transfer problem dynamics macroeconomics of the franco prussian war indemnity we study the classic transfer problem of predicting the effects of an international transfer on the terms of trade and the current account a two country model with debt and capital allows for realistic features of historical transfers they follow wartime increases in government spending and are financed partly by borrowing the model is applied to the largest historical transfer the franco prussian war indemnity of 1871 1873 in these three years france transferred to germany an amount equal to 22 percent of a year s gdp when the transfer is combined with measured shocks to fiscal policy and productivity over the period the model provides a very close fit to the historical sample paths of french gdp terms of trade net exports and aggregate consumption this makes a strong case for the dynamic general equilibrium approach to studying the transfer problem more generally our results provide striking evidence of the importance of international capital markets in the nineteenth century

smallholder market participation concepts and evidence from eastern and southern africa abstract this paper reviews the evidence on smallholder market participation with a focus on staple foodgrains i e cereals in eastern and southern africa in an effort to help better identify what interventions are most likely to break smallholders out of the semi subsistence poverty trap that appears to ensnare much of rural africa the conceptual and empirical evidence suggests that interventions aimed at facilitating smallholder organization at reducing the costs of intermarket commerce and perhaps especially at improving poorer households access to improved technologies and productive assets are central to stimulating smallholder market participation and escape from semi subsistence poverty traps macroeconomic and trade policy tools appear less useful in inducing market participation by poor smallholders in the region

measuring human capital in the labor market the supply of experience in 8 oecd countries abstract to investigate the evolution of the supply side of the labor market i derive a methodology to measure an important component of the human capital level of the workforce the experience of the labor market based on the perpetual inventory method a stock of experience is estimated for eight oecd countries it appears that during the last three decades the oecd labor markets have faced a decline in the supply of experience by the labor market participants with a minimum in the early 1980s for most countries and a recovery in the 1990s some implications regarding relative wages relative unemployment and schooling are discussed

selection investment and women s relative wages over time in theory growing wage inequality within gender should cause women to invest more in their market productivity and should differentially pull able women into the workforce our paper uses heckman s two step estimator and identification at infinity on repeated current population survey cross sections to calculate relative wage series for women since 1970 that hold constant the composition of skills we find that selection into the female full time full year workforce shifted from negative in the 1970s to positive in the 1990s and that the majority of the apparent narrowing of the gender wage gap reflects changes in female workforce composition we find the same types of composition changes by measuring husbands wages and national longitudinal survey iq data as proxies for unobserved skills our findings help to explain why growing wage equality between genders coincided with growing inequality within gender

a tale of tax policies in open economies recent financial crises in europe as well as the periodic battles in the u s over the debt ceiling point to the importance of fiscal discipline among developed countries this paper develops an open economy model calibrated to the u s and a subset of the emu to evaluate the impact of various permanent tax changes the first set of experiments considers a targeted one percentage point reduction in the government deficit to gdp ratio through raising one of the consumption tax the labor income tax or the capital income tax in terms of welfare the consumption tax is found to be the least costly of the tax increases a second set of experiments looks at deficit neutral tax changes partially replacing the capital income tax with either a higher labor income tax or higher consumption tax and partially replacing the labor income tax with an increased consumption tax reducing reliance on capital income taxation is welfare enhancing although it leads to short term losses reducing labor income taxation improves international competitiveness and is welfare improving

economies of scope and the cash crop food crop debate in senegal abstract the government of senegal plans to achieve national food self sufficiency by inducing farmers to switch away from cash crops toward food crop production this paper examines selected economic consequences of the planned substitution using empirical data recently collected in southeastern senegal cost function estimates suggest that farmers are currently producing too much food crop and too little cash crop output given existing technology and observed relative prices moreover economies of scope in producing both food crops and cash crops on the same farm result in a 22 cost saving relative to growing both types of crops on separate specialized farms

forest resource use change during early market integration in tropical rain forests the huaorani of upper amazonia abstract this paper examines the impact of early market integration on the extraction of forest resources by traditional forest based households with emphasis on the commercial subsistence dichotomy empirical analysis of resource use transition among the huaorani people of the ecuadorian amazon shows that as markets become more accessible production patterns change but do not seem to affect subsistence production huaoranis increase the production of animal resources from forests however the extraction of harvested and primarily of farmed commodities seems not to be affected data also suggest that trade relies on limited specialization trade among the huaorani communities studied depends on raising the production of some of the same commodities that are found in the subsistence basket these changes are clearly explained if a flexible labor theory of early market integration is used this period is characterized by labor and land abundance and a relative ease to move labor from low return to more productive activities under these conditions market participation need not be accompanied by a reduction in the production of subsistence commodities or commodity specialization high risks and uncertainty and high transportation costs keep poor forest households from shifting completely to commercial activities this contrasts with a long presumption that production of individual commodities responds quickly to price changes based on demand shifts between products but that total output is slow to respond only after all the surplus labor has been allocated to productive activities total output becomes less flexible at this point increased production requires commodity or technological specialization

changes in returns to education in latin america the role of demand and supply of skills using micro data for the urban areas of argentina brazil chile colombia and mexico the authors document trends in men s returns to education during the 1980s and the 1990s and estimate the role of supply and demand factors in explaining the changes in skill premia they propose a model of demand for skills with three production inputs corresponding to workers with primary secondary and university level education further the authors demonstrate that an unprecedented rise in the supply of workers having completed secondary level education depressed their wages relative to workers with primary level education throughout latin america this supply shift was compounded by a generalized shift in the demand for workers with tertiary education

