cash transfer programs with income multipliers procampo in mexico abstract cash transfer programs create multiplier effects when recipients put the money they receive to work to generate further incomes when this is the case the ultimate income effects are multiples of the amounts transferred we analyze the procampo program in mexico that was introduced to compensate farmers for the anticipated negative effect of nafta on the prices of basic crops the transfer rules and the timing of the panel data collected allow unique control of biases in this impact analysis we find that the multiplier among ejido sector recipients is in the range 1 5 2 6 multipliers are higher for households with medium and large farms low numbers of adults in the household nonindigenous backgrounds and located in the center and gulf regions high multipliers reflect income opportunities that had remained unrealized due to liquidity constraints that are relaxed by the transfers opportunities come from the asset endowments that these households received through the land reform particularly irrigated land and they are enhanced by access to technical assistance

effects of financial innovations on the money demand function a canadian evidence a money demand function for the candian economy has been estimated to explore if recent financial innovations have caused any significant change in the structural relationship between the demand for money and its determinants two sets of estimation results have been analysed the first set is obtained by estimating a standard money demand function for several overlapping sample periods and the other set is obtained by estimating a modified version which included a dummy or a ratchet variable to capture the effects of innovations the estimated equations have been used to generate ex post simulations and forecasts the results suggest that innovations have displaced the money demand function in the early 1980s it also appears that the incorporation of approriate innovation variables improves the predictive performance of the money demand function

the public choice of differing degrees of tax progressivity there are a number of hypotheses developed in the literature for explaining the degree of public income redistribution that can be adapted to explain the degree of progressivity that a collectivity will chose in some cases it is difficult to obtain easily measurable and unambiguous proxies for the theoretical proposition nevertheless our attempts to do so prove at least somewhat encouraging

evidence on nonlinear error correction in money demand the case of taiwan this paper proposes a nonlinear error correction model based upon smooth transition regression methodology the model is specified such that the short run adjustment toward long run equilibrium is nonlinear and that the error correction is a smooth function of long run deviation empirical results obtained from estimating m2 money demand in taiwan support the hypothesis of a nonlinear error correction process and provide better interpretation of change in the demand for money

raising primary school enrolment in developing countries the relative importance of supply and demand abstract few policies are as universally accepted as raising primary school enrolment in developing countries but the policy levers for achieving this goal are not straightforward this paper merges household survey data with detailed school supply characteristics from official sources in order to estimate the relative impact of demand and supply side determinants of rural primary school enrolment in mozambique policy simulations based on a set of plausible interventions show that in rural mozambique building more schools or raising adult literacy will have a larger impact on primary school enrolment rates than interventions that raise household income when relative costs are considered adult literacy campaigns are nearly 10 times more cost effective than the income intervention and 1 5 to 2 5 times better than building more schools

weighing what s practical proxy means tests for targeting food subsidies in egypt abstract despite achieving a significant cost reduction over the past two decades the absolute cost of food subsidies in egypt is still high relative to the benefits received by the poor there is scope for better targeting these food subsidies in particular for targeting cooking oil and sugar ration cards both because reforms in this area are perceived to be far less politically sensitive than adjusting subsidy policy for bread and wheat flour and because higher income groups presently receive a significant percentage of the benefits targeting the high subsidy green ration cards to the poor and the low subsidy red ration cards to the nonpoor will require identification of both poor and nonpoor households an international food policy research institute research team in egypt in collaboration with the egyptian ministry of trade and supply developed a proxy means test for targeting ration cards the paper describes the process of moving from the optimal income predicting model to the final model that was both administratively and politically feasible an ex ante evaluation of the levels of accuracy of the proxy means testing model indicates that the model performs quite well in predicting the needy and nonneedy households an effective and full implementation of this targeting method would increase the equity in the ration card food subsidy system and at the same time the total budgetary costs of rationed food subsidies would decline moreover the experience gained under this reform would facilitate targeting future social interventions to reduce and prevent poverty in egypt

interest rate pass through and monetary transmission evidence from individual financial institutions retail rates official interest rate changes should influence short rates on money market instruments and retail products such as deposit accounts and mortgages but complete pass through is often taken for granted this paper provides a theoretical and econometric framework for assessing the evidence for this assumption using seventeen years of monthly data for rates on thirteen deposit and mortgage products offered by individual uk financial institutions the methodology allows for asymmetries and non linearities in adjustment and the results show that the speed of adjustment in retail rates depends on whether the perceived gap between retail and base rates is widening or narrowing

endogenous property rights regimes common pool resources and trade a model is developed where opening to trade affects a dynamic common pool resource stock and welfare through a community s voting decision to institute a property rights regime regulating the stock the model finds that resource stock levels can decline even when a markov perfect equilibrium path for labor and property rights regimes are chosen to maximize welfare thus opening to trade can be welfare maximizing even when resource stock declines experimental results show that under certain conditions subjects briefly follow a markov perfect equilibrium path for property rights regime choice but labor allocations are myopically chosen indicating that some resource dynamics may be considered by subjects

stability of a uk money demand equation a bayesian approach to testing exogeneity the paper analyses an m3 demand for money equation for the united kingdom attention is paid to the policy change that occurred in 1971 with the introduction of the measure known as competition and credit control classical and bayesian single equation instrumental variables procedures are developed to investigate the exogeneity of the short term interest rate and the constancy of the parameters of the underlying relationships the parameters of the short term equation have changed as well as the exogeneity status of the interest rate variable but the parameters of the long term equation appear to be less affected by the policy change

