration increases tariffs and higher tariffs in turn decrease import penetration however despite the simultaneity of these variables studies of australia s trade policies associated with research lines 1 and 2 followed separate paths by only considering unidirectional causal relationships and yet these paths do converge the meeting point perplexing results on the one hand studies of endogenous protection such as anderson 1980 and aislabie 1988 have consistently failed to establish the expected result that an increase in import penetration will lead to higher tariffs on the other studies of trade liberalization often find that tariff reduction shave asurprisingly small effect on imports with a study by simmons and smith 1994 concluding that at least in relation to the examined industry removal of the tariff would have no effect on the level of imports p 57 it is important to note that analogous and equally puzzling findings pertaining to improbably smalle ffect so fliberalization on imports have been identified in the caseofothercountries suchastheunitedstates byanumberofauthors

the economics of poverty traps and persistent poverty empirical and policy implications the moral and economic imperatives to intervene in poverty traps motivate the identification of poverty traps and their structural causes so as to inform the design of appropriate policy responses however empirical identification remains challenging because of poverty traps complexity after reviewing mechanisms that can generate poverty traps we focus on one multiple financial market failures emphasising its heretofore underappreciated testable implications including specific behaviours that are rational only in the presence of a poverty trap we therefore recommend tests for these behaviours rather than more econometrically challenged efforts to directly test for poverty traps in estimated asset dynamics

lobbying and international cooperation in tariff setting abstract this paper develops a theory of tariff protection that incorporates cooperative behavior and lobbying governments use import tariffs or subsidies to maximize a weighted sum of lobbying contributions and general welfare governments do not use export taxes or subsidies and thus balance the interests of export and import competing lobbies in setting tariff levels in a symmetric model cooperation between governments is sustained by threats of punishment in future periods unless governments place too much weight on the future the result is a cooperative tariff otherwise the result is a reciprocal import subsidy

asset smoothing consumption smoothing and the reproduction of inequality under risk and subsistence constraints abstract a growing literature asks whether low wealth agents can accumulate assets over time or whether they are trapped in poverty this paper develops a stochastic dynamic programming model with endogenous asset price risk to explore savings and portfolio decisions in a resource poor environment characterized by risk and subsistence constraints optimal portfolio strategies are found to bifurcate despite divisible assets and fully rational agents wealthier agents acquire a higher yielding portfolio and pursue conventional consumption smoothing poorer agents acquire a less remunerative portfolio and pursue asset smoothing rather than consumption smoothing asset based risk coping thus results in positive correlation between initial wealth and portfolio rate of return

migration remittances and capital accumulation evidence from rural mexico this paper studies the link between migration remittances and productive assets accumulation for a panel of poor rural households in mexico over the period 19972006 in a context of nancial markets imperfections migration may act as a substitute for imperfect credit and insurance provision through remittances from migrants and thus exert a positive eect on investment however it may well be the case that remittances are channelled towards increasing consumption and leisure goods exploiting within family variation and an instrumental variable strategy we show that migration indeed accelerates productive assets accumulation moreover when we look at the eect of migration on consumption of non productive assets durable goods we nd instead a negative eect our results then suggest that

commercial policy the terms of trade and the real exchange rate revisited abstract we estimate the effects of commercial policy and changes in the external terms of trade on the real exchange rate for four latin american economies using data on internal relative prices we find that the greater the elasticity of the non traded price level with respect to the price of importables the larger is the real exchange rate effect of import restrictions but the smaller is the real exchange rate effect of changes in the external terms of trade

protectionist responses and declining industries abstract this paper employs a three factor ricardo viner model of a small economy to analyse the effect of a falling world import price on the domestic price of the economy s importable good in the presence of an endogenously determined tariff the outcome is seen to depend on a the way in which the recycled tariff revenue is allocated to the three factor groups and b differences in relative risk aversion across those groups however under reasonable assumptions hillman s 1982 result that a declining industry will continue to decline is seen to hold in our general equilibrium framework