changes in male labor supply and wages in the 1980s both wages and labor supply of poorly educated men fell substantially relative to those of educated men some observers have interpreted this positive association between changes in w

wages profits and capital intensity evidence from matched worker firm data swedish data on workers matched with firms balance sheet reports are used to examine the relation between wages and firms ability to pay results indicate that experienced and highly educated workers are sorted into profitable firms wages are positively correlated with profits and the capital labor ratio after controlling for worker quality degree of effort supervision job characteristics local unemployment firms employment history and employer size lester s range of pay due to rent sharing is around 12 24 of the mean wage in sweden which is close to the estimates for the united states and united kingdom

smallholder production structure and rural roads in africa the case of nakuru district kenya data from a 1998 survey of farming households in kenya is used to estimate the effects of poor rural road infrastructure and high market access costs on the structure of smallholder farm production simultaneous estimation of cost and input share equations reveals rational responses by farmers to high access costs in the expected continued absence of major investments in rural infrastructure in countries such as kenya the policy challenge is to identify and catalyse institutional innovations that reduce a range of transaction costs increase financial liquidity increase social capital and reduce risk

does neoclassical theory account for the effects of big fiscal shocks evidence from world war ii much debate surrounds the usefulness of the neoclassical growth model for assessing the macroeconomic impact of fiscal shocks we test the theory using data from world war ii which is by far the largest fiscal shock in the history of the united states we take observed changes in fiscal policy during the war as inputs into a parameterized dynamic general equilibrium model and compare the values of all variables in the model to the actual values of these variables in the data our main finding is that the theory quantitatively accounts for macroeconomic activity during this big fiscal shock

food security strategies under extremely adverse conditions the determinants of household income and consumption in rural mozambique abstract this paper uses household survey data from war torn northern mozambique to examine the factors associated with higher incomes and improved rural household food security incomes and calorie consumption were found to be low and variable in each district and both are highly correlated with land holdings the central role of land holdings is largely a result of serious market failure food market participation rates and the proportion of net buyers are lower than in other sub saharan africa ssa research purchased food as a percentage of total caloric intake and off farm income as a percentage of total income are both very low by ssa standards in short surveyed smallholders have adopted a strategy of marked reliance on farm based own production to ensure their survival it is suggested that land holdings will continue to be key determinants of household income and consumption for the foreseeable future broad based rural development efforts possibly organized around existing cotton growing enterprises may offer one way out of the poverty trap for smallholders

migration theories and evidence an assessment abstract this paper presents a critical survey of theories of migration their welfare and policy implications and their empirical relevance we also develop some extensions to the theory beginning with the harris and todaro ht model in particular the ht model is extended to examine risk averse behaviour within families where the migration of members of families serves to diversify risk the welfare implications of the individual migration decision and government intervention in the form of employment subsidies are examined recent evidence on international migration is presented it is shown that migration does not flow automatically in response to wage differentials characteristics of migrants and the process of self selection are found to be important determinants of the rate of migration

technology and the us labor market evidence from the sectoral and regional decomposition of the change in the us workforce skill mix abstract researchers have found indirect evidence supporting the role of technology in changing the workforce skill mix in the us by decomposing the change in the skill mix into within between industry components this paper provides additional support for the role of technology by extending the decomposition analysis into both the sectoral and the regional dimensions

capital is back wealth income ratios in rich countries 1700 2010 how do aggregate wealth to income ratios evolve in the long run and why we address this question using 1970 2010 national balance sheets recently compiled in the top eight developed economies for the united states united kingdom germany and france we are able to extend our analysis as far back as 1700 we find in every country a gradual rise of wealth income ratios in recent decades from about 200 300 in 1970 to 400 600 in 2010 in effect today s ratios appear to be returning to the high values observed in europe in the eighteenth and nineteenth centuries 600 700 this can be explained by a long run asset price recovery itself driven by changes in capital policies since the world wars and by the slowdown of productivity and population growth in line with the s g harrod domar solow formula that is for a given net saving

economic and welfare impacts of climate change on developing countries the impact of global climate change on developing countries is analyzed using cge multimarket models for three archetype economies representing the poor cereal importing nations of africa asia and latin america the objective is to compare the effects of climate change on the macroeconomic performance sectoral resource allocation and household welfare across continents simulations help identify those underlying structural features of economies which are the primary determinants of differential impacts these are suggestive of policy instruments to countervail undesirable effects results show that all these countries will potentially suffer income and production losses however africa with its low substitution possibilities between imported and domestic foods fares worst in terms of income losses and the drop in consumption of low income households countervailing policies to mitigate negative effects should focus on integration in the international market and the production of food crops in africa and on the production of export crops in latin america and asia

estimating the implied cost of carbon in future scenarios using a cge model the case of colorado abstract using colorado as a case study we develop a state level computable general equilibrium cge model that reflects the roles of coal natural gas wind solar and hydroelectricity in supplying electricity we focus on the economic impact of implementing colorado s existing renewable portfolio standard updated in 2013 this requires that 25 of state generation come from qualifying renewable sources by 2020 we evaluate the policy under a variety of assumptions regarding wind integration costs and assumptions on the persistence of federal subsidies for wind specifically we estimate the implied price of carbon as the carbon price at which a state level policy would pass a state level cost benefit analysis taking account of estimated greenhouse gas emission reductions and ancillary benefits from corresponding reductions in criteria pollutants our findings suggest that without the production tax credit federal aid the state policy of mandating renewable power generation rps is costly to state actors with an implied cost of carbon of about 17 per ton of co2 with a 3 discount rate federal aid makes the decision between natural gas and wind nearly cost neutral for colorado

