competition under consumer loss aversion we address the effect of expectation based consumer loss aversion on firm strategy in imperfect competition consumers are fully informed about match value and price at the moment of purchase however some consumers are initially uninformed about their tastes and form a reference point consisting of an expected match value and price distribution whereas others are perfectly informed all the time we show that if firms have symmetric costs a larger share of informed consumers leads to a more competitive outcome the reverse holds if cost asymmetry in duopoly is sufficiently large

nonmonetary effects of the financial crisis in propagation of the great depression this paper examines the effects of the financial crisis of the 1930s onthe path of aggregate output during that period our approach is complementary to that of friedman and schwartz who emphasized the monetary impact of the bank failures we focus on non monetary primarily credit related aspects of the financial sector output link and consider the problems of debtors as well as those of the banking system we argue that the financial disruptions of 1930 33 reduced the efficiency of the credit allocation process and that the resulting higher cost and reduced availability of credit acted to depress aggregate demand evidence suggests that effects of this type can help explain the unusual length and depth of the great depression this abstract was borrowed from another version of this item

do formula or competitive grant funds have greater impacts on state agricultural productivity this article examines the impact of public agricultural research and extension on agricultural total factor productivity at the state level the objective is to establish whether federal formula or competitive grant funding of agricultural research has a greater impact on state agricultural productivity a pooled cross section time series model of agricultural productivity is fitted to annual data for forty eight contiguous states over 1970 1999 our results show that public agricultural research and agricultural extension have statistically significant positive impacts on state agricultural productivity in addition hatch formula funding has a larger impact on agricultural productivity than federal competitive grant funding and a reallocation of hatch formula funds to competitive grant funding would lower agricultural productivity this seems unlikely to be a socially optimal policy furthermore from a cost benefit perspective our study shows that the social marginal annualized real rate of return to public resources invested in agricultural research is 49 62 and to public agricultural extension the rate is even larger

assessing the impact of food policy research rice trade policies in viet nam abstract the economic impact of marketing and trade policy research in viet nam conducted by the international food policy research institute ifpri is assessed using a novel benefit cost framework it measures the economic value of the time saved in hastening the policy responses of the government of vietnam extensive interviews with partners and stakeholders in the research clearly indicated that the time saving was a legitimate measure of the influence of ifpri on decision making linking a spatial equilibrium model with income distribution analysis based on national household surveys allowed ifpri to satisfy policymakers that relaxing rice export quotas and internal trade restrictions on rice would not adversely impact on regional disparities and food security and would have beneficial effects on farm prices and poverty these were major concerns of policymakers prior to the ifpri research project the research on these and other policy options gave a degree of confidence to policymakers that relaxing the controls would be in viet nam s national interest they made these decisions earlier than would have been the case without the ifpri research the policy assessment framework is used to measure the economic impact of the policy changes themselves and in particular the contribution of ifpri s work with viet nam on the policies from 1995 to 1997 the relaxation of rice export quotas and internal restrictions on rice trade made by the government of viet nam in 1995 97 are estimated to have had a present 1995 value to viet nam using a 5 discount rate of 222 million by 2000 rising to 966 million by 2020 for an incremental research investment of less than us 1 million a conservative estimate of the benefit to viet nam of the ifpri contribution to the policy changes effected in viet nam from the reduction in the policy implementation lag indicates a present value in 1995 terms of us 45 million this represents a benefit cost ratio of 56 a more optimistic assessment is that the present value is us 91 million with a benefit cost ratio of 114 in addition to the welfare gains to viet nam there were sizeable gains to the rest of the world from ifpri s contribution inclusion of these benefits increases present value and benefit cost estimates by 34 to 84 around 38 of the contribution of ifpri is estimated to have accrued to the rest of the world as viet nam is now a major player in world rice trade

two faces effects of business groups on innovation in emerging economies this paper shows that business groups in emerging economies exert dual effects on innovation while groups facilitate innovation by providing institutional infrastructure groups also discourage innovation by creating entry barriers for nongroup firms and thereby inhibit the proliferation of new ideas this pattern reflects an evolutionary process in which the interplay of the availability of innovation infrastructure and variety of ideas influences the level of innovation in an industry we show that group market share has an inverted u impact on innovation in industrial sectors of both korea and taiwan during the 1981 1995 period institutional differences between korea and taiwan in terms of market structure and industrial policies lead to different innovation thresholds the point at which the marginal costs of increasing group share begin to dominate the marginal benefits in the two countries

