access to markets and rural poverty evidence from household consumption in china abstract this paper presents evidence on the effects of access to domestic and international markets on per capita consumption of households using data from rural china the econometric analysis uses alternative identification schemes to address the potential endogeneity of access to markets we use straight line distances to coastline and navigable river along with the topography of the intervening counties as sources of exogeneous variations we also use identification through heteroskedasticity which does not rely on standard exclusion restrictions the results from alternative identification schemes show that better access to both domestic and international markets has positive effects on per capita consumption the domestic market effect is significantly larger in magnitude and there is complementarity between the access to domestic and international markets

compulsory savings in the welfare state according to a widely held belief compulsory savings are justified on efficiency grounds because they alleviate the following free rider problem if the welfare state grants a minimum income to older persons some of the young may find it optimal not to provide for retirement the literature argues that compulsory savings can be used in order to overcome this problem however potential free riders consider compulsory savings as if they were payroll taxes this holds even if the pension system is actuarially fair if the resulting labour market distortions are important it is optimal to accept the free rider problem rather than to introduce a compulsory pension system 2000 elsevier science s a all rights reserved

edgeworth price cycles and intertemporal price discrimination in a retail gasoline market exhibiting edgeworth price cycles prices change asymmetrically with many small decreases interrupted by occasional large increases the result is a de facto menu of prices from which consumers can choose based on exactly when they buy this article introduces four classes of purchase timing strategies designed to systematically shift consumer purchases towards the cycle troughs it shows in the study market of toronto canada the monetary gains to consumers from optimized timing strategies are as high as 3 9 markups earned from these consumers fall up to 82 in spite of the gains from timing strategies surprisingly few consumers use them evidence is presented that a main reason is that consumers are not well informed about the cycles policy implications are discussed

endogenous transfer institutions in overlapping generations abstract we characterize the set of equilibrium transfers between overlapping generations when transfer institutions are endogenous in stationary economies pareto improving transfers require institutions cost as much to construct as they convey even if less costly institutions exist that make the same transfer if institutions can be built upon they may cost less and convey more but transfers may become excessive interpreting such institutions as social security we introduce private saving with time social security crowds out savings still the potential to save limits any excess transfer endogenous costly to create gold money institutions are examined and the role of compulsion in evolving to costless to create fiat currency detailed

social mobility and inequality in urban china understanding the role of intergenerational transmission of education china s rapid economic growth since the late 1980s has been accompanied by great economic and social transformations which have resulted in a sharp increase in income inequality this article contributes to the literature of social mobility in china by examining the impact of parental education on the education of their children using the 1990 and 2000 chinese population censuses we employ nonparametric estimation strategies to provide a systematic investigation of intergenerational transmission of education in urban china we find evidence of increasing parents children educational correlations our results raise concerns regarding economic inequality in urban china as high intergenerational persistence of education is expected to be a barrier to equal opportunities in children s education attainments and their future labour market outcomes

reconsidering the use of nonlinearities in intergenerational earnings mobility as a test for credit constraints intergenerational earnings regression among canadian men is nonlinear middle earning families experience slower regression this pattern appears to confirm economic models of educational choice with credit constraints this paper reexamines the economic model and finds no connection between credit markets and earnings regression nonlinearities in particular credit constraints need not produce concavity and concavity does not imply credit market failure despite the invalidity of the test data availability will likely lead to continued research along this path the paper proposes an amended test using quantile regressions applied to canadian data the simple liquidity constraint conclusion is rejected

retail price cycles and the presence of small firms abstract in many canadian cities retail gasoline prices remain unchanged for weeks at a time while in other cities retail prices cycle increasing sharply and declining slowly in maskin and tirole econometrica 56 1988 571 both price cycles and rigid prices can exist in equilibrium in this article i demonstrate that the existence of these equilibria is dependent on the number of retail outlets operated by the firms constant price equilibria are found to exist only when firms are of similar size however cycle equilibria can be constructed for a wide range of relative sizes