growing their own unobservable quality and the value of self provisioning abstract many important food quality and safety attributes are unobservable at the point of sale particularly in informal markets with weak reputation effects through a framed field experiment conducted in western kenya we show that farmers place a large premium on maize they have grown themselves relative to that available for purchase providing information on the origin of maize and on its taste and safety reduces this gap we conclude that information which is unavailable during typical market transactions is important to how consumers value maize and that imperfect information may contribute to the prevalence of agricultural production for subsistence needs in developing countries

regional labor markets and the determinants of wage inequality from 1972 to 1990 the united states experienced the largest increase in wage inequality of any developed country the spread in log wages between the 90th and 10th percentiles of the male wage distribution increased by about 60 points and inequality increased within virtually every demographic or skill category of the labor force see chinhui juhn et al 1993 various explanations have been offered including changes in the relative demand for skill intensive goods international trade immigration of less skilled workers and increased labor force participation of women yet attempts to quantify the relative importance of these factors have not met with much success this leaves skill biased technical change as the residual claimant that rationalizes the data this paper uses regional differences in the evolution of wage inequality to provide new evidence on the determinants of relative wages using a model of factor demand in geographic markets i isolate contributions of i changing skill ratios in the labor force ii increased participation of women iii technical change and iv changes in the industrial composition of labor demand the data indicate that changing skill ratios and women s labor supply have affected the wages of low skilled men in the west the data indicate that increased immigration of less skilled hispanic and asian workers has adversely affected the wages of natives causing a greater increase in inequality there than in any other region of the country i modeling wage inequality in regional markets

the challenges of determining the employment effects of renewable energy abstract the benefits of promoting renewable energy are regularly claimed to be energy security climate change mitigation and job creation while the first two benefits are generally accepted the impact of renewable energy on employment is still disputed this paper presents a discussion of the various factors that influence the analysis of renewable energy and its impact on employment the advantages and disadvantages of input output methods and analysis methods are discussed as well as the issues surrounding the measurement of job creation a critical evaluation of the literature reveals factors that should be considered when completing a study about renewable energy and employment labour intensity of renewables cost increases and availability of investments counting job losses job quality and skills model assumptions and sources of information analytical studies using extensive surveys were found to be more appropriate for regional studies while input output methods were better suited to national and international studies

clearing up the fiscal multiplier morass bayesian prior predictive analysis of five nested dsge models suggests that model specifications and prior distributions tightly circumscribe the range of possible government spending multipliers multipliers are decomposed into wealth and substitution effects yielding uniform comparisons across models by constraining the multiplier to tight ranges model and prior selections bias results revealing less about fiscal effects in data than about the lenses through which researchers choose to interpret data when monetary policy actively targets inflation output multipliers can exceed one but investment multipliers are likely to be negative passive monetary policy produces consistently strong multipliers for output consumption and investment

why does private consumption rise after a government spending shock recent empirical evidence suggests that private consumption is crowded in by government spending this outcome violates existing macroeconomic theory according to which the negative wealth effect brought about by a rise in public expenditure should decrease consumption

consumer response to maize market liberalization in urban kenya abstract the elimination of consumer food subsidies associated with structural adjustment in africa has been widely thought to exacerbate food insecurity for low income consumers this article determines how urban maize consumption and expenditure patterns have responded to the liberalization of the maize and maize meal markets in kenya the article decomposes changes in maize meal prices attributable to changes in maize grain prices and maize milling margins results are obtained through two random household surveys in nairobi the first having been conducted before and the second after liberalization the main finding of the study is that maize market liberalization has conferred substantial benefits to urban consumers the combined saving to nairobi consumers from lower maize milling costs has been roughly us 10 1 million each year about the same amount that the government of kenya allocates annually to agricultural research results also indicate that the former consumer subsidies conferred through the official marketing channel were untargeted and actually inversely related to household income the subsidies on sifted meal also served to entrench a non competitive market structure that inhibited the development of a lower cost informal milling system these findings are consistent with research results from other eastern and southern african countries showing that the negative effects of eliminating food subsidies in the state marketing system have been largely compensated by relaxing controls on private grain trade which has increased consumers access to less expensive grain products distributed through informal markets

the fiscal role of conscription in the u s world war ii effort an often overlooked role of conscription is as a method of lump sum taxation in times of war conscription of military personnel allows the fiscal authority to minimize wartime government expenditure and hence minimize tax distortions associated with war finance this paper presents a simple dynamic general equilibrium model to articulate this view and calibrates the model to the u s world war ii experience analysis of the calibrated model indicates that the welfare value of conscription as a fiscal policy tool is quantitatively large despite the fact that the american involvement lasted only four years conscription is worth approximately 2 of annual aggregate consumption in perpetuity

assessing the impact of skill shortages on the productivity performance of high tech firms in northern ireland this article utilizes data from three separate skill related surveys of firms in the northern ireland it electronic engineering and mechanical engineering industries in order to assess the extent to which the performance of high tech firms are being constrained as a result of hard to fill and or unfilled vacancies whist it was found that the determinants of skill shortage varied somewhat depending upon the definitional approach adopted a high degree of correlation was found with regards to the impacts of skill shortages on firm level performance it was found that both hard to fill and unfilled vacancies had reduced output per worker levels by between 65 and 75 in affected firms however these impacts were only detecw after controlling for selection effects the evidence suggests that standard ols procedures can generate highly misleading results in studies of this nature