using an asset index to assess trends in poverty in seven sub saharan african countries summary using comparable nationally representative surveys and extending the work of sahn d e stifel d c 2000 poverty comparisons over time and across countries in africa world development 28 12 2123 2155 an asset index is used to investigate changes in poverty in seven african countries poverty declined in five of the seven countries improvements in the asset index are driven by progress in the accumulation of private assets while access to public services has deteriorated however the method has some shortcomings assets are slow changing and discrete the index therefore may not capture changes in well being accurately the poor discrimination ability of the index at the lower end of the scale also makes it an inappropriate tool for studying ultra poverty

trade wars and trade talks when governments meet in the international arena their actions reflect the political situations at home previous studies of trade relations have focused on governments that are immune from political pressures and that act as benevolent servants of the public interest here we introduce domestic politics into the analysis of international economic relations we study the interactions between national leaders who are concerned both with providing a high standard of living to the general electorate and collecting campaign contributions from special interest groups our analysis sheds light on the determinants of the structure of protection in non cooperative and cooperative policy equilibria

eco labelling scheme environmental protection and protectionism in this paper a model of international duopoly is developed involving competition in both prices and levels of environmental friendliness and the implications of government policies are studied it is shown that contrary to the conventional wisdom a regulatory increase in the minimum required level of environmental friendliness of imported goods may harm the home firm and may result in a rise in the volume of imported goods whether consumers lose or gain from such a regulatory increase depends on consumption spillover effects we also show that under certain conditions the duopoly s equilibrium choice of levels of environmental friendliness is socially optimal jel classification f00 eco etiquetage protection environnementale et protectionnisme ce memoire developpe un modele de duopole international ou la concurrence se fait a la fois par les prix et par les niveaux de sensibilite aux problemes environnementaux on etudie les impacts des politiques gouvernementales contrairement a ce que suggere la sagesse conventionnelle il semble qu un accroissement reglementaire dans le minimum requis de disposition favorable a l environnement des biens importes peut nuire a l entreprise locale et peut resulter en un accroissement du volume de biens importes le consommateur perdra ou gagnera en consequence de cette accroissement de la reglementation selon la nature des effets de retombees on montre aussi que sous certaines conditions le choix des niveaux d equilibre de sensibilite aux problemes de l environnement s avere socialement optimal

determinants of the increase in the number of interest groups in western democracies theoretical considerations and evidence from 21 oecd countries mancur olson s theory of institutionalsclerosis is based on the notion that thenumber of interest groups within a countryincreases with the duration of itspolitical stability the following paperargues that the increase in the number ofinterest groups over time could also be aconcomitant of economic development theoretically both explanations provetenable an empirical cross sectionalregression analysis using data from 21oecd countries finds no evidence for asignificant impact of the duration ofpolitical stability on the number ofinterest groups a significantly positiveeffect is however reported for the degreeof economic development

economic reform voting and local political intervention evidence from india abstract this paper uses the indian tariff reforms of the early nineties to estimate how voters hurt by economic reforms respond regions more hurt by the tariff reform increased their support for both the party that initiated their suffering and parties with similar preferences in favor of poverty centric policies this response is surprisingly sophisticated where voters did not simply punish incumbents for negative income shocks and correctly discounted initial anti reform stances by opposition parties that later turned out to be false furthermore the strength of this voting response varied with both geography and local political incentives suggesting that the economic effects of reforms might vary substantially in large and decentralized democracies

wealth risk and activity choice cattle in western tanzania abstract imperfect credit markets force households to use their savings for investment profitable activities often require lumpy investments limiting entry by poorer households resulting in increasing welfare differences in tanzania cattle are a profitable but lumpy investment and a liquid asset for consumption smoothing richer households own substantial cattle herds while poorer households specialize in low return low risk activities a dynamic programming model and simulations are presented to analyze entry into asset accumulation under income risk the evidence suggests that households with lower endowments are less likely to own cattle and returns to their endowments are lower