elasticities of demand for gasoline in canada and the united states abstract fluctuations in the world price of oil the concern with greenhouse gas emissions and the efforts to revive the 1997 kyoto protocol have resulted in renewed interest in the estimation of elasticities of demand for gasoline in this paper a complete system of demand equations is estimated including an equation for the demand for gasoline canadian family expenditure famex and united states consumer expenditure cex survey data are used household level data permits estimation of elasticities for various household groups also differences in demand responsiveness to own price and income changes are estimated for different regions in canada and the united states demand is found to be own price and income inelastic on the whole as reported in earlier studies there is also variation in these elasticities across regions of canada and the united states however larger differences are observed with respect to household size and housing tenure than to region of residence

the growth of social security electoral push or political pull the growth of social security electoral push or political pull i introduction during the post world war ii period the social security program was among the fastest growing programs in the federal budget surpassing defense spending as the largest category of expenditures in the mid seventies the program which disbursed only 132 million dollars in 1942 disbursed more than 156 billion dollars forty years late a thousand fold increase as a consequence of this growth and the program s recent financial problems a number of economists have turned their attention to the economics of social security recent examples include kahn 1988 boskin et al 1987 and veall 1986 yet only weaver 1982 and turner 1984 attempt to analyze the growth of the social security program weaver s legislative history of the program suggests that special interest groups had a major impact on social security programs turner argues that program benefit levels are affected by demographic changes which affect the cost of intergenerational redistribution in this paper we use the public choice approach to explain increases in benefit levels from 1946 1980 we develop and test three alternative public choice models of the politics of retirement benefit levels our analysis thus sheds light on an important question neglected by previous research have social security expenditures grown because special interest groups have effectively captured the congress or is congress simply responding to demands placed on it by the electorate the answer to this question is relevant to normative analysis of existing programs and to alternative proposals for reform in addition our study of the principal determinants of the growth of program benefit levels serves as an event study for assessing the merits of alternative theories of political decision making borcherding 1985 discusses two public choice explanations for the growth of public expenditures first public programs may expand as a result of the voting rules which underlie the political process when decisions are made by majority rule an increase in the median voter s demand for public services tends to increase public service levels because prospective candidates will revise their policy positions in order to be elected the wagner 1958 hypothesis for example maintains that increases in real income cause individuals to prefer both absolutely and relatively larger public expenditures borcherding notes that about 40 percent of the rate at which public sector spending has replaced private sector spending over the past eighty years can be explained with a median voter approach such an approach does better in what borcherding calls traditional areas of public expenditure where a median voter model can account for about 73 percent of the rate at which public expenditures excluding transfers have displaced private expenditures the median voter might favor public transfers to the elderly for two reasons first he may have an interdependent utility function in which the plight of the elderly poor arouses a charitable response while the redistribution from young to old does not simply target the old poor as a group the elderly do seem to be relatively less wealthy than the middle aged and the yound if one considers the average capitalized value of future income receipts from labor and capital second to the extent that the social security program offers a connection between reductions in current consumption and increases in future consumption it is a rather complex savings and insurance program the median voter s motivation for transferring monies to today s elderly may be a vehicle for ensuring future transfers to himself while this explanation is difficult to motivate at the individual level since a savings program for future retirement need not pay anything to today s elderly a continuing program of tax funded transfers is plausible method of establishing the moral constitution necessary to ensure that future transfers do in fact take place

voting on pensions a survey abstract the paper presents a nonexhaustive survey of the literature designed to explain emergence size and political sustainability of pay as you go pension systems it proposes a simple framework of analysis a small open two overlapping generation economy model around which some variants are displayed dictatorship of the median voter is assumed the text is organized to answer the following questions i do political equilibria with payg pension schemes exist ii why do they emerge iii what are the conditions for the participation constraint of the pension game to be verified and finally iv what is the size of the pension system chosen by the median voter and how is this size influenced by an exogenous e g demographic shock