marginal analysis of welfare costs of environmental policies the case of pesticide regulation we present a methodology for estimating net social welfare costs and their distribution using only information on price quantities elasticities of supply and demand and estimates of cost and or yield effects of policies provided by natural scientists an application to a case of pesticide regulation demonstrates the importance of equity effects simulations show that redistribution of income among producers becomes the dominant effect of pesticide policies when supply elasticities are higher and demand elasticities are lower with changes in supply elasticity having a greater impact than changes in demand elasticity for crops with significant export markets foreign consumers are shown to bear much of the short run cost many cases now exist of legislation and executive orders mandating the use of benefit cost criteria in policy choice to be useful in policy assessments welfare methodologies must meet certain requirements first they must provide estimates of the efficiency impacts of alternative policies measured by changes in net social surplus second estimates of the

contributions of public and private science and technology to u s agricultural productivity the impact of public and private research to agricultural productivity in the us between 1950 and 1982 were assessed using an econometric model analysis of us aggregate measures of multifactor agricultural productivity was undertaken using imputation accounting statistical meta function and statistical productivity decomposition methods the study indicated that public sector research should be focused on general and pretechnology sciences while private sector resources should be channeled to applied research and technology advancement

equilibrium pollution taxes in open economies with imperfect competition abstract this paper argues that imperfect competition in global markets creates a strategic interaction between governments that can lead to the inefficient distortion of pollution taxes this distortion can be decomposed into a rent capture effect and a pollution shifting effect the rent capture effect lowers equilibrium taxes as each country attempts to gain a competitive advantage over its trading partner and thereby capture foreign rent through net exports the pollution shifting effect raises equilibrium taxes as each country attempts to transfer production and its associated pollution to the other country this effect vanishes if pollution is perfectly transboundary because shifted pollution causes as much damage to the domestic environment as does domestic pollution the net effect on symmetric equilibrium taxes is negative except in the special case of perfect competition with no transboundary pollution in this case the two effects are mutually offsetting and the nash equilibrium is efficient when pollution is at least partially transboundary there also arises the usual transboundary externality and this reinforces the negative net strategic effect giving rise to equilibrium taxes that are lower than what is globally efficient

reassessing patent propensity evidence from a dataset of r d awards 1977 2004 it is well known that not all innovations are patented but the exact volume of innovative activities undertaken outside the coverage of patent protection and relatedly the actual propensity to patent an innovation in different contexts remain to a major degree a matter of speculation this paper presents an exploratory study comparing systematically patented and unpatented innovations over the period 1977 2004 across industrial sectors the main data source is the r d 100 awards competition organized by the journal research and development since 1963 the magazine has been awarding this prize to the 100 most technologically significant new products available for sale or licensing in the year preceding the judgments we match the products winners of the r d 100 awards competition with uspto patents and we examine the variation of patent propensity across different contexts industries geographical areas and organizations finally we compare our findings with previous assessments of patent propensity based on several sources of data

relative importance of sectoral and aggregate sources of price changes this paper estimates a dynamic common factor model to assess relative importance of the aggregate and the sector specific factors that determine changes in the prices of individual products it also examines how aggregate price changes are affected by these factors two different specifications of the model are estimated the baseline model with one aggregate factor and a second specification with two aggregate factors in the one actor model the aggregate factor contributes little to the movements of changes in prices mostly of nondurable goods whereas it seems to have important contributions to the movements of changes in prices of commodity groups mainly used as intermediate or capital goods in the specification with two aggregate factors the additional factor has significant effects on changes in prices of farm products and processed foods and feeds only forecast error variance decompositions of both aggregate and disaggregate price changes suggest that sectoral factors account for most of t

libertarian paternalism information production and financial decision making we develop a theoretical model to analyze the effects of libertarian paternalism on information production and financial decision making individuals in our model appreciate the information content of the recommendations made by a social planner this affects their incentive to gather information and in turn the speed at which information spreads across market participants via social learning or formal advice channels we characterize situations in which libertarian paternalism improves welfare and contrast them with scenarios in which this policy is suboptimal because of its negative impact on the production and propagation of information the author 2013 published by oxford university press on behalf of the society for financial studies all rights reserved for permissions please e mail journals permissions oup com oxford university press

forecasting resource allocation decisions under climate uncertainty fire suppression with assessment of net benefits of research making input decisions under climate uncertainty often involves two stage methods that use expensive and opaque transfer functions this article describes an alternative single stage approach to such decisions using forecasting methods the example shown is for preseason fire suppression resource contracting decisions faced by the united states forest service two stage decision tools have been developed for these decisions and we compare the expected gains to the agency in terms of reduced personnel costs of the single stage model over the two stage model existing hiring decisions and decisions that would have been made given perfect foresight