growth the external terms of trade and endogenous trade liberalization we study the effects of growth and changes in the external terms of trade on protection there are two sectors an urban sector and a rural sector and trade policy is used to redistribute income between them we show that growth precedes trade liberalization in addition we find that trade reform is triggered by falls in the world prices of primary exports or intermediate imports these results are shown to hold for tariffs and quotas

the economics of special interest politics the case of the tariff this paper investigates the interaction of politicians and special interest lobbies the goal is to model the equilibrium levels of redistributive policies such as taxes subsidies tariffs and regulatory decisions the model is applied throughout to the setting of tariffs by contributing to political campaigns special interest lobbies generate economic returns higher tariffs generate revenue for import competing industries through higher product prices higher milk support prices raise dairy farm income and so forth the lobby invests to maximize these net economic returns in evaluating their chances of election politicians weigh the favorable effects of special interest money against the unfavorable association with the lobby and the social cost of the redistributive policy section i explores the lobby s problem it describes a formalization of mancur olson s discussion of the voluntary provision of public goods and optimal contributions by lobbies to political campaigns section ii describes determination of the equilibrium tariff positions of each politician in a political campaign

exploring poverty traps and social exclusion in south africa using qualitative and quantitative data abstract recent theoretical work hypothesises that a polarised society like south africa will suffer a legacy of ineffective social capital and blocked pathways of upward mobility that leaves large numbers of people trapped in poverty to explore these ideas this paper employs a mix of quantitative and qualitative methods novel econometric analysis of asset dynamics over the 1993 98 period identifies a dynamic asset poverty threshold that signals that large numbers of south africans are indeed trapped without a pathway out of poverty qualitative analysis of this period and the period 1998 2001 more deeply examines patterns of mobility and confirms the continuation of this pattern of limited upward mobility and a low level poverty trap in addition the qualitative data permit a closer look at the specific role played by social relationships while finding ample evidence of active social capital and networks these are more helpful for non poor households for the poor social capital at best helps sta

the political economy of underinvestment in agriculture abstract owners of sector specific factors form political lobbies in order to influence government policy in a closed economy public investment in agriculture shifts the internal terms of trade against agriculture due to engel s law and thereby increases the surplus of unorganized classes which cannot be appropriated by the lobbies as a result the latter push the government to increase subsidies or reduce taxes to their members at the expense of public investment which falls below its socially optimal level trade liberalization by making the terms of trade invariant to public investment tends to reduce the extent of under allocation of public investment in agriculture

poverty status and the impact of formal credit on technology use and wellbeing among ethiopian smallholders summary this paper examines the impact of formal credit largely microfinance on the use of improved technology and on consumption and asset growth across households in different degrees of asset poverty using data from rural ethiopia the analysis finds no relationship between participation in microfinance programs and the use of technologies or consumption growth among the poorest households even though the use of certain technologies like fertilizer contributes to their asset accumulation over time for other households microfinance has positive effects on both consumption and asset growth as well as on the use of improved technology the findings imply variation in constraints faced by different classes of poor households and suggest the value of asset based poverty classifications in identifying target groups for poverty interventions

a dynamic model of endogenous trade policy empirical evidence suggests that past levels of protection are significant determi nants of current levels of protection we investigate dynamic interactions among interest groups and resulting endogenous links between current and future trade policies we explore these intertemporal links in a small open economy in which lobbying and tariff policies are the outcome of a dynamic game among factor owners the model can generate cycles with prolonged periods of free trade and or prolonged periods of restricted trade i e persistent trade policies an interesting aspect of the environment is the role of lobbying as a partial

a dynamic programming approach to price installment options installment options are bermudan style options where the holder periodically decides whether to exercise or not and then to keep the option alive or not by paying the installment we develop a dynamic programming procedure to price installment options we study in particular the geometric brownian motion case and derive some theoretical properties of the io contract within this framework we also characterize the range of installments within which the installment option is not redundant with the european contract numerical experiments show the method yields monotonically converging prices and satisfactory trade offs between accuracy and computational time our approach is finally applied to installment warrants which are actively traded on the australian stock exchange numerical investigation shows the various capital dilution effects resulting from different installment warrant designs

