consumption vulnerability to risk in rural pakistan abstract as one of the dimensions of vulnerability this paper empirically investigates the inability of rural dwellers to cope with negative income shocks a variable coefficient regression model is applied to a two period household panel dataset collected in the north west frontier province pakistan an area with high incidence of income poverty and low human development the empirical model allows for a different ability to smooth consumption approximated by a linear function of households attributes and controls for the endogeneity of observed changes in income using qualitative information on subjective risk assessment estimation results show that the ability to cope with negative income shocks is lower for households that are aged landless and do not receive remittances regularly

nutritional status during an economic crisis evidence from russia between 1996 and 1998 russia experienced a spectacular decline in economic activity which was followed by a dramatic rebound between 1998 and 2000 we use panel data to examine the impact of variation in household resources on six dimensions of nutritional status distinguishing longer run from short term fluctuations in resources nutritional status is very resilient to short term variation in household resources gross energy intake adult weight and child stature change very little as expenditure deviates from its long run average longer run resources have a substantively large positive and significant effect on energy intake diet quality adult weight and child stature the evidence indicates that individuals and households are able to weather short term fluctuations in economic resources at least in terms of maintaining body mass and energy intake increased globalisation has resulted in many less developed countries becoming more integrated into world markets this integration carries both benefits and costs for the populations of those countries an oft cited cost is elevated risk of exposure to economic fluctuations which has been manifest in several spectacular economic crises across the globe in the last few decades there is however little evidence on the extent to which individuals and families are able to mitigate deleterious effects of these economic upheavals on their well being in spite of its importance for understanding the consequences of globalisation this article provides new evidence on this issue specifically we examine the relationship between several dimensions of nutritional well being and variation in household resources during the russian economic crisis in the late 1990s the economies of the former soviet bloc have been especially volatile since the transition to market based economies which began in the early 1990s nowhere has this been more true than in russia where in the last half of 1998 real gdp collapsed by around 30 and then rapid growth brought the economy back to its pre crisis level by 2000 the time path of changes in gdp is closely mimicked by changes in the incomes and expenditures of russian households using extremely rich longitudinal household survey data from the russian longitudinal monitoring survey rlms we examine the impact of these large fluctuations in household resources on nutrient intake and on anthropometric markers of nutritional status at the individual level in so doing we address an important issue in the literature regarding the extent to which households in low income settings are able

the relative impact of inheritance and other factors on economic inequality an empirically grounded micro simulation of saving with bequests related negatively either in total to average children s income or separately to individual children s incomes is constructed for a single generation in a steady growth economy behavioral parameters are set so that predicted bequests to the next generation are consistent with both the scale and assignment of inheritances taken from a real world source for the simulation generation the relative impact of inheritance and other factors on different aspects of economic inequality is assessed while inheritance is a major cause of wealth inequality its influence on annual income and lifetime resources is small and in the latter case ambiguous inheritance perpetuates and may intensify inequalities arising originally from other causes in that sense it is a secondary cause of inequality but that is not of course to say that it is of secondary importance the extent of its influence on distribution remains an open question which cannot be decided merely by theoretical reasoning but requires in addition something in the nature of a quantitative analysis of the relevant facts wedgwood 1929 pp 60 61

dynamic asset allocation when bequests are luxury goods abstract luxury bequests impart systematic effects of age to an investor s optimal allocation the expected percentage allocation to equities rises throughout retirement when bequests are luxuries the marginal utility of bequests declines more slowly than the marginal utility of consumption this is essentially lower risk aversion as a retiree approaches death her expected remaining lifetime utility is increasingly composed of bequest utility and thus generates progressively lower risk aversion a retiree responds by increasingly favoring the higher return risky asset compared to standard preferences luxury bequests elevate a retiree s average exposure to the risky asset but the difference is small in early retirement

risk sharing and public transfers we use public transfers in the form of food aid to test for the presence of risk sharing arrangements at the village level in rural ethiopia we reject perfect risk sharing but find evidence of partial risk sharing via transfers there is also evidence consistent with crowding out of informal insurance linked to food aid programmes

risk sharing between and within families this paper uses the panel study of income dynamics to test whether risk sharing is complete between or within american families the tests accommodate a wide variety in the configuration and availability of family data the test results reject inter as well as intra family full risk sharing even assuming that leisure is endogenous or that leisure and consumption are nonseparable