money and prices evidence from the g7 countries this paper examines the exogeneity of money and prices within a money demand vector error correction model the exogeneity of the variables is central to several buffer stock models however the paper makes two modifications to the traditional approach the first is to explicitly acknowledge the importance of the supply of money function by including the function alongside its demand counterpart the second is to estimate the behaviour of the nominal sector and real sector simultaneously overall the results from the g7 countries suggest that the concerns raised by buffer stock models are relevant

the impact of changes in common property resource management on intrahousehold allocation abstract in developing countries common property resources cprs can be an important source of income for certain individuals within households this paper demonstrates that if changes in the management of cprs impose fixed costs on them or cause a decline in the prices of goods produced from it the intrahousehold allocation of resources may alter in a manner detrimental to those individuals the paper also shows that the assumption of a unitary household model causes the detrimental effects of certain cpr policy interventions to be overlooked although the model is narrowly conceived the results can be generalised to examples where households have members who specialise in different economic activities outside the home

common property institutions and sustainable governance of resources abstract the literature on common property based resource management comprises many important studies that seek to specify the conditions under which groups of users will self organize and sustainably govern resources upon which they depend using three of the more comprehensive such studies and with an extensive review of writings on the commons this paper demonstrates that the enterprise of generating lists of conditions under which commons are governed sustainably is a flawed and impossibly costly research task for a way out the paper examines the relative merits of statistical comparative and case study approaches to studying the commons it ends with a plea for careful research design and sample selection construction of causal mechanisms and a shift toward comparative and statistical rather than single case analyses such steps are necessary for a coherent empirically relevant theory of the commons

cross country estimates of the demand for money and its components the demand for money aggregates m1 m2 and their components currency demand deposits and time deposits are estimated using a sample of 103 countries at two time periods money demand is found to be affected by age literacy industrial development and political structure as well as income and inflation this expanded demand function helps to explain the considerable changes in money demand that have occurred over long periods and the large variation in money demand found across countries the knowledge thus gained is useful for understanding differences in monetary and taxation policies across countries

social capital and coping with economic shocks an analysis of stunting of south african children abstract south african households live in an environment characterized by risks and many face a significant probability of experiencing economic losses that threaten their daily subsistence using household panel data that include directly solicited information on economic shocks and employing household fixed effects estimation we explore how well households cope with shocks by examining the effects of shocks on child nutritional status unlike in the idealized village community some households appear unable to insure against risk particularly when others in their communities simultaneously suffer large losses households in communities with more social capital however seem better able to weather shocks

productivity health and inequality in the intrahousehold distribution of food in low income countries a model is formulated incorporating linkages among nutrition labor market productivity health heterogeneity and the intrahousehold distribution of food and work activities in a subsistence economy empirical results based on a sample of households from bangladesh indicate that despite considerable intrahousehold disparities in calorie consumption households are averse to inequality furthermore consistent with the model the results also indicate that both the higher level and greater variance in the calories consumed by men relative to women reflect in part the greater participation by men in activities in which productivity is sensitive to health status copyright 1990 by american economic association

monetary transmission in spain a structural cointegrated var approach this paper analyses the monetary policy channels in spain using a cointegrated structural var approach which explicitly accounts for endogenous policy reactions in a small open economy evidence is found of one cointegrating relation which is identified as a long run money demand function in addition stability tests are applied to this relationship to assess whether there has been a change of monetary regime the impulse responses for the non monetary shocks as well as the absence of the puzzles traditionally found in the empirical literature suggest that the model specification identifies the monetary policy shocks correctly thus according to our results a monetary contraction causes a weak downward response in the price level as well as an increase in both short and long run nominal interest rates a decrease in aggregate output and an exchange rate appreciation

program interventions intrahousehold distribution and the welfare of individuals modelling household behavior abstract in this essay the implications for the intrahousehold distribution of resources derived from economic models of household behavior that treat the household as maximizing a single welfare function are reviewed particular attention is paid to the within family allocation of time and food and to the effects of these resources on the schooling earnings and health status of individuals as they are affected by direct food intervention and female employment schemes and price altering policies empirical applications are provided from data sets from india indonesia and the philippines to illustrate the power and limitations of such models for illuminating household interventions and for placing restrictions on data

modeling the demand for narrow money in the united kingdom and the united states abstract despite the importance of well specified empirical money demand functions for inference forecasting and policy problems in modeling have arisen concerning the economic theories of money demand the data institutional frameworks financial innovation and econometric implementation by developing constant data coherent m 1 demand equations for the u k and the u s we investigate these issues and explain such puzzles as missing money the great velocity decline and the recent explosion in m 1 the endogeneity of money the lucas critique and the non invertibility of our m 1 models are also discussed

tax base choice by local governments limitations on general property tax rates and or levies existed in 28 states as of 1983 an increase from only 6 states prior to 1970 acir 1984 what began with property tax circuit breakers and homestead exemptions led in some cases to statewide campaigns to limit property tax rates and assessments research on the genesis of these state and local government slg tax and spending limitations has found that voters appear to dislike high taxes rapid spending growth and perceived government inefficiency but do not favor major cuts in service provision ladd and wilson 1982 1983 frieman and grasso 1982 courant et al 1980 voter desire for reduced taxes without ser