on barro s theorem of debt neutrality the irrelevance of net wealth the effects of national debt on real economic activity has been a recurring topic in the literature on macroeconomic policy analysis since the time of adam smith the problem is usually stated as follows for a given level of government spending is the economy sensitive to the financing mix between tax and debt historically attention has focused on the question of whether or not individuals perceive government bonds as net wealth the link between wealth and real activity being taken as given the main point of debate is well established the issue of bonds raises private assets by the full value of the bonds the corresponding tax liabilities for interest payments and retirement of the debt extend indefinitely into the future the perception of bonds as net wealth would then appear to depend on the length of the individual s optimization horizon the most recent contribution to this debate was made by robert barro 1974 in which he argued that despite the limitation of finite lives bonds will not be regarded as net wealth in a system characterized by operative intergenerational transfers the essence of his argument is that inclusion of a bequest motive effectively converts a finite horizon into an infinite one in that paper barro acknowledged a potential limitation on his proof of the neutrality result it was only valid for bonds that are redeemed at a known point in the future this limitation was raised again in a subsequent exchange with martin feldstein in which barro 1976 agreed that for a growing economy an increase in steady state per capita debt will generate net wealth if the rate of growth is greater than the interest rate however he argued that such a steadystate growth situation would not be consistent with rational utility maximizing behavior the main theme of this paper is that the literature has focused attention on the wrong question the real effects of national debt are independent of whether or not individuals perceive the debt as net wealth the correct question is whether or not changes in the level of debt force individuals into patterns of intertemporal consumption that they are unable to neutralize by adjustments in their portfolio behavior viewing neutrality in this light leads to some reinterpretation of the conditions under which neutrality is likely to hold my analysis starts where barro and feldstein leave off within the framework of the overlapping generations model with gift and bequest motives i show that steady state equilibrium growth is consistent with a growth rate in excess of the interest rate indeed without specific knowledge of the parameters of the economy there are no a priori grounds on which to expect any particular relationship between the growth and interest rates more importantly so long as it is valid to view the aggregate economy as behaving like a composite individual changes in the steady state level of government debt are neutral regardless of which relationship prevails provided one or the other of the intergenerational transfer motives is operative i will refer to this as the extended neutrality theorem section i presents an analysis of steadystate growth with gift and bequest behavior the steady state growth path is shown to lie above the golden rule solution if the gift

2 1 2 proposals to save social security the real deal the history and future of social security true security rethinking american social insurance social security the phony crisis 1 introduction in the grand cycle that seems to govern the social security systems of the nations of the world it may once again be the united states turn to move chile famously has adopted compulsory individual retirement accounts australia has moved to a kind of compulsory 401 k superannuation plan switzerland to a system of compulsory occupational pensions and sweden to a system of compulsory notional accounts where individual contributions are recorded by the government and accumulate as individual entitlements that do not correspond to private sector investments canada facing roughly the same type of shortfall as the united states simply raised payroll taxes with a plan for direct investment by the pension authority in the stock market that has not yet been broadly controversial interesting attempts e g robson 1996 to advance chilean type solutions did not find much political traction but in the united states the trustees of the major public pension plan old age and survivors insurance and disability insurance oasdi have been forecasting for about 15 years essentially since immediately after the implementation of the last reforms that were to save social security that the plan as structured could not meet its obligations through a 75 year forecast window but there has been no legislative correction there certainly have been a number of proposals indeed the 1994 1996 advisory council on social security came up with three here we review a newer proposal presented in book form the real deal the history and future of social security by sylvester j schieber and john b shoven we also review a second book true security rethinking american social insurance by michael j graetz and jerry l mashaw this book is also about saving social security but the problem is thought of as not so much about oasdi financial projections but instead p 5 that the long term political support for social insurance could come unglued unless the effectiveness of current social insurance broadly defined is improved finally a third book social security the phony crisis by dean baker and mark weisbrot focuses on discussions of oasdi solvency although it discusses aspects of health insurance as well but argues that current action to restructure oasdi is not required to save it hence we have only counted this in our title as one half a proposal no pejorative connotation is intended we begin in section 2 with a brief annotated outline of each of the three books we put most of our emphasis on oasdi issues as do schieber shoven and baker weisbrot as noted graetz mashaw covers a very wide range of social insurance programs in section 3 we make some more general observations a central point is the reminder that a positive economics approach cannot choose among these or any proposals to a large extent these proposals are different simply because their authors have different values section 4 concludes 2 overviews the real deal schieber and shoven this is a substantial and worthwhile book schieber and shoven have devoted several chapters to a history of united states social security from its inception they then discuss current problems in depth provide a discussion of a number of recent reform proposals and give a significant proposal of their own according to their history right from the beginning the central issue facing oasdi was to fund or not to fund that is whether there would be a fund to cover the public pension promises being made to current workers and hence a long delay before any significant benefits would be paid or whether instead there would be a reliance on subsequent generations to cover the promises in the future and hence transfers could begin relatively quickly the initial plan signed into law by roosevelt in 1935 was a funded one but by the 1939 amendments this was changed to a largely unfunded plan by a coalition of liberals who wanted to alleviate current poverty among the elderly and conservatives who argued that the accumulation of a trust fund would lead to untoward government intervention in the economy through social investment