the macroeconomic effects of lockdown policies abstract a tractable incomplete market model with endogenous unemployment risk sticky prices real wage rigidity and a fiscal side is calibrated to euro area countries and used to analyze the macroeconomic effects of lockdown policies modeling them as a shock to the extensive margin of labor adjustment a rise in separations produces large and persistent negative effects on output unemployment and welfare raises precautionary savings and lowers inflation in line with early evidence about inflation dynamics modeling lockdowns as a shock to the intensive margin a fall in labor utilization produces small and short lived macroeconomic and welfare effects and implies a counterfactual rise in inflation conditional on a lockdown separation shock raising public spending or extending ui benefits by large amounts is much more effective in stimulating the economy than during normal times quantitatively however the ability of such policies to flatten the output and unemployment curves remains limited even though these policies can alleviate a reasonable share of the aggregate welfare losses from the lockdown

immigrants minorities and labor market competition this paper investigates the extent of labor market competition among immigrants minorities and the native population an analysis of 1980 u s census data reveals that immigrants tend to be substitutes for some labor market groups and complements for others the effects of shifts in immigrant supply on the earnings of native born men are however very small on the other hand increases in the supply of immigrants do have a sizable impact on the earnings of immigrants themselves an increase of 10 percent in the supply of immigrants for example reduces the immigrant wage by about 10 percent

impacts of prices and transactions costs on input usage in a liberalizing economy evidence from tanzanian coffee growers despite improvements in production incentives agricultural output in africa remained sluggish through the 1990s low use of purchased inputs may be part of the cause of persistently low productivity in african agriculture this article analyzes the roles of relative prices and transactions costs in explaining low use of chemical inputs among tanzanian coffee growers a sample selection model indicates that output prices exert great influence on input purchases and that both fixed and variable transactions costs affect input use decisions travel costs in input and output markets have distinct effects on input usage implying distinct avenues for interventions to promote more intensive use of agricultural inputs

episodes of war and peace in an estimated open economy model we analyze the effects of world wars on the macroeconomic dynamics of the u s france germany and the uk by means of an estimated open economy model the model allows wars to affect the economy through capital depreciation sovereign default a military draft household preferences and spillovers on other exogenous processes productivity investment trade policy variables if the bulk of fluctuations during war episodes can be explained by the rise in government spending in the u s other factors are crucial in other countries we also discuss the size and state dependence of public spending multipliers and a counterfactual welfare exercise

the associations of soil fertility and market access with household income evidence from rural uganda abstract this study attempts to identify the major factors affecting farm and nonfarm income by using panel data of 894 rural households interviewed in 2003 and 2005 in rural uganda we supplement the panel data with household level soil fertility data and road distance data to the nearest urban center on three road types tarmac loose surface and dirt roads the results suggest that soil fertility measured by the soil organic matter som content is positively associated with crop income but not with livestock and nonfarm income we also find that the total road distance to the nearest urban center and the road quality have strong negative associations with the crop income

informing food security decisions in africa empirical analysis and policy dialogue discussions of economic and agricultural development in africa have focused heavily in recent years on structural adjustment i e basic policy changes aimed at allowing international and domestic markets to play a greater role in coordinating national economic activities often these structural adjustments and accompanying policies aimed at improving economic performance have been based on several implicit assumptions about how african food systems operate yet for many countries little empirical information has been available to test these assumptions hence designing policies too often becomes an exercise in planning without facts this paper argues that not only is there a need to base food security and structural adjustment policies more firmly on empirical information but that the process by which the information is obtained is as important as the information itself agricultural economists and other social scientists can and increasingly should design policy research in africa in ways that simultaneously increase effective demand for empirical information as an input into the ongoing policy process and augment african capacity continually to inform policy deliberations we illustrate the payoffs to such an approach by drawing on selected experience in several african countries weber

wars and capital destruction abstract in this paper we propose a theoretical framework to investigate the impact of conflicts and wars on key macroeconomic aggregates and welfare using a panel data with 9 countries from 1870 onwards we first show that the consumption to output ratio is minimal during wwii for participants while this can be explained by an increase in public spending in the usa this cannot be the case in other countries that participated in wwii as they experience a large fall in output during wartime to account for this we build a variation of a real business cycle model first proposed by hercowitz and sampson 1991 we extend the initial model to account for specific shocks that destroy private and public capital stocks as conflicts do by assuming an exogenously time varying parameter in the law of capital accumulation in addition the model imbeds generalized tfp shocks capturing standard technological factors as well as the potential effects of war on the labor force the model is estimated and used i to assess the importance of capital shocks during war episodes and ii to quantify the welfare effects of conflicts we show that capital shocks are crucial to account for the macroeconomic dynamics of countries that have experienced large war related destruction and that the welfare losses from fluctuations can be quite large when considering data samples that include major war episodes

interlinked markets and the cash crop food crop debate in land abundant tropical agriculture the purpose of this article is to illustrate how such institutions do arise in the african context under certain preconditions it is argued that the lack of a land market due largely to a non capitalist conception of property rights over land 3 along with other conditions to be examined below leads to the failure of labor and private sector credit markets in response indigenous institutions have evolved to cope with the market failures

the impact of environmentally friendly innovations on value added while recent literature has focused on explaining the determinants of green innovations it is not well understood how such innovations affect performance to analyse the relationship between green innovation and performance new industry level panel data were exploited these include 12 oecd countries the whole manufacturing sector and a period of 30 years the results show that green inventions are u shape related to performance however the turning point is quite high and hence only relevant for a few industries this indicates that given the current level of green promotion market incentives alone are not sufficient to allow the green invention activities of industries to rise considerably to verify these results and to get a better understanding of the mechanisms in the green market we finally made several interviews with multinational firms that have a good understanding of what happens on the global market of green innovation