risk sharing with limited commitment and preference heterogeneity structural estimation and testing in order to analyze the role of limited commitment and preference heterogeneity in explaining the consumption allocation i propose a theoretical and empirical framework to estimate and evaluate a risk sharing model where insurance transfers have to be self enforcing and the coefficient of relative risk aversion may depend on observable household characteristics i compare this model to benchmark models with full commitment and or without preference heterogeneity using data from three indian villages i find that the limited commitment model with heterogeneous preferences outperforms the benchmark models in a statistical sense and in terms of i explaining the dynamic response of consumption to idiosyncratic income shocks ii accounting for the variation of consumption unexplained by household and time effects and iii capturing the variation of inequality across time and villages and predicting changes in inequality i also use the estimated models to predict the effects of a counterfactual tax and transfer policy on the consumption allocation the limited commitment model with preference heterogeneity predicts larger benefits to the poor than its homogeneous counterpart

optimal consumption and portfolio policies when asset prices follow a diffusion process abstract we consider a consumption portfolio problem in continuous time under uncertainty a martingale technique is employed to characterize optimal consumption portfolio policies when there exist nonnegativity constraints on consumption and on final wealth we also provide a way to compute and verify optimal policies our verification theorem for optimal policies involves a linear partial differential equation unlike the nonlinear partial differential equation of dynamic programming the relationship between our approach and dynamic programming is discussed we demonstrate our technique by explicitly computing optimal policies in a series of examples in particular we solve the optimal consumption portfolio problem for hyperbolic absolute risk aversion utility functions when the asset prices follow a geometric brownian motion the optimal policies in this case are no longer linear when nonnegativity constraints on consumption and on final wealth are included by these examples one can see that our approach is much easier than the dynamic programming approach

motives for private transfers over the life cycle an analytical framework and evidence for peru abstract this paper tests for the motives for private income transfers we consider two motives altruism and exchange the question of private transfer motives is important because such motivation can influence the effects of public income transfers on the distribution of income using a household survey for peru we find that transfer amounts received increase with recipient pre transfer income which contradicts a key prediction of the strong form of the altruism hypothesis but is consistent with exchange we also find that capital market imperfections are likely to be an important cause of private transfers and that social security benefits crowd out the incidence of private transfers

targeting of food aid in rural ethiopia chronic need or inertia abstract this paper quantifies the factors underlying the allocations of food aid by the ethiopian government together with local and international non governmental organizations ngos both across rural regions and to households within regions we focus on reduced form specifications in which as little structure as possible is put on the decision rules because so little is known about these rules and their implementation nationally representative rural household data from ethiopia collected in 1996 are used the paper determines the extent to which food aid both free distribution and food for work is targeted to poor households and communities we also demonstrate that food aid allocations display a large degree of spatial continuity over time and are concentrated in areas that at least during the time of the survey are not the poorest the paper attempts to disentangle two competing explanations for the apparent spatial rigidity of food aid allocations that the recipient areas are chronically needy or that needs shift geographically from 1 year to the next but that fixed costs in setting up operations and in the process of identifying needs lead to a degree of inertia in the location of food aid programs over time we conclude that the evidence best fits the inertia explanation

measuring vulnerability to asset poverty in sub saharan africa summary this paper presents a methodology to measure vulnerability to asset poverty using repeated cross section data age cohort decomposition techniques focusing on second order moments can be used to identify and estimate the variance of shocks on assets and therefore the probability of being poor in the future estimates from the ghana living standard surveys show that expected asset poverty is a reliable proxy for expected consumption poverty applying the methodology to eight demographic health surveys countries households in rural areas are found to be unambiguously more vulnerable to poverty than those in urban areas

consumption smoothing in island economies can public insurance reduce welfare abstract in this paper we study the effects of certain types of public compulsory insurance arrangements for aggregate shocks on private allocations in environments with limited commitment we show that this type of insurance can improve the wellbeing of private situations but it can also deteriorate it we also describe how different characteristics of the environment affect the role of public insurance using data on the mexican progresa program we document the impact that some government programs have in crowding out private transfers

does public welfare crowd out informal safety nets ethnographic evidence from rural latin america abstract the researchers compare ethnographic data from two neighboring countries suriname and french guiana to investigate whether public welfare systems displace informal risk sharing arrangements the results suggest that the informal safety nets of poor rural households are deficient when shocks are extreme irreversible cumulative and co variate public welfare can reduce poverty by strengthening informal insurance systems distributing cash enabling new risk management strategies and promoting human capital development it remains a challenge for policy makers to implement welfare systems that cover society members with the lowest levels of human and social capital and that minimize adverse consequences of economic change