in the eye of the storm the welfare impacts of a hurricane summary the impact of a large covariant shock namely hurricane mitch is examined in the context of household asset holdings in rural nicaragua utilizing household panel data from the period it is found that the hurricane did not have an adverse impact on the ownership of productive assets among the affected households on average on the other hand nonproductive asset holdings seem to have been significantly reduced a further examination confirms that the shock affected the poorest households disproportionally especially in terms of nonproductive assets finally this study presents strong suggestive evidence of a geographical poverty trap within the shock affected areas of the country

one kind of freedom poverty dynamics in post apartheid south africa abstract a 1993 south african living standards survey documented the legacy of apartheid in the form high levels of inequality and human insecurity drawing on a 1998 re survey of households in the 1993 study this paper explores whether this legacy has been superseded or whether apartheid s end has been only one kind of freedom that has left households in a poverty trap from which they cannot escape after proposing a theoretically grounded dynamic poverty typology that distinguishes stochastic from structural poverty transitions the paper goes on to estimate that significant numbers of the south african poor are potentially trapped in a structural poverty trap and lack the means to escape poverty over time

on the provision of official and private foreign aid abstract the provision of official relative to private foreign aid varies considerably between donor countries we explain the variations in terms of country size household composition income distribution and the government s ability to commit to aid and derive inter alia the results 1 official aid crowds out private aid 2 total aid and official aid collected from each household are lower in more populous countries 3 total aid is lower if i the distribution of income favors the more altruistic households and ii the government can credibly commit to a certain level of aid evidences suggest that the theoretical results can explain stylized facts

financial education and behavioral finance new insights into the role of information in financial decisions recent empirical evidence based on surveys and experimental activities within the fields of behavioral finance and financial education has offered economists new empirically based insights into how individuals use information in making financial decisions specifically the importance of information in financial decisions may be reduced or eliminated by psychological aspects of the individual such as a state of overconfidence that is individual or shared with a group or by the individual s limited ability to process complex and abundant information this paper aims to complement this emerging body of literature by studying how individuals perceive and process information when making financial decisions we review these contributions and suggest a number of broad guidelines that can provide a framework for future discussion of this topic within financial decision theory

nonfarm employment agricultural shocks and poverty dynamics evidence from rural uganda this article examines the role of off farm employment in poverty reduction over a short period of time by using panel data from 894 rural ugandan households in 2003 and 2005 taking advantage of the unique off farm labor supply and income data we analyzed how households respond to negative agricultural shocks especially through off farm labor supply and income to mitigate crop income loss our analysis indicates that the flexibility of labor time allocation varies across off farm jobs and that only low skilled and low wage jobs tend to be used to mitigate negative shocks especially among the asset poor

learning about the prospects for mobility economic and political dynamics following fundamental policy reform abstract the political left turn in latin america which lagged its transition to liberalized market economies by a decade or more challenges conventional economic explanations of voting behavior this paper generalizes the forward looking voter model to a broad range of dynamic possibly non concave income processes under full information the model implies support for redistributive policies materializes rapidly if few prospects of upward mobility are present in contrast modeling voters evolving beliefs about an unknown income dynamic process shows a slow and polarizing shift toward redistributive preferences simulation using fitted income dynamics suggests that this imperfect information perspective accounts for latin america s right to left political shift and offers additional insights about political dynamics in the face of economic polarization

how strong is the evidence for the existence of poverty traps a multicountry assessment introducing this special collection on asset dynamics and poverty traps this article assesses evidence on these issues across eight panel data sets in six countries generally not previously considered in this perspective it examines the importance of assets in relation to chronic poverty and uses parametric and non parametric methods to test for dynamic asset based poverty traps the article finds that chronically poor households have lower levels of assets than others though does not find evidence of the non convexities which would imply a multiple dynamic poverty trap from this base the article introduces the remainder of the articles in this collection which set out many promising approaches to further develop and improve methods and approaches for looking at poverty traps in future