principal challenges confronting smallholder agriculture in sub saharan africa summary this paper uses small scale farm survey data from five countries of eastern and southern africa to highlight four under appreciated issues i how land distribution patterns constrain the potential of crop technology and input intensification to enable many small farms to escape from poverty ii why most smallholders are unable to produce more than a marginal surplus or participate meaningfully in commodity markets iii why most farmers are directly hurt by higher grain prices and iv why the marketed agricultural surplus is exceedingly concentrated among a small group of relatively large smallholders policy and public investment options are reviewed in the light of these findings there is no one future for small farms in africa much depends on government policy and investment decisions

employment trends in the u s electricity sector 2008 2012 abstract between 2008 2012 electricity generated gwh from coal the longtime dominant fuel for electric power in the us declined 24 while electricity generated from natural gas wind and solar grew by 39 154 and 400 respectively these shifts had major effects on domestic employment in those sectors of the coal natural gas wind and solar industries involved in operations and maintenance o m activities for electricity generation using an economic input output model we estimate that the coal industry lost more than 49 000 jobs 12 nationally over the five year period while in the natural gas solar and wind industries employment increased by nearly 175 000 jobs 21 we also combine published ratios for jobs per unit of fuel production and per megawatt of power plant capacity with site specific data on fuel production and power plant retirements additions and capacity changes to estimate and map direct job changes at the county level the maps show that job increases in the natural gas solar and wind industries generally did not occur where there were significant job losses in the coal industry particularly in west virginia and kentucky

the hidden winners of renewable energy promotion insights into sector specific wage differentials abstract in light of germany s energy system transformation this paper examines differences in employment structures and wage differentials between renewable energy establishments and their sector peers to do so we have developed a novel data set by linking company level information from the german renewable energy federation with administrative establishment level data from the institute for employment research descriptive evidence shows significant differences in wages and several other characteristics between renewable energy establishments and their sector peers our estimates give evidence that human capital and other establishment level characteristics mostly explain the wage differential among manufacturers and energy providers however we find a persistent renewable energy wage premium of more than ten percent in construction installation activities and architectural engineering services we interpret this premium as a positive indirect effect of the promotion of renewable energies for the benefit of employees in renewable energy establishments within these two sectors

stochastic depreciation and the business cycle the authors study a version of the neoclassical growth model in which shocks to both aggregate productivity and the depreciation of capital generate fluctuations around the steady state growth path depreciation shocks induce an inverse comovement between average labor productivity and hours worked when the model is calibrated to u s data it generates a correlation between productivity and hours which is significantly closer to the observed value than that of standard real business cycle models furthermore the addition of depreciation shocks does not cause a deterioration of the predictions of the model concerning other comovements copyright 1994 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

us monetary and fiscal policy in the 1930s the paper provides a survey of fiscal and monetary policies during the 1930s under the hoover and roosevelt administrations and how they influenced the policies during the recent great recession the discussion of the causal impacts of monetary policy focuses on papers written in the last decade and the findings of scholars using dynamic structural general equilibrium modelling the discussion of fiscal policy shows why economists do not see the new deal as a keynesian stimulus describes the significant shift toward excise taxation during the 1930s and surveys estimates of the impact of federal spending on local economies the paper concludes with discussion of the lessons for the present from 1930s monetary and fiscal policy

can government purchases stimulate the economy this essay briefly reviews the state of knowledge about the government spending multiplier drawing on theoretical work aggregate empirical estimates from the united states as well as cross locality estimates i assess the likely range of multiplier values for the experiment most relevant to the stimulus package debate a temporary deficit financed increase in government purchases i conclude that the multiplier for this type of spending is probably between 0 8 and 1 5 jel e23 e62 h50

ten years after the financial crisis what have we learned from the renaissance in fiscal research author s ramey valerie a abstract this paper takes stock of what we have learned from the renaissance in fiscal research in the ten years since the financial crisis i first discuss the new innovations in methodology and various strengths and weaknesses of the main approaches to estimating fiscal multipliers reviewing the estimates i come to the surprising conclusion that the bulk of the estimates for average spending and tax change multipliers lie in a fairly narrow range 0 6 to 1 for spending multipliers and 2 to 3 for tax change multipliers however i identify economic circumstances in which multipliers lie outside those ranges finally i review the debate on whether multipliers were higher for the 2009 obama stimulus spending in the united states or for fiscal consolidations in europe

the effect of income taxes on household income research on the distribution of income during the 1980s has identified a trend towards increasing inequality which may be the continuation and acceleration of trends spanning several decades this paper explores to what extent behavioral responses to the tax changes during the 1980s may also explain the rising inequality the 1986 tax reform act is used as a natural experiment to explore the roles played by both taxes and a variety of nontax factors our principal finding is that both tax rates and nontax factors appear to have had significant effects on relative income growth during the late 1980s

a comparison of international income inequality an ordered probit model analysis in this study the ordered probit model with marginal effect was applied to examine the key elements that influence changes in the gini levels the empirical results indicated that export incentives and poverty have a positive impact on the gini levels moreover the marginal effect revealed that export incentives increase income inequality for countries with higher inequality and reduce inequality for those countries with a relatively even income distribution likewise the study found that the asian pacific economic cooperation apec and the eu countries move from inequality to equality more efficiently than countries in the latin american integration association laia