a rent seeking model of tels tax and expenditure limits or tels are constitutional or statutory constraints on the fiscal powers of government since the taxpayer revolt beginning in the late 1970s tels have been introduced in twenty three states in recent years a number of studies attempting to test the impact of tels have found little evidence that tels significantly reduced the growth of state government in this study we challenge the implicit leviathan model that underlies most of these studies and offer an alternative rent seeking model econometric tests provide support for this rentseeking model and indicate that tels have been significant in reducing the growth of state government at least in the short run

innovation in structural change of local government rural development has become a national concern as many local communities in rural areas of the united states are increasingly confronted with fiscal stress from several sources these sources include structural change in the local economic base demographic shifts reduced intergovernmental revenues and lower property values short of state and national rural development initiatives the range of choices for local government officials encompasses economic development efforts raising effective tax rates reducing services and or restructuring institutions to provide services more efficiently institutional restructuring or innovation in local government structure refers to internal restructuring functional consolidation geographical consolidation and or privatization community choice regarding institutional innovation is often

rational voting applied to choice of taxes fulton county atlanta georgia conducted a referendum on a local option sales tax the referendum offered voters an opportunity to substitute a 1 sales tax for an equal amount of property taxes the precinct level voting patterns of the referendum are analyzed using a rational voter framework the regression results generally support the implication of the model

investigating stability and linearity of a german m1 money demand function starting from a linear error correction model ecm the stability and linearity of a german m1 money demand function are investigated applying smooth transition regression techniques using seasonally unadjusted quarterly data from 1961 1 to 1990 2 it is found that the money demand equation considered is both linear and stable after extending the sampling period until 1995 4 a clear structural instability due to the monetary unification on 1 july 1990 is found and subsequently modelled a non linear specification for the extended period is presented and discussed copyright 1999 john wiley sons ltd

the demand for m1 in the u s a 1960 1988 estimated u s m1 demand functions appear unstable regularly breaking down over 1960 1988 e g missing money great velocity decline m1 explosion we propose a money demand function whose arguments include inflation real income long term bond yield and risk t bill interest rates and learning curve weighted yields on newly introduced instruments in m1 and non transactions m2 the model is estimated in dynamic error correction form it is constant and with an equation standard error of 0 4 variance dominates most previous models estimating alternative specifications explains earlier breakdowns showing the model s distinctive features to be important in accounting for the data

the search for a stable money demand function a survey of the post 1973 literature phe question of whether the demnand function for money is stable is one of the most important recurring issues in the theory and application of macroeconomic policy what is being sought in a stable demand function is a set of necessary conditions for money to exert a predictable influence on the economy so that the central bank s control of the money supply can be a useful instrument of economic policy as such the notion of a stable demand function appears to involve three key elements e g john t boorman 1976 p 317 and david e w laidler 1977 pp 34 35 first the demand for money relation should be highly predictable in a statistical sense as measured by the usual goodness of fit statistics precision of estimated coefficients and presumably its ability to forecast accurately out of sample second a stable demand function for money has relatively few arguments a relationship that requires knowledge about a large number of variables in order to pin it down is in effect not predictable finally the variables that appear as arguments in the function should represent significant links to spending and economic activity in the real sector in sum a stable demand function for money means that the quantity of money is predictably related to a small set of key variables linking money to the real sector of the economy the importance of a stable money demand function for monetary policy can be illustrated with the standard is lm model in which interest rates and gnp are the endogenous variables in this context a stable demand function for money translates into a well defined relationship between money interest rates and gnp

targeting the poor in mexico an evaluation of the selection of households into progresa abstract in this paper we conduct an evaluation of the targeting method used by health education and nutrition program progresa of mexico to identify beneficiary households we address two key questions a how well does progresa s targeting perform and b how does the program perform in terms of its impact on poverty alleviation relative to other feasible methods and transfer schemes the first question is accomplished by comparing progresa s method to an alternative selection method based on household consumption which is our preferred measure of welfare we employ the concepts of undercoverage and leakage and find that progresa selection method is more effective in identifying the extremely poor localities or households but less so when it comes to distinguishing among localities or households in the middle of the scale to address the second question we compare the potential impact of progresa on poverty alleviation against uniform transfers that involve no targeting at all targeting based on consumption and geographic targeting i e targeting at the locality level rather than at the household level we find that progresa s method of targeting households outperforms uniform coverage and targeting at the locality level in terms of reducing the poverty gap and severity of poverty indices even after taking into account the economic costs of targeting but the closeness of progresa s performance to what could be achieved by geographic targeting alone raises some serious questions about the costs and benefits associated with the practice of household targeting within poor localities

are women overrepresented among the poor an analysis of poverty in 10 developing countries abstract this paper presents new evidence on the proportion of women in poverty in 10 developing countries it compares poverty measures for males and females and for male and female headed households and investigates the sensitivity of these measures to the use of per capita and per adult equivalent units and different definitions of the poverty line while poverty measures are higher for female headed households and for females the differences are significant in only a fifth to a third of the datasets the contribution of female headed households to aggregate poverty is less than that of females due to the low population share of the former stochastic dominance analysis reveals that differences between male and female headed households and between males and females are often insignificant except for ghana and bangladesh where females are consistently worse off these results suggest that cultural and institutional factors may be responsible for higher poverty among women in these countries our results point to the need to analyze determinants of household income and consumption using multivariate methods and to give greater attention to the processes underlying female headship