the effects of social security on population and output growth in this paper we have considered two unfunded social security programs under the conventional system benefits are related to aggregate fertility under the hypothetical fertility related system benefits are directly linked to individual fertility the effects on fertility and per capita growth rates of the two social security systems are examined in the context of endogenous growth the relative merits of the two systems for developing and developed countries are considered the authors conclude that the conventional social security system existing in many developed nations may be desirable to developing countries in reducing population and promoting economic growth on the other hand the hypothetical fertility related system may be useful to developed countries as far as increasing fertility is concerned

nonlinearities in intergenerational earnings mobility consequences for cross country comparisons we show that the patterns of intergenerational earnings mobility in denmark finland and norway unlike those for the us and the uk are highly nonlinear the nordic relationship between log earnings of sons and fathers is flat in the lower segments of the fathers earnings distribution sons growing up in the poorest households have the same adult earnings prospects as sons in moderately poor households and is increasingly positive in middle and upper segments this convex pattern contrasts sharply with our findings for the us and the uk where the relationship is much closer to being linear as a result cross country comparisons of intergenerational earnings elasticities may be misleading with respect to transmission mechanisms in the central parts of the earnings distribution and uninformative in the tails of the distribution it is now a stylised fact that intergenerational earnings mobility is higher in the nordic welfare state economies than in more market oriented economies such as the us see

dynamic efficiency in the gifts economy abstract in the standard analysis of overlapping generations economies with gifts from children to parents each generation takes the actions of other generations as given the resulting equilibrium is dynamically inefficient in reality however parents realize that children will respond to higher parental saving by reducing gifts for a broad class of gift economies this implicit tax on saving pushes the equilibrium to dynamic efficiency this result reestablishes the potential relevance of the gift model to the us economy renders moot an important part of the ricardian equivalence debate and provides a motivation for a type of social security system

the political economy of social security we consider a two period overlapping generations model in which individual voters differ by age and by productivity in such a setting a redistributive pay as you go system is politically sustainable even when the interest rate is higher than the rate of population growth the workers with medium wages not those with the lowest wages and the retirees form a majority which votes for a positive level of social security this level depends on the difference between the rates of population growth and interest as well as on the redistributiveness of the benefit rule

labor market outcomes and reforms in china over the past few decades of economic reform china s labor markets have been transformed to an increasingly market driven system china has two segregated economies the rural and urban understanding the shifting nature of this divide is probably the key to understanding the most important labor market reform issues of the last decades and the decades ahead from 1949 the chinese economy allowed virtually no labor mobility between the rural and urban sectors rural urban segregation was enforced by a household registration system called hukou individuals born in rural areas receive agriculture hukou while those born in cities are designated as nonagricultural hukou in the countryside employment and income were linked to the commune based production system collectively owned communes provided very basic coverage for health education and pensions in cities state assigned life time employment centrally determined wages and a cradle to grave social welfare system were implemented in the late 1970s china s economic reforms began but the timing and pattern of the changes were quite different across rural and urban labor markets this paper focuses on employment and wages in the urban labor markets the interaction between the urban and rural labor markets through migration and future labor market challenges despite the remarkable changes that have occurred inherited institutional impediments still play an important role in the allocation of labor the hukou system remains in place and 72 percent of china s population is still identified as rural hukou holders china must continue to ease its restrictions on rural urban migration and must adopt policies to close the widening rural urban gap in education or it risks suffering both a shortage of workers in the growing urban areas and a deepening urban rural economic divide

public pensions choices for the future abstract the purpose of this paper is to analyze to what extent pay as you go government mandated pensions can provide adequate retirement income to future generations this question is particularly relevant at times when the financial viability of public pensions is threatened by demographic aging and possibly declining productivity and when more importantly there is little consensus as to why those programs exist as they are that is mandatory public and unfunded the gist of our argument is that an aging population particularly if combined with declining productivity would jeopardize the financial and political viability of public pensions if individuals behavior doesn t adjust to this new reality and public authorities don t adopt the appropriate reforms as to mandatory retirement age payroll taxes and benefits structure among key individual decisions we focus on saving labor participation retirement education migration and fertility we consider how sensitive each of these is to changes in the environment and to changes in policy parameters then we turn to a number of issues unsolved either because of analytical complexity or because they arise from new realities