green jobs economic impacts of renewable energy in germany abstract the labor market implications of large investment into renewable energy re are analyzed in this text although a growing re industry can be observed in germany the overall effect of large increases of re based electricity and heat generating technologies on the german economy require a careful model based analysis the applied model panta rhei has been used among others to evaluate the german energy concept in 2010 it takes positive and negative impacts of re into account the paper shows the overall effects under different assumptions for fossil fuel prices domestic installations and international trade the results are sensitive to assumptions on the development of re world markets and german exports to these markets almost all of these scenarios exhibit positive net employment effects under medium assumptions net employment of re expansion will reach around 150 thousand in 2030 only with assumptions for german re exports below today s level net impacts are slightly negative gross employment will increase from 340 thousand in 2009 to between 500 and 600 thousand in 2030

household specific food price differentials and high value crop production in rural ghana using panel data from ghana we have examined the relationship between household specific producer consumer price differentials and rural household cropland allocation between food and high value crops we test the hypothesis that cereal price bands induce a shift of resources away from high value crop production making smallholders appear unresponsive to price incentives our results lend support to this hypothesis implying that a policy aiming at increasing farmers income through high value crop production may fail if hard and soft infrastructure does not improve in rural areas and if staple crop productivity does not increase significantly

stabilizing food markets in eastern and southern africa a major challenge for agricultural policy in africa is how to address the market instability related causes of low farm productivity and food insecurity this paper highlights structural changes affecting the behavior of food markets in eastern and southern africa and discusses their implications for the design of strategies to stabilize food prices these changes include 1 an increasing trend in maize prices toward import parity levels reflecting an emerging structural maize deficit in much of the region 2 increasingly diversified food consumption patterns in both rural and urban areas 3 highly concentrated marketed maize surplus which have largely unrecognized implications for the magnitude of price risk faced by most farm households and 4 the strategic interactions between private and public marketing actors leading in some cases to heightened market instability and food crises in the prevailing dual market environment now characterizing most of the region greater coordination transparency and consultation between private and public market actors is needed to achieve reasonable levels of food price stability and predictability

differences in labor supply to monopsonistic firms and the gender pay gap an empirical analysis using linked employer employee data from germany this article investigates women s and men s labor supply to the firm within a semistructural approach based on a dynamic model of new monopsony using methods of survival analysis and a large linked employer employee data set for germany we find that labor supply elasticities are small 1 9 3 7 and that women s labor supply to the firm is less elastic than men s which is the reverse of gender differences in labor supply usually found at the level of the market our results imply that at least one third of the gender pay gap might be wage discrimination by profit maximizing monopsonistic employers

does unmeasured ability explain inter industry wage differentials this paper provides empirical assessments of the two leading explanations of measured inter industry wage differentials 1 true wage differentials exist across industries and 2 the measured differentials simply reflect unmeasured differences in workers productive abilities first we summarize the existing evidence on the unmeasured ability explanation second we construct a simple model which shows that if matching is important then endogenous job change decisions can create important self selection biases even in first differenced estimates of industry wage differentials third we analyze a sample that approximates the experiment of exogenous job loss we find that i the wage change experienced by a typical industry switcher closely resembles the difference in the relevant industry differentials estimated in a cross section and ii pre displacement industry affiliation plays an important role in post displacement wage determination

collateral damage trade disruption and the economic impact of war abstract conventional wisdom in economic history suggests that conflict between countries can be enormously disruptive of economic activity especially international trade we study the effects of war on bilateral trade with available data extending back to 1870 using the gravity model we estimate the contemporaneous and lagged effects of wars on the trade of belligerent nations and neutrals controlling for other determinants of trade as well as the possible effects of reverse causality we find large and persistent impacts of wars on trade national income and global economic welfare we also conduct a general equilibrium comparative statics exercise that indicates costs associated with lost trade might be at least as large as the conventionally measured direct costs of war such as lost human capital as illustrated by case studies of world wars i and ii

labor earnings in one company towns theory and evidence from kazakhstan one company towns characterized by the presence of a large employer in a local labor market are a frequent legacy of state led development strategies how will downsizing or closing unprofitable state owned enterprises affect these towns this article develops a simple model combining monopsony power in the labor market with a keynesian closure of the product market and uses it to interpret the findings of previous studies the article evaluates the impact of the company s employment level on the town s labor earnings in kazakhstan where one company towns are still prevalent the evaluation is based on data from the 1996 living standards measurement survey the results show that labor earnings in the town decrease roughly 1 5 percent when the share of its population working for the company decreases 1 percent the results are robust to changes in the definition of labor earnings and to the inclusion of a variety of other community characteristics in the analysis these results and the theoretical model are combined to evaluate the welfare impact of company downsizing and consequently to derive the optimal extent of labor retrenchment

make trade not war this paper analyses theoretically and empirically the relationship between military conflicts and trade we show that the conventional wisdom that trade promotes peace is only partially true even in a model where trade is economically beneficial military conflicts reduce trade and leaders are rational when war can occur because of the presence of asymmetric information the probability of escalation is lower for countries that trade more bilaterally because of the opportunity cost associated with the loss of trade gains however countries more open to global trade have a higher probability of war because multilateral trade openness decreases bilateral dependence to any given country and the cost of a bilateral conflict we test our predictions on a large data set of military conflicts on the 1950 2000 period using different strategies to solve the endogeneity issues including instrumental variables we find robust evidence for the contrasting effects of bilateral and multilateral trade openness for proximate countries we find that trade has had a surprisingly large effect on their probability of military conflict

are government spending multipliers greater during periods of slack evidence from 20th century historical data a key question that has arisen during recent debates is whether government spending multipliers are larger during periods of slack some researchers and policymakers have argued that while government spending multipliers are estimated to be modest on average they might become greater during times when resources are underutilized auerbach and gorodnichenko 2012 forthcoming henceforth ag test this hypothesis and find larger multipliers dur