canadian weekly money supply announcements and financial market reactions in the first years of targeting a view of market perceptions of bank of canada policy this paper demonstrates using weekly data between 1976 and 1979 that unanticipated changes in the canadian money supply exerted a significant impact on the foreign exchange and bond markets during the first years of the bank of canada s policy of targeting m1 growth this finding which is perhaps surprising in light of the apparent volatility of weekly changes in the canadian money supply is consistent with the efficient markets paradigm after the empirical regularities are established an interpretation is offered that focuses on market perceptions of the reaction function of the bank of canada

a positive model of tax structure the model of tax structure developed in this paper is one in which the composition of revenues and the structure of specific taxes arise naturally as the result of self interested political behavior it is assumed that political agents choose tax structure so as to minimize the political costs or expected net loss in votes associated with raising a budget of given size several hypotheses concerning the nature of political cost functions are developed and applied to an explanation of the differences among u s states in their reliance on income taxation the empirical application emphasizes differences in political constraints across jurisdictions in the belief that much can be learned about the choice of policy instruments by studying structural adjustments in response to varying constraints the paper discusses how the proposed approach differs from or is consistent with that adopted by other authors and how the estimating equation relates to other empirical research in the literature

labour supply household production and intra family welfare distribution abstract this paper demonstrates the importance in conceptual and empirical terms of incorporating household production in models of labour supply to avoid misleading results concerning the intra family distribution of income and behavioural responses to economic policy

economic policies and demand for money evidence from canada this study identifies canadian fiscal and monetary policy regime changes that could influence the services of money it is argued that if these policy regime changes were not incorporated in the estimation of demand for real balances the resulting estimate would be biased and unstable using canadian monthly data for the january 1975 to june 2001 period the paper estimates a standard demand for money m1 function with and without these policy regime changes it was found the demand for money in canada is stable over the short and long run periods when these policy regime changes are incorporated and the estimated coefficients have correct signs

financial development and economic growth in south korea an application of smooth transition error correction analysis this article investigates the influences of financial development on economic growth for south korea the analysis is performed using an error correction model and a nonlinear smooth transition error correction technique empirical results from the cointegration test reveal that there is a long run equilibrium relationship among financial development and economic growth we also demonstrate that the nonlinear specification is more appropriate than the linear model and confirm the presence of nonlinearity in the aggregate output furthermore we find that the short run effect of financial development on economic growth is unstable despite the positive long term effect

time varying parameter error correction models the demand for money in venezuela 1983 i 1994 iv the possibility of using time varying parameter models in the context of error correction models is studied empirically as an application a money demand relationship m1 for venezuela is estimated from 1983 to 1994 within a cointegrated var framework first the stochastic properties of the series are analysed studying each corresponding order of integration second the existence of a long run stable relation between the variables involved has been investigated and then the cointegration relation and the short run adjustment mechanism estimated as both relations are identified in the context of constant parameters a stability analysis is performed finally the technique of kalman filtering is used to estimate a model that permits the short run parameters to vary while the parameters of the long run relation are kept constant

the transactions demand for money in the presence of currency substitution evidence from vietnam currency substitution the use of foreign money to finance transactions between domestic residents is widespread in low income and transition economies traditionally however empirical models of the demand for money tend to concentrate on the portfolio motive for holding foreign currency while maintaining the assumption that the income elasticity of demand for domestic money is invariant to the degree of currency substitution a simple re specification of the demand for money is offered which more accurately reflects the process of currency substitution by allowing for a variable income elasticity of demand for domestic money this specification is estimated for vietnam in the 1990s using a standard cointegration framework evidence is found for currency substitution only in the long run but well defined wealth effects operating in the short run

taxation and the household abstract previous analyses of demand systems and the welfare effects of taxing male and female labour supplies suppress the analysis of household resource allocation by assuming a household utility function to analyse the implications of assuming this is not the case we construct a simple but fairly general model of household resource allocation and use the properties of the equilibrium of this model to characterise the effects of tax policy on individual utilities as determined by the household resource allocation process

characterizing the financial cycle evidence from a frequency domain analysis a growing body of literature argues that the financial cycle is considerably longer in duration and larger in amplitude than the business cycle and that its distinguishing features became more pronounced over time this paper proposes an empirical approach suitable to test these hypotheses we parametrically estimate the whole spectrum of financial and real variables to obtain a complete picture of their cyclical properties we provide strong statistical evidence for the us and slightly weaker evidence for the uk validating the hypothesized features of the financial cycle in germany however the financial cycle is if at all much less visible

an empirical analysis of state and local tax structure in the context of the leviathan model of government this paper has investigated the ability of an extreme and relatively simple model of political behavior to explain the level of revenues generated by state and local governments in general the behavior of these governments appears to be at least consistent with many of the fiscal outcomes predicted by the leviathan theory several although not all of the specific leviathan theory hypotheses considered received empirical support the evidence was consistent with the hypothesis that states utilizing comprehensive tax bases especially a personal income tax can be expected to generate higher levels of aggregate revenues strong support was also observed for the contention that intergovernmental competition by general purpose substate governments may serve as a substitute for constitutional constraints in limiting the revenue generating power of local governments