a theory of dynamic oligopoly ii price competition kinked demand curves and edgeworth cycles we provide game theoretic foundations for the classic kinked demand curve equilibrium and edgeworth cycle we analyze a model in which firms take turns choosing prices the model is intended to capture the idea of reactions based on short run commitment in a markov perfect equilibrium mpe a firm s move in any period depends only on the other firm s current price there are multiple mpe s consisting of both kinked demand curve equilibria and edgeworth cycles in any mpe profit is bounded away from the bertrand equilibrium level we show that a kinked demand curve at the monopoly price is the unique symmetric renegotiation proof equilibrium when there is little discounting we then endogenize the timing by allowing firms to move at any time subject to short run commitments we find that firms end up alternating thus vindicating the ad hoc timing assumption of our simpler model we also discuss how the model can be enriched to provide explanations for excess capacity and market sharing keiiwords tacit collusion markov perfect equilibrium kinked demand curve edgeworth cycle excess capacity market sharing endogenous timing

learning about heterogeneity in returns to schooling using data from the national longitudinal survey of youth nlsy we introduce and estimate various bayesian hierarchical models that investigate the nature of unobserved heterogeneity in returns to schooling we consider a variety of possible forms for the heterogeneity some motivated by previous theoretical and empirical work and some new ones and let the data decide among the competing specifications empirical results indicate that heterogeneity is present in returns to education furthermore we find strong evidence that the heterogeneity follows a continuous rather than a discrete distribution and that bivariate normality provides a very reasonable description of individual level heterogeneity in intercepts and returns to schooling

the problem of population and growth a review of the literature from malthus to contemporary models of endogenous population and endogenous growth abstract this paper deals with the evolution of the literature on the problem of population and growth from the classical period to the recent literature on endogenous growth and development the problem concerns two distinct issues 1 how to explain the observed covariation of the levels and rates of growth of per capita income and population size over time and space and 2 how to improve the human condition represented by these variables through an accommodating social policy the evolution of the literature we survey is reflected by the progressive treatment of key variables as endogenous rather than exogenous to the growth process it is also reflected by a shift from the historical concern about population explosion and its implications for growth to the more recent concern about the association between growth and population implosion in many developed countries

costly transfer institutions and the core in an overlapping generations model we examine an overlapping generations economy with no pre existing intergenerational transfers and study the set of transfer institutions in the core of the economy that is institutions that would be admissible for the first generation to create and would not be rejected by any future generation institution building is assumed to be costly we allow the cost of creating a new institution to vary with the size of the transfer it institutes and show that all institutions in the core must cost as much to build as they transfer in fact the core set is nonempty if and only if the institution that supports the golden rule transfer costs as much to create as it transfers the core set is characterized for various cost functions we conclude that costs associated with the creation of transfer institutions are essential to make intergenerational transfers socially viable but they may induce the choice of institutions making suboptimal transfers

efficiency enhancing signalling in the samaritan s dilemma suppose an altruistic person a is willing to transfer resources to a second person b if b comes upon hard times if b anticipates that a will act in this manner b will save too little from both agents point of view this is the samaritan s dilemma this paper shows that the undersaving result is mitigated if we relax the standard assumption of complete information because if a is uncertain about how big b s need for support is b will have an incentive to signal that he is in great need by saving more than he otherwise would have done

gas wars retail gasoline price fluctuations this paper examines the retail gasoline price fluctuations known as gas wars weekly prices for the los angeles area were examined for the period from january 2 1968 through december 23 1975 the observed fluctuations were remarkably regular and apparently large ly predictable the data appear consistent with the recent game theory model of e maskin and j tirole in which competing firms produce edgeworth cycles by undercutting each other and eventually relenting copyright 1993 by mit press