multilateral trade negotiations european integration and farm policy reform trade negotiations and farm policy kym anderson why was it so hard to reach an agreement in the uruguay round to reduce agricultural protection after surveying the growth of agricultural protection in the 1980s i develop arguments based on political economy that imply a systematic tendency for governments to protect farmers increasingly at least up to some threshold as economic development proceeds agricultural protection growth in industrializing countries is therefore normal not exceptional liberalizing those policies before reaching that threshold is unattractive politically unless new influences e g from abroad upset the domestic political equilibrium the uruguay round provided such a force what made the early 1990s so significant a crossroads for farm policy reform was that coincidently there were other changes taking place in europe which lowered the domestic political cost of reforming the ec s common agricultural policy the paper argues that the reforms to farm policy during the rest of this decade as a result of the uruguay round agreement will at best be slow and messy but that is far preferable to the alternative of a failed uruguay round and continued growth of agricultural protection

regional agricultural endowments and shifts of poverty trap equilibria evidence from ethiopian panel data we examine changes in patterns of equilibria over time and across regions applied to the ethiopia rural household survey we revisit incidence of multiple equilibria using new nonparametric techniques and examine single equilibria that remain stagnant below the poverty line using quantile regressions we identify differences across the income distribution we introduce the empirical analysis of sequences of equilibria we identify a single equilibrium in 1994 1999 but find a second higher equilibrium emerging in 1999 2004 evidencing a shift from unimodal toward a bimodal asset distribution the most deprived region exhibits a low level stagnant equilibrium despite significant rural income growth nationwide

measuring socio economic status in the millennium villages the role of asset index choice how are poverty analyses and poverty traps assessments affected by the choice among conventional methods of asset index construction to address this question this article uses panel data from four sites in the millennium villages project mvp in malawi tanzania mali and ghana to study the relationship between eight asset indices and the sensitivity of findings related to poverty rates poverty transitions and poverty traps to the index used we find that although estimations of poverty rates and transitions are largely consistent across indices evidence of poverty traps can be conditional on which asset index is used the asset indices studied include structural income principal components factor analysis and a reduced set of assets reflecting the portfolio assessed in the demographic health survey dhs data

trade diversion and declining tariffs evidence from mercosur abstract this paper empirically examines the alternative posed by richardson j intern econ 34 1993 39 to the traditional view that trade integration may exacerbate inefficiencies richardson s hypothesis boldly predicts that trade diversion and trade creation may actually cause tariffs to decline the hypothesis is fundamentally attributable to the presence of a political component in the governments objective functions a cross sectionally rich data set on trade and tariffs from the mercosur pact countries primarily argentina is used the evidence yields surprising conclusions about the validity of endogenous tariff determination in models of trade integration

lobbying and adjustment in declining industries abstract this paper explains the persistence of protection in terms of interaction between industry adjustment lobbying and the political response faced with a trade shock owners of industry specific factors can respond in two ways they can undertake costly adjustment or they can lobby politicians for trade protection and thereby mitigate the need for adjustment the choice will depend on the relative returns from adjusting relative to lobbying by introducing an explicit lobbying process it can be shown that the current level of protection is an increasing function of past protection and that declining industries contract more slowly over time the more responsive are politicians to lobbying in addition the model makes clear that the type of senescent industry collapse predicted by cassing and hillman 1986 is only possible under fairly special assumptions about the technology of lobbying

assessing the impact of nerica on income and poverty in central and western uganda persistent food shortage and poverty in sub saharan africa ssa are major development issues new rice for africa nerica was developed to boost crop yield and income of rural households in ssa although its high yielding traits have become fairly well known there is no empirical analysis of its impact on income and poverty by taking the case of uganda where a nerica promoting program was initiated as one of the major poverty eradication measures this study attempts to compare actual income with the hypothetical income without nerica we found that introduction of nerica decreases poverty to a significant extent without deteriorating income distribution