comments on n r ericsson d f hendry and k m prestwich the demand for broad money in the united kingdom 1878 1993 the paper by ericsson hendry and prestwich ehp is a report on an empirical analysis of the demand for money in the uk over the period 1878 to 1993 in spite of the very long period with a vast number of institutional changes and tremendous changes in the degree of openness of the economy the authors are able to find an econometric model with underlying constant parameters this somewhat surprising result is obtained through a redefinition of variables based on the opportunity cost of holding money use of nonlinear formulations and use of dummy variables the period is divided into two subperiods one running from 1878 to 1973 and the other from 1878 to 1993 it is shown that the differences between the parameter values in the two estimated models are negligible the actual model has a nonlinear equilibrium correction term which seems quite interesting the cointegrating relation for the period 1878 to 1973 is ehp equation 17

characterizing nonlinearities in business cycles using smooth transition autoregressive models during the past few years investigators have found evidence indicating that various time series representing business cycles such as production and unemployment may be nonlinear in this paper it is assumed that if the time series is nonlinear then it can be adequately described by a smooth transition autoregressive star model the paper describes the application of these models to quarterly logarithmic production indices for 13 countries and europe tests reject linearity for most of these series and estimated star models indicate that the nonlinearity is needed mainly to describe the responses of production to large negative shocks such as oil price shocks

real stock prices and the long run money demand function evidence from canada and the usa abstract this paper investigates the relationship between stock prices and the long run money demand function in canada and the usa during the post wwii period 1955 1989 the empirical investigation is conducted by means of the johansen method of cointegration and the error correction modelling strategy results show that stock prices play a significant role in the determination of stationary long run real m1 and real m2 demand functions in both countries the direction and magnitude of the role of stock prices depends upon the definition of the money and the country error correction results provide evidence of causality between the real money stock and the determinants of the money demand including real stock prices

the assessment consumer expenditure this article aims to illuminate two sets of consumption puzzles the first concerns the behavior of aggregate saving rates in the 1980s and early 1990s collapse and rebound in scandinavia and the u k and apparently a more secular decline in the u s the second set of puzzles concerns various apparent contradictions of the rational expectations permanent income hypothesis e g in time series the excess sensitivity of consumption changes to anticipated income changes and in cross sections the tendency of consumption and income age profiles to follow each other more than standard life cycle theory implies the article discusses in relatively non technical terms the implications both for euler equations and solved out consumption functions of introducing uncertainty credit constraint consumption leisure interactions habits and durability alternative to rational expectations the illiquidity of some assets and financial deregulation it also compares the merits of euler and solved out models of aggregate consumption

euro area money demand and international portfolio allocation a contribution to assessing risks to price stability this chapter argues that a stable broad money demand for the euro area over the period 1980 2011 can be obtained by modelling cross border international portfolio allocation we first observe that in this first decade of the new millennium the breakdown of standard money demand specifications for the euro area and the strong developments in annual m3 growth coincide with large net flows in portfolio invest ment in the euro area we then estimate a new money demand which turns out to be stable by including variables explaining portfolio flows omitted in the traditional specifications

the demand for broad money in the united kingdom 1878 1993 using annual data from friedman and schwartz 1982 hendry and ericsson 1991a developed an empirical model of the demand for broad money in the united kingdom over 1878 1975 we update that model over 1976 1993 accounting for changed data definitions and clarifying the concept of constancy with appropriate measures of opportunity cost and credit deregulation the model s parameters are empirically constant over the extended sample which was economically turbulent policy implications follow for parameter nonconstancy and predictive failure causation between money and prices monetary targeting deregulation and financial innovation and the effect of policy on economic agents behavior

stability of money demand function revisited in china as china s economic reforms have undergone significant structural changes after 1979 it has been rather difficult to formulate a stable money demand function over the period following that year while previous literature on the long run relationship of money demand in china shows the existence of stable money demand this article revisits the stability of the china money demand function over the period after 1979 to employ the unit root tests and the cointegration tests with structural break the empirical evidence demonstrates that economic and financial deregulation did affect the stability of demand for money in china over the period 1977 to 2002 moreover the estimated long run income and interest elasticity are respectively 1 01 1 11 and 0 14 0 08 using the real m1 m2 equation in addition real income and the interest rate are found to be weakly exogenous we overall do find structural breakpoints mainly in 1980 and 1993 and they look to match clearly with corresponding critical financia

long run money demand in taiwan revisited evidence from a cointegrating str approach previous studies on the nonlinearity of the money demand function focus only on short run dynamics and assume that the long run cointegrated relationship is linear which according to economic theory need not be the case thus this article focuses on the variables that make up the long run money demand function in taiwan and their determinants by using the cointegrating smoothing transition regression cstr test developed by choi and saikkonen 2004 this model is more general than the previous str model in that it may contain several transition functions and has more than a single transition variable we demonstrate our empirical results for robustness and adopt two models to ascertain whether or not the stock price should be added as a determinant of the demand for money our empirical results show the existence of a stationary long run relationship among real money demand functions for the period from 1976q1 to 2005q1 and the robustness test covers the 1980q1 2005q1 period in taiwan by comparing

renter illusion fact or fiction the renter illusion hypothesis holds that renters underestimate their property tax burden and therefore support excessive levels of local expenditure a number of studies have reached results that are consistent with the hypothesis but so far empirical investigations have proceeded from the assumption that renter illusion is a fact and have investigated the implications of this fact no one has investigated renter illusion as such in other areas of fiscal illusion survey analyses of voter perceptions have yielded considerable insight into the validity of illusionary hypotheses this paper follows this method and investigates a representative sample of 1000 danish renters and home owners perception of the local property tax system the evidence raises doubts about the renter illusion hypothesis the survey findings are corroborated by an analysis of property taxation in danish municipalities