the trend and mechanism of intergenerational income mobility in china an analysis from the perspective of human capital social capital and wealth intergenerational income mobility is the extent to which children s incomedepends on their parents the increasing of intergenerational income mobilitycan relieve the social pressure caused by the income gap and provide the incentivefor hardworking and human capital investment using microdata and economicempirical technique this study analyses the time trend and structuralmechanism of china s intergenerational income mobility in 1988 2005 theresults suggest the intergenerational income mobility improves in the early period then becomes stable and even shows a deteriorating sign recently humancapital social capital and wealth explain more than 60 per cent of the intergenerationalincome mobility in china with wealth contributing the largest proportion promoting education equality eliminating the labour market segmentationand deepening the market oriented reform are suggested to help improve theintergenerational income mobility in china

jointly determined saving and fertility behaviour theory and estimates for germany italy uk and usa abstract the comparative statics predictions of models of the joint determination of household saving and fertility are derived under various hypotheses self interest altruism of parents towards children altruism of children towards parents etc and compared with those of models which determine saving under the assumption of exogenous fertility country specific saving and fertility equations are then estimated using time series data for germany italy uk and usa for each of the countries considered the estimates are consistent with the hypothesis that saving and fertility are jointly determined by self interested parents and reject the alternative hypotheses the data also show that a self financing expansion of social security discourages fertility and generally raises household saving

the speed of gasoline price response in markets with and without edgeworth cycles retail gasoline prices are known to respond fairly slowly to wholesale price changes this does not appear to be true for markets with edgeworth price cycles recently many retail gasoline markets in the midwestern u s and in other countries have been shown to exhibit price cycles in which competition generates rapid cyclical retail price movements we show that cost changes in cycling markets are passed on 2 to 3 times faster than in markets without cycles we argue that the constant price movement inherent within the edgeworth cycle eliminates price frictions and allows firms to pass on cost fluctuations more easily

uncertain lifetimes and the welfare enhancing properties of annuity markets and social security this paper explores the implications of social security programs and annuity markets through which agents who are characterized by different distributions of length of lifetime share deathrelated risks when annuity markets operate a non discriminatory social security program affects only the intragenerational allocation of resources in the absence of private information regarding individual survival probabilities such a program will lead to a non optimal intragenerational allocation of resources however the presence of adverse selection considerations gives rise to a pareto improving role for a mandatory non discriminatory social security program

institutional and individual investors saving for old age this paper brings together the academic literature on individual and institutional investors in order to understand the nature of difficulties faced by them and set the background for the special issue this introductory article and the papers in the special issue contribute to the debate on how to support individuals in their savings commitments and investment decision making and whether and how institutional investors have fulfilled their role in supporting the development of the funded pension industry there are three main conclusions i individual investors are not ready for the role that has been assigned to them in the pension industry ii institutional investors are a long way short of establishing healthy relational contracts and trustworthy relationships with their clients and iii more effective regulation may be needed

mixed strategy in oligopoly pricing evidence from gasoline price cycles before and under a timing regulation this paper studies oligopoly firms dynamic pricing strategies in a gasoline market before and after the introduction of a unique law that constrains firms to set price simultaneously and only once per day the observed gasoline pricing behavior both before and under the law is well captured by the edgeworth price cycle equilibrium in the maskin and tirole dynamic oligopoly model my results highlight the importance of price commitment in tacit collusion i also find evidence that the price leadership outcome under the law is better predicted by mixed strategies play than by alternative hypotheses

intergenerational altruism with future bias abstract we show that standard preferences of altruistic overlapping generations exhibit future bias which involves preference reversals associated with increasing impatience this underlies a conflict of interest between successive generations we explore the implications of this conflict for intergenerational redistribution when there is a sequence of utilitarian governments representing living generations and choosing policies independently over time we argue that future bias creates incentives to legislate and sustain a pay as you go pension system which every government views as a self enforcing commitment mechanism to increase future old age transfers

altruism the samaritan s dilemma and government transfer policy this paper shows that altruism provides an efficiency rationale for public provision of insurance to the poor the framework is one in which there are rich altruists and risk averse poor who face some possibility of loss the government represents the rich and makes transfers on their behalf with unconditional transfers the poor may forgo insurance and rely on private charity to bail them out in the event of loss this reliance on private charity has adverse efficiency effects these may be avoided if the government makes in kind transfers of insurance copyright 1995 by american economic association