a simple test of consumption insurance are consumers effectively insured against idiosyncratic shocks to income or wealth either by formal institutions such as charities private insurance and government programs or by informal mechanisms such as gifts and loans from relatives friends and neighbors under full insurance consumption growth should be cross sectionally independent of idiosyncratic variables that are exogenous to consumers this proposition is tested by cross sectional regressions of consumption growth on a variety of exogenous variables full insurance is rejected for long illness and involuntary job loss but not for spells of unemployment loss of work due to strike and an involuntary move

the economics and nutritional impacts of food assistance policies and programs recent evidence on malnutrition and poverty raise important questions on the role of food assistance policies and programs in this review article we examine evidence on the economic and nutritional impacts of international food assistance programs faps and policies the returns on investments in faps are on average high but depend considerably on the targeting and cost structures as well as on food quality and role of complementary activities we disaggregate findings into four classes of recipients returns to faps are highest for children under two but faps oriented towards early childhood interventions are less well funded than are interventions aimed at school age children or at the broader largely adult population even though available evidence indicates that these latter classes of interventions offer considerably lower average returns in economic health and nutrition terms nonetheless fap effectiveness in achieving any of several objectives varies with a range of key factors including targeting additionality seasonality timeliness incentive effects social acceptability and political economy considerations

the effect of irrigation on poverty reduction asset accumulation and informal insurance evidence from northern mali summary the impact of small scale irrigation investments on household consumption assets and informal insurance is estimated from a panel of northern malian households 1998 2006 access to irrigation increases household consumption by 27 30 relative to water recession and rain fed cultivators the paper also investigates whether irrigation has secondary impacts on risk mitigating strategies by reducing covariate risk and reinforcing informal food sharing networks that allow households to insure against idiosyncratic risk we find that households with irrigation save between 4 5 and 6 4 more tropical livestock units and are 20 more likely to engage in informal food sharing with non irrigators this finding suggests that impact estimates that rely on consumption may underestimate welfare gains by ignoring the household s savings behavior and informal insurance network

vulnerability seasonality and poverty in ethiopia most studies examining the dynamics of welfare have found large fluctuations in consumption over relatively short periods suggesting substantial short run movements in and out of poverty the consequence is that cross section poverty research may not be able to identify the poor in this study we explore this short run variability further we use a data set on a panel of 1450 households in different communities in rural ethiopia surveyed thrice over 18 months on average year to year poverty is very similar however we find high variability in consumption and poverty over the seasons and year by year econometric analysis suggests that consumption is affected by idiosyncratic and common shocks including rainfall and household specific crop failure while households respond to seasonal incentives related to changing labour demand and prices the results imply that a larger number of households are vulnerable to shocks than implied by the standard poverty statistics while some of the non poor in the

synergy and learning effects of informal labor sharing arrangements summary we study the effects of informal labor sharing arrangements and other social interactions on farmers productivity in a developing country context testing whether these types of social and work interactions lead to productivity gains through learning synergy or both using a rich panel data set of ethiopian subsistence farmers we estimate a distance function of grains production and find large productivity gains approximately 33 and 29 in 1999 and 2004 from labor sharing due to synergy effects that boost labor productivity however labor sharing does not lead to learning as the productivity gains observed in years with labor sharing disappear in following years if the farmers do not continue to engage in labor sharing labor sharing partners are either neighbors relatives members of the same funeral and religious associations or have plots next to each other which together reduce labor sharing as a single venue for learning however the synergy effect is strong enough to warrant the design of extension and outreach policies that recognize and utilize farmers informal social networks such as labor sharing arrangements

university industry relations and research group production is there a bidirectional relationship this study aims to analyze if there is a bidirectional relationship between university industry collaboration and scientific production the results from a sample of 137 research groups at a university in an ultra peripheral region reveal the existence of this bidirectional relationship scientific production has a positive influence on university industry relations thus when the articles published by the research groups increase the contracts between university and industry also increase moreover the results reflect a nonlinear relationship between contracts and scientific production university industry relations are complementary to scientific production up to a certain level and after that point there is a substitution effect the results also show the moderating effect of the knowledge area on this relationship because groups belonging to technology oriented areas have higher scientific production in response to university industry relations

consumption smoothing and vulnerability in russia applying bootstrapped quantile regression to the russian longitudinal monitoring survey rlms data we examine the channels through which individuals experience and seek to cope with changes in consumption we find that married individuals living in small households with educated heads in urban areas are better equipped to smooth consumption investigating the impact of idiosyncratic shocks we find that the labour market is an important transmission mechanism allowing households to smooth their consumption but also exposing them to risk mainly through job loss outside of pension payments the formal social safety net does not facilitate consumption smoothing thus heightening the importance of informal coping institutions it transpires that both support from relatives friends and home production act as important insurance mechanisms for the most vulnerable