the role of tax bases and collections costs in the determination of income tax rates seigniorage and inflation a growing theoretical literature on optimal taxation predicts that governments will set the tax rates on money holdings and on more traditional tax bases to minimize the deadweight losses of collecting government revenue under the presumption that relative collection costs and tax bases have not changed significantly over time the empirical time series seigniorage literature has focused on the theory s tax smoothing implication finding only weak support we show that changes in collections costs and tax bases played an important role in the determination of tax composition and find stronger support for tax smoothing when this is taken into account

nonlinear equilibrium correction in u s real money balances 1869 1997 several theoretical models of money demand imply nonlinear functional forms for the aggregate demand for money characterized by smooth adjustment toward long run equilibrium in this paper we propose a nonlinear equilibrium correction model of u s money demand that is shown to be stable over the sample period from 1869 to 1997

instability in cointegration regressions a brief review with an application to money demand in portugal this study addresses some modelling questions related to the possibility of structural change in models with nonstationary variables focusing on cointegration issues some methodological aspects are discussed attempting to integrate coherently the several steps of the modelling strategy these range from unit root to cointegration testing and to testing for instability in the cointegration vector an empirical example with portuguese data tries to illustrate the usefulness of this approach where a simple money demand function is estimated using an error correction model ecm if a break is explicitly allowed in the cointegration vector the forecasting performance of the ecm improves

modelling uk inflation 1875 1991 uk inflation has varied greatly in response to many economic policy and exchange rate regime shifts two world wars and two oil crises as well as legislative and technological changes inflation is modelled as responding to excess demands from all sectors of the economy goods and services factors of production money financial assets foreign exchange and government deficits equilibrium correction terms are developed for each of these over the sample indicator variables and commodity prices capture turbulent years variables representative of most theories of inflation matter empirically yielding an eclectic model inconsistent with any single cause explanation copyright 2001 john wiley sons ltd

unstable money demand and the monetary model of the exchange rate in this paper the authors investigate the importance for the monetary model of exchange rate determination of j frankel 1979 of allowing unrestricted dynamics and of accounting for shifts in the demand for money due to financial innovation based on estimation and simulation results for the canada u s bilateral exchange rate over the 1970 85 period the aut hors find strong evidence in favor of a generalized approach to dynamic specification but find that the shif t adjustment of official money supply data has only minor implications for the empirical results moreover neither modification is sufficient to generate a monetary model that is well supported by the data

non linear error correction and the uk demand for broad money 1878 1993 in this paper we reconsider an error correction model of uk broad money demand by ericsson hendry and prestwich their model is non linear in both variables and parameters and it can be viewed as an approximation to a smooth transition regression str type specification the corresponding str model when specified and estimated fits the data better than the original model adopting a somewhat more general modelling approach leads to another str model this model variance dominates the other two and the encompassing tests performed in this paper indicate that it is an improvement over the other two specifications copyright 2001 john wiley sons ltd

a stable demand for money despite financial crisis the case of venezuela the demand for broad money in venezuela is investigated over a period of financial crisis and substantial exchange rate fluctuations the analysis shows that there exist a long run relationship between real money real income inflation the exchange rate and an interest rate differential that remains stable over major policy changes and large shocks the long run properties emphasize that both inflation and exchange rate depreciations have negative effects on real money demand whereas a higher interest rate differential has positive effects the long run relationship is finally embedded in a dynamic equilibrium correction model with constant parameters these results have implications for a policy maker in particular they emphasize that with a high degree of currency substitution in venezuela monetary aggregates will be very sensitive to changes in the economic environment

money demand in hungary and poland this paper analyses the determinants and the stability of money demand functions in hungary and poland using an error correction framework the null of stable cointegration relationships cannot be rejected in some specifications the results suggest that long run parameters are in line with economic theory while judging the appropriateness of different strategies of monetary policy on the basis of these findings alone would be premature the paper suggests that money demand functions can serve as a useful reference for monetary authorities

interest group demand for taxation researchers have typically ignored the determinants of the tax structure of the public sector political scientists have concentrated their analyses on the expenditure side of the public ledgers while economists have avoided the issue by assuming that taxes are exogenously determined in this paper we have shown that a behavioral model of political interest groups can be employed to gain insights into the political selection of taxes the theory provides a general complement to the well documented analysis of special interest demand for public expenditures our analysis raises several important policy questions first is the influence of interest groups on the determination of tax systems desirable from a public policy perspective for example special interest groups dominated by high and middle income individuals may prefer regressive tax systems which reduce their own tax burden certainly the impact of interest groups on the well known regressivity of state and local tax systems is an area worthy of additional investigation second does the influence of interest groups lead to tax systems that unduly hamper economic efficiency and retard economic growth for example governments with economies dominated by a single industry may forsake diversity and economic development by selecting a tax system favorable to the major industry interest group demand for taxes may be a factor in explaining long run regional cycles such as the rise and fall of heavy manufacturing states such as the upper midwest this research has established that a link exists between special interest group demand for taxation and the structure of local tax systems however the extent to which these groups influence tax systems and the exact nature of this influence requires further research additional research may also provide insights into the control e g constitutional or legislative of interest group influence on taxes should it be determined that such control is necessary