retail gasoline price cycles across spatially dispersed gasoline stations abstract studies of volatility in retail gasoline prices have used either weekly averages of the prices at a small subset of stations in a city or daily observations on prices at a small number of stations this paper uses daily observations on station specific prices within a large canadian metropolitan area to address whether weekly average prices or prices for a small number of stations provide an accurate description of pricing in a market with volatility this paper considers whether researchers using restricted data can draw meaningful conclusions about the appropriate theoretical model and the policy response to allegations of anticompetitive behavior

the old age security hypothesis revisited abstract children s altruism toward parents is allowed in a two overlapping generations model with endogenous fertility parents raise children because when retired they expect gifts from their children who are essentially a capital good individuals behavior between generations is examined by analyzing a nash equilibrium which is then compared with a social planner s optimal allocation the pay as you go public pension program is viewed as the optimal gifts from the optimal allocation when the latter is implemented the effect on fertility of the introduction of a capital market is also analyzed the validity of the old age security hypothesis is shown to depend on the parameters of utility and cost functions

individual heterogeneity in returns to education in urban china during 1995 2002 abstract this paper analyzes the individual level differences in returns to education in urban china from 1995 to 2002 we have uncovered substantial heterogeneity in schooling coefficients and we find that the extent of heterogeneity diminishes over time

do retail gasoline prices respond asymmetrically to cost shocks the influence of edgeworth cycles asymmetric price cycles similar to edgeworth cycles are appearing in increasingly many retail gasoline markets in the united states and worldwide the asymmetry in the cycles can give rise to a finding of asymmetric price responses to cost shocks asymmetric passthrough this article estimates asymmetric passthrough for the market of toronto which exhibits cycles and decomposes it into two components that part explainable by the cycles and that part driven by other unknown sources significant asymmetric passthrough is found with increases passed through more quickly than decreases a significant cause of the finding is the presence of the cycles themselves

endogenous fertility and the old age security hypothesis a note abstract many of the results in nishimura and zhang 1992 and in zhang and nishimura 1993 are incorrect since the authors assume interior solutions to many of the utility maximization problems when corner solutions yield higher utility this note proves inter alia that fertility and saving cannot both be positive in the optimal steady state

public pensions as optimal social contracts abstract a simple overlapping generations model is modified to allow for an externality experienced by the young from consumption by the elderly this sets up a game between generations in which one generation s strategy may be to save too little and rely on gifts from the young e g public assistance for retirement income social security can therefore be viewed as a pareto optimal contract to restore efficient intertemporal allocation a funded public pension plan corresponds to forced saving but is vulnerable in that the next young generation may stop contributing rely on its children for retirement assistance and meanwhile reap the consumption externality from the current elderly s social security benefits this suggests a forced giving or pay as you go type of compulsory pension plan such as exists in most nations which also has the advantage of aiding the initial old generation and therefore generating an immediate consumption externality for the initial young the approach can also be used to explain other aspects of existing social security

pay as you go public pensions with endogenous fertility abstract veall s 1986 model of public pensions is generalized to allow for endogenous fertility we show that gifts to the old which can be viewed as social security contributions are always positive in the steady state an optimal stationary allocation is sustainable if savings are zero and fertility is exogenous however the optimal allocation is in general not sustainable in particular if a government enforces a social security plan setting the pension level at the optimal gifts and individuals optimize under the pension constraint the resulting sustainable outcome is in general different from either the optimal or nash outcome

explaining pay as you go financed public pension systems abstract the existence of pay as you go payg financed public pension plans is usually explained by median voter models or by strategic non saving behavior by young generations here it is claimed that both types of models are neither sufficient nor necessary for explaining payg systems

expectations on pension schemes under non stationary conditions abstract the way expectations are treated in models concerning pension schemes in generally decisive for their predicted development in this letter we show how these expectations can consistently be modeled in a dynamic context without having to rely on adhoc assumptions

social security as trade among living generations we model u s social security that is legislated endogeneously by living generations specifically we consider the effects of social security on resource allocation and pareto optimality examining which generations gain from social security and whether some generations lose because saving and transfer decisions are made sequentially in the real world we use an infinite horizon overlapping generations framework in which life cycle saving and transfers to the old are determined by living agents we focus on the case in which agents are altruistic but place sufficiently greater weight on own comsumption than on the consumption of agents in other generations so that starting from a steady state without social security living agents would gain utility if consumption were shifted marginally to them from later generations excerpt