why do cities pay more an empirical examination of some competing theories of the urban wage premium abstract ols regression identifies a 19 percent wage advantage for workers in large urban areas fixed effects estimation suggests that two thirds of this premium can be explained by cities attracting workers of higher unmeasured skills and ability the remaining wage premium is shown to consist of both level and growth elements the wage level effect is consistent with a productivity advantage for firms located in cities the wage growth effect is shown to relate in part to a cumulative advantage in the returns to job mobility for urban workers this last finding highlights the importance of coordination in urban labor markets

renewable energy policies and private sector investment evidence from financial microdata this paper analyses the effect of government policies and other determinants on private finance investment in renewable energy a unique dataset of financial transactions for renewable energy projects is constructed using the bloomberg new energy finance database the dataset covers 87 countries six renewable energy sectors wind solar biomass small hydropower marine and geothermal and the 2000 2011 time span in a first set of models undertaken at the level of the financial deal we find that in contrast to quota based schemes price based support schemes are positively correlated with private finance contributions this result holds for complementary analyses undertaken at the level of the project however for those projects in which public finance complements private finance co financed projects neither quota based measures nor price based support schemes have a significant effect on private finance flows

do newly founded firms pay lower wages first evidence from germany using a linked employer employee data set for germany this paper analyses wage setting in a cohort of newly founded and other establishments from 1997 to 2001 while theory provides alternative explanations for higher or lower wages in newly founded firms we show empirically that start ups tend to pay lower wages ceteris paribus on average wages in newly founded establishments are 8 lower than in similar incumbent firms this negative wage differential is substantially smaller in eastern than in western germany the wage differ ential is shown to decline over time as the newly founded firms become more mature

the decline of welfare benefits in the u s the role of wage inequality welfare benefits in the u s have experienced a much studied secular decline since the mid 1970s we explore a new hypothesis for this decline related to the increase in wage inequality in the labor market and the decline of real wages at the bottom of the distribution we posit that voters prefer benefits which are tied to low skilled wages we test the hypothesis using a 1969 1992 panel of state level data an additional contribution of our analysis is the use of general social survey data on voter preferences for welfare which we combine with current population survey data to determine the voter in each state who has the median preferred welfare benefit level our analysis reveals considerable evidence in support of a role for declining real wages in the decline of welfare benefits

trade liberalization and the inter industry wage premia the missingf role of productivity the literature concerning the effect of tariffs on the inter industry wage premium has not addressed the role of total factor productivity tfp in determining both the wage premium and tariffs this omission not only overlooks an important determinant of wage premium but also invalidates the use of the pre reform tariff level as an instrument for the change in tariffs based on an analysis of colombian data i find that including tfp in the estimated model of the effects of tariffs on the wage premium leads to a 41 decrease in the effect of tariffs on the inter industry wage premium relative to the model that omits tfp more specifically a 10 percentage point decrease in tariffs reduces the wage premium by 1 01 whereas a 10 increase in tfp raise wage premium by 1 6 this finding suggests the importance of using policies that boost productivity to offset the effect of tariffs on the wage premium

comparing shocks and frictions in us and euro area business cycles a bayesian dsge approach this paper estimates a dsge model with many types of shocks and frictions for both the us and the euro area economy over a common sample period 1974 2002 the structural estimation methodology allows us to investigate whether differences in business cycle behaviour are due to differences in the type of shocks that affect the two economies differences in the propagation mechanism of those shocks or differences in the way the central bank responds to those economic developments our main conclusion is that each of these characteristics is remarkably similar across both currency areas copyright 2005 john wiley sons ltd

the economics of immigration this literature review concerns the impact of immigration on the economy of the host country focusing on the experience of the united states the emphasis is on the period from the 1970s to the 1990s the author shows that research earlier in this period generally concluded that the economic effects of immigration were positive but that more recent research on later migrations have generally concluded that immigration may be having an adverse effect on the earnings of native unskilled workers and be placing an increased burden on welfare programs the importance of such economic analysis for the formulation of appropriate migration policies is stressed

differences in metropolitan and nonmetropolitan u s family income inequality a cross county comparison abstract u s family income inequality is examined using 1990 cenus of population data for the 3109 counties and independent cities in the 48 contiguous states use of counties as the unit of analysis extends previous research on u s income inequality that relied on national state or metropolitan level data in addition including both metropolitan and nonmetropolitan counties allows us to determine whether income inequality differs between them after controlling for a variety of labor market demographic and regional characteristics as another innovation we also consider whether counties that experienced recent structural changes in industry composition have higher income inequality

aggregation bias in elasticities of substitution and the minimum wage paradox while the employment effects of minimum wages are usually reported to be small suggesting low substitutability between skill types direct estimates suggest a much larger degree of substitutability this article argues that this paradox is largely due to a bias induced by the aggregation of skill types into broad categories an assignment model is applied where skilled workers have a comparative advantage in complex jobs the implied pattern of substitutability reveals the sources of the bias estimation results for the united states show elasticities of complementarity to be underestimated by up to a factor 2 5 the methods laid out likewise can be applied to other markets where different quality types are close substitutes such as the housing market

labor market institutions and wage inequality the authors investigate how labor market institutions such as unemployment insurance unions firing regulations and minimum wages have affected the evolution of wage inequality among male workers results of estimations using data on institutions in eleven oecd countries indicate that changes in labor market institutions can account for much of the change in wage inequality between 1973 and 1998 factors found to have been negatively associated with male wage inequality are union density the strictness of employment protection law unemployment benefit duration unemployment benefit generosity and the size of the minimum wage over the 26 year period institutional changes were associated with a 23 reduction in male wage inequality in france where minimum wages increased and employment protection became stricter but with an increase of up to 11 in the united states and united kingdom where unions became less powerful and in the united states minimum wages fell