a median voter analysis of variations in the use of property taxes among local governments this paper explores the variations among local governments in the composition of tax revenues or more specifically in the relative use of property taxes using a median voter framework various hypotheses are developed concerning the factors that should influence the relative use of property taxes a cross sectional sample of central cities is employed to test the hypotheses the empirical results are consistent with the hypotheses

the stability of long run money demand in five industrial countries abstract this study provides strong evidence for the stability of long run demand functions for narrowly defined money m1 in five industrial countries u s japan canada u k and west germany using post war quarterly data evidence of stability is examined using two different estimation techniques and through a formal test of parameter constancy designed specifically for cointegrating vectors in the majority of these countries the key to stability is the imposition of a unitary long run income elasticity that is rarely rejected by the data

the empirical content of nash bargained household behavior in households whose allocation decisions can be represented as nash bargained household decisions extrahousehold environmental parameters eeps serve as pure shifters of the threat points the comparative statics of changes in demands due to changes in these eeps are given these are incorporated into a comprehensive statement of the empirical content of nash bargained household behavior including a nash generalization of barten s 1966 fundamental matrix equation of the theory of consumer demand estimation and data requirements are discussed along with nested testing of the following structure the neoclassical model is nested in the nash bargained model which in turn is nested in an unrestricted model of household demands emphasized throughout is the enriched menu of explanatory variables for demand analysis provided by the nash model as well as the model s ability to jointly analyze i household formation and ii intrahousehold allocation decisions

explaining the decision to repeal an optional local tax county governments in pennsylvania have had the option to repeal the intangible property tax since 1978 as of 1992 27 of pennsylvania s 66 counties had repealed it an attempt is made to explain empirically the probability of repeal in this paper the empirical model accounts for a large part of the variation across counties the results show that the probability of levying the intangible property tax is positively related to the projected change in the real estate tax rate further it was found that revenue diversification and several taste and political variables significantly influence the repeal decision these findings are consistent with those of previous tax adoption studies the evidence however does not show the exportation of real estate taxes to have the expected effect on the probability of repeal

median voters political systems and public policies an empirical test this paper tests the median voter hypothesis that variations in policies across political systems are caused by variations in median voter preferences the context of the empirical analysis is the tax policies of three groups of sub national governments in england in three time periods the results of a median voter model of tax policy variation are compared to the results of a mean voter model in different party systems and different electoral systems the evidence provides little support for the median voter hypothesis

money demand during hyperinflation and stabilization bulgaria 1991 2000 the demand for money in bulgaria is estimated over a ten year period 1991 2000 of high inflation and inflation uncertainty the paper distinguishes between three well defined sub periods high variable but not systematically accelerating inflation from 1991 until april 1996 the near hyperinflation period from may 1996 to february 1997 and the subsequent stabilization after the adoption of a currency board the empirical analysis utilizes a standard methodology of cointegration and error correction the functional determinants of the demand for money change during the different sub periods during the hyperinflation episode cagan s model is employed

currency substitution and nonlinear error correction in taiwan s demand for broad money we modify the conventional money demand function by including a real exchange rate variable to reflect the effect of currency substitution empirical evidence indicates that the variable is crucial to the long run stability of taiwan s money demand after finding the failure of a linear error correction model ecm in describing the dynamics of taiwan s money demand we apply a nonlinear ecm to examine its dynamics and support the appropriateness of the nonlinear model empirically

are experience and schooling complementary evidence from migrants assimilation in the bangkok labor market abstract this paper models the assimilation process of migrants and shows evidence of the complementarity between their destination experience and upon arrival human capital bayesian learning is assessed using panel data of wages from bangkok thailand it is found that i schooling returns are lower for migrants than for natives ii the accumulation of destination experience raises wages for migrants iii the experience effect is greater for more educated agents and iv the complementarity increases as destination experience accumulates the results imply that more educated migrants have higher learning efficiency and can perform tasks of greater complexity ultimately yielding higher wage growth in the destination market

nonlinearities and the sustainability of the government s intertemporal budget constraint i introduction fiscal policy sustainability is an important issue for european union eu countries which are subject to some forms of monitoring of their public finances the european stability and growth pact esgp constrains the fiscal policy of member states by limiting their autonomy in creating excessive deficits 1 this because fiscal disequilibria in one state create negative externalities for the other member countries and in the case of european monetary union emu countries can endanger the overall credibility of the euro currency on the other hand given the common monetary policy the correction of idiosyncratic shocks is assigned to the fiscal instrument alone imposing further pressure on the fiscal policy of member countries while the issue of sustainability of the public finances of the eu emu countries has received an increasing attention less attention has been paid to the issue of how the sustainability is achieved that is how budgetary authorities adjust fiscal policies to achieve maintain a sustainable path of public debt focusing on this adjustment by applying linear and nonlinear error correction models is the main purpose of this paper our empirical analysis is based on italy which provides an interesting case as it joined the emu in 1999 in spite of a stock of public debt of around 113 of nominal gdp against the 60 level required by the maastricht treaty and whose public accounts are often under scrutiny for struggling to comply with the esgp 2 as well as for subsequent downgradings of its sovereign debt by the main credit rating agencies 3 in this paper we address three main relevant policy questions first are the italian public finances sustainable second is the process of fiscal adjustment equally shared by changes in revenues and changes in government spending third does fiscal adjustment vary with the sign and magnitude of disequilibria and or with the state of the economy these are important questions for policy making purposes although our methodology is only applied to italy we feel our work should be of definite interest to other european countries and beyond bearing in mind that italy enjoys membership of the g7 economies and accounts for around 17 of eurozone s gdp a better understanding of how its public finances operate in practice is extremely important for monitoring the fiscal health of eurozone countries and minimizing at an early stage possible threats to eurozone s stability as well as limiting any spill over effects to the rest of the world further loans from the european financial stability facility 4 efsf can only meet the approval of policymakers if they feel confident they have a deep understanding of how individual member states pursue their own fiscal policies toward sustainability verifiability and credibility of sustainable fiscal policies would also condition the availability of the european stability mechanism consisting in a permanent bail out fund for eurozone member states bofinger et al 2010 that is expected to become operational from 2013 at the expiry of the efsf at the same time proposals for independent monitoring of public finances of member states as well as stricter sanctions such as the temporary suspension of voting rights for eurozone members that break the region s rules on public finances are put forward by the european central bank trichet 2010 all these recent policy developments confirm the importance of our research in providing a comprehensive framework for empirically testing the sustainability of fiscal policy our proposed approach provides a number of interesting findings the italian government s intertemporal budget constraint ibc is formally respected in spite of the high levels of public debt nevertheless the burden of correcting budgetary disequilibria is entirely carried out via changes in the average tax rate rather than changes in government spending or policy mixes

trust membership in groups and household welfare evidence from kwazulu natal south africa unfortunately these two literatures have remained largely unconnected the group and network literature concludes that participation has important economic benefits even when the stated function of the group is noneconomic in most cases however the mechanisms by which groups and networks achieve this are unclear the determinants of trust and participation in groups literature highlights the importance of income and social homogeneity what remains less understood is whether and how trust can be generated for example via participation in groups this article links the empirical literatures referenced above by exploring the relationship between membership in groups and trust specifically using longitudinal data from kwazulu natal province south africa we examine 1 the importance of trust in the decision to join groups 2 the subsequent ability of groups to generate trust and 3 the effect of group membership and trust on a measure of well being per capita household income in addition we disaggregate groups into financial and nonfinancial and we categorize trust in people by agent or actor therefore we can explore whether trust in different kinds of actors is important for participation in different kinds of groups and whether participation in different kinds of groups is important for generating trust in different kinds of actors excerpt

testing for the cointegrating rank of a var process with structural shifts tests for the cointegrating rank of a vector autoregressive process are considered that allow for possible exogenous shifts in the mean of the data generation process the break points are assumed to be known a priori it is proposed to estimate and remove the deterministic terms such as mean linear trend term and a shift in a first step then systems cointegration tests are applied to the adjusted series the resulting tests are shown to have known limiting null distributions that are free of nuisance parameters and do not depend on the break point the tests are applied for analyzing the number of cointegrating relations in two german money demand systems

separate spheres bargaining and the marriage market this paper introduces the separate spheres bargaining model a new model of distribution within marriage it differs from divorce threat bargaining models e g manser brown mcelroy horney in that the threat point is not divorce but a noncooperative equilibrium within marriage this noncooperative equilibrium reflects traditional gender roles the predictions of our model thus differ from those of divorce threat bargaining models in the separate spheres model cash transfer payments to the mother and payments to the father can but need not imply different equilibrium distributions in existing marriages in the long run the distributional effects of transfer policies may be substantially altered by changes in the marriage market equilibrium

does cash crop adoption detract from child care provision evidence from rural nepal this document addresses the issues of agricultural commercialization using data from fieldwork conducted in nepal it aimed to examine the impact of a project designed to commercialize vegetables and fruit the vegetable and fruit cash crop program vcf on male and female time allocation the goal of vfc program was to increase the commercial production of vegetables and fruits in farm households that were heavily dependent on the production of cereal and livestock for home consumption findings from multivariate analysis suggest that for households with one preschooler vfc participation results in more time to agricultural production of the cash crop for both men and women but also a decrease in care time to preschoolers from both men and women meanwhile for households with more than one preschooler this trade off is not so apparent the analysis also suggests that behavior change initiatives to protect time to child care might be feasible in that vfc participation does not decrease the overall nonwork time of men or women with preschool children in residence

money demand function estimation by nonlinear cointegration conventionally the money demand function is estimated using a regression of the logarithm of money demand on either the interest rate or the logarithm of the interest rate this equation is presumed to be a cointegrating regression in this paper we aim to combine the logarithmic specification which models the liquidity trap better than a linear model with the assumption that the interest rate itself is an integrated process the proposed technique is robust to serial correlation in the errors for the usa our new technique results in larger coefficient estimates than previous research suggested and produces superior out of sample prediction copyright 2007 john wiley sons ltd

income and outcomes a structural model of intrahousehold allocation there is evidence from several sources that one cannot treat many person households as a single decision maker if this is the case then factors such as the relative incomes of the household members may affect the final allocation decisions made by the household we develop a method of identifying how incomes affect outcomes given conventional family expenditure data the basic assumption we make is that household decision processes lead to efficient outcomes we apply our method to a sample of canadian couples with no children we find that the final allocations of expenditures on each partner depend significantly on their relative incomes and ages and on the level of lifetime wealth