government debt in an overlapping generations model with bequests and gifts in 1974 robert barro argued that if individuals in successive generations were linked by bequests changes in the stock of government debt or in social security programs would have no effect on the steady state capital stock barro assumed that individuals held static expectations and that the size of the population was constant martin feldstein 1974 1977 had concluded that social security would reduce the capital labor ratio in models that did not admit a bequest motive and in his 1976 comment on barro argued that the introduction of government debt or social security into a perfect foresight dynamic growth model with bequests would still reduce the capital labor ratio barro replied that feldstein s criticisms were invalid if the steady state capital labor ratio were smaller than the golden rule level but would be correct if the opposite were true barro did suggest however that the latter possibility with overaccumulation of capital might be ruled out in his model as it was in miguel sidrauski 1967 but he was unable to demonstrate that the required behavior would be consistent with utility maximization by finite lived individuals 1976 p 345 although recent work by willem buiter 1979 jeffrey carmichael 1979 1982 truman bewley 1981 a b and others has helped to elucidate the nature of overlapping generations models with bequests and gifts and the issues in the barro feldstein debate they remain far from clear the purpose of this paper is to shed a little more light on the subject in what follows i contend that some of the authors cited above either have specified the individual s optimization problem in an asymmetric way or have failed to impose necessary conditions for a sensible optimization problem or both there is a natural specification of the barro model 1 that emphasizes the similarity between this model and optimal growth models see for example david cass 1965 peter diamond 1973 here in steady state equilibrium the aftertax interest rate r must equal the rate at which individuals discount the utility of their heirs p r p has become known as the modified golden rule and a meaningful individual optimization problem requires that p exceed n the natural growth rate of the economy my results confirm barro s hunch about his model in a barro model r must exceed n much of the barro feldstein 1976 interchange which assumed that r could have any relation to n is wrong headed barro and feldstein reach different conclusions about the effects of government debt and social security because they assume different individual utility functions also my results contrast sharply with those of buiter and carmichael for example carmichael concluded that with intergenerational transfers from parents to children bequests r must exceed n but with transfers in the opposite direction n must exceed r 1982 pp 205 06 indeed i believe that the buiter carmichael representation of the barro model is logically faulty see section ii in section i i outline an overlapping generations model with gifts and bequests and derive its steady state properties in the next section i discuss the shortand long run effects of introducing government debt into the model and contrast my results with those

society land love or money a strategic model of how to glue the generations together abstract the purpose of this paper is to show that if reasonable care is taken in well defining the types of games of strategy which arise naturally from considerations of the multigenerational aspects of any society then many different plausible explanations of intergenerational links will all be consistent with an ongoing economy with intergenerational transfers of wealth given that the problem is stated and deemed to be important what can we do about it in this paper we proceed by developing in highly simplified form the apparatus needed to consider a multistage variable person game of strategy this is applied to several relatively simple examples involving conscious altruism coded or instinctive behavior the threat of social custom and the role of ownership in conclusion it is argued that although the examples analyzed are simple they are examples of general phenomena the level of mathematical analysis itself is kept as a minimum further development calls for a considerable enlargement of notation and further discussion of items such as information games with infinite horizons and the many problems associable with the development of adequate solution theories for games played in extensive form as the stress is upon the modeling problems of glueing the generations together the game theory is presented only as a useful method for furthering this purpose because it stresses the general concepts of strategic analysis it is our belief that it is particularly suited to the analysis of situations in which economic social political and other decisions and motivations must be considered together

public pensions with endogenous fertility comment on nishimura and zhang abstract the analysis in nishimura and zhang journal of public economics 1992 48 239 258 n z relies on an unstated assumption that either individuals are able to coordinate their fertility decisions or individual pensions are conditional on individual fertility the present note criticizes this assumption and shows what happens if it is dropped introducing a social security system with a rate of tax equal to the socially optimal transfer from the young to the old will have no effect on fertility but will raise lifetime consumption and welfare rather than reduce fertility and raise transfers as n z predict the implications of reversing the direction of altruism from parents to children rather than children to parents as in n z or doing away with altruism altogether are also discussed