are college graduates more responsive to distant labor market opportunities abstract are highly educated workers better at locating in areas with high labor demand to answer this question i use three decades of u s census data to estimate a mcfadden style model of residential location choice i test for education differentials in the likelihood that young workers reside in states experiencing positive labor demand shocks at the time these workers entered the labor market i find effects of changes in state labor demand on college graduate location choice that are several times greater than for high school graduates nevertheless medium run wage effects of entry labor market conditions for college graduates equal or exceed those of less educated workers

risk and household grain management in developing countries a dynamic model is presented of a household s joint production storage and trade decisions when facing transaction costs and risk in prices and yields grain management decisions balance the goals of maximising profits and reducing consumption price risk model solutions calibrated to chinese data show that grain s consumption role makes it an attractive form of precautionary saving even when households have access to credit the joint nature of production and savings decisions limits the income loss associated with risk coping and the desire to store grain can explain why subsistence households are frequently net purchasers but rarely net sellers of grain

are kenyan farmers under utilizing fertilizer implications for input intensification strategies and research abstract it is widely perceived that african farmers are under utilizing inorganic fertilizer however very little long term evidence from farmers fields accounting for variations in agro ecological conditions has been assembled to back this claim or determine the conditions under which it is true using five waves of nationwide household survey data from kenya covering 13 years we estimate the relative and absolute profitability of nitrogen application rates on maize fields and compare these profitability conditions to observed nitrogen use patterns over time in general we find that farmers are consistently and steadily increasing towards risk adjusted economically optimal rates of fertilizer application over time and that in the most agriculturally productive areas farmers application rates on maize sometimes exceed rates that maximize profitability fertilizer use rates may nevertheless be profitably raised in these areas but doing so will require the adoption of complementary inputs and management practices that raise maize response rates to fertilizer application this motivates a more holistic approach to input intensification strategies in the region

the effect of male wage inequality on female age at first marriage a model in which women search for husbands characterized by their wages predicts increasing within group male wage inequality raises the expected value of continued marital search and so lowers female marriage propensities using 1970 1980 and 1990 census data i test this hypothesis within geographically racially and educationally defined marriage markets the estimates suggest rising male wage inequality accounted for 7 to 18 of the decline in the propensity to marry between 1970 and 1990 for white women and more educated black women growing wage inequality appears to have had little effect on the marriage behavior of less educated black women

the future of small farms new directions for services institutions and intermediation summary efficient pre and post harvest services are essential if small farms in high potential areas are to intensify production contribute to economic growth and reduce poverty they also matter if small farms in marginal areas are to manage their natural resource base in the face of growing population pressure and climate change difficulties that smallholders face in accessing services are reviewed showing how incentives for commercial delivery of services to smallholders differ between staple food traditional cash crop and high value product supply chains the major challenge in service delivery to smallholders in much of africa concerns coordination of service development and delivery different forms of intermediary institution for achieving such coordination are examined

factor proportions and relative wages the supply side determinants of wage inequality supply side factors may contribute to rising wage inequality first certain changes in the supply of skills allegedly exacerbate wage inequality women s increased labor force participation and increased immigration are the leading candidates both allegedly reduce the wages of less skilled men however immigration s impact on wage inequality has been minor and the effects of women s participation is inconclusive second in evaluating the likelihood that human capital investment will mitigate future inequality evidence suggests that rising returns to education have increased the proportion of young people attending college limiting the growth of inequality among high wage workers

chronicle of a war foretold the macroeconomic effects of anticipated defence spending shocks we identify us defense news shocks as shocks that best explain future movements in defense spending over a ve year horizon and are orthogonal to current defense spending our identied shocks are strongly correlated with the ramey 2011 news shocks but explain a larger share of macroeconomic uctuations and have signicant demand eects fiscal news induces signicant and persistent increases in output consumption investment hours and the interest rate standard dsge models fail to produce such a pattern we propose a sticky price model with distortionary taxation variable capital utilization capital adjustment costs and rule of thumb consumers that replicates the empirical ndings

the macroeconomic effects of war finance in the united states world war ii and the korean war during world war ii government expenditures were financed primarily by issuing debt during the korean war expenditures were financed almost exclusively by higher taxes reflecting president truman s preference for balanced budgets this paper evaluates quantitatively the economic effects of the different policies used to finance these two wars counterfactual experiments are used to explore the implications of financing world war ii like the korean war and financing the korean war like world war ii the author finds that using a korean war policy during world war ii would have resulted in much lower output and welfare relative to the actual policy copyright 1997 by american economic association

on the political economy of immigration and income redistribution in this article we analyze an economy in which agents vote over immigration policy and redistributive tax policy we show that natives preferences over immigration are influenced by the prospect that immigrants will be voting over future tax policy we also show that changes in the degree of international capital mobility the distribution of initial capital among natives the wealth or poverty of the immigrant pool and the future voting rights and entitlements of immigrants can have dramatic effects on equilibrium immigration and tax policies finally we provide some empirical support for the model s predictions

new market power models and sex differences in pay in the context of certain models it is possible to infer the elasticity of labor supply to the firm from the elasticity of the quit rate with respect to the wage we use this strategy to estimate the elasticity of labor supply for men and women workers at a chain of grocery stores identifying separation elasticities from differences in wages and separation rates across different job titles within the firm we estimate that women have lower elasticities so a robinson style monopsony model can explain reasonably well the lower relative pay of women in the retail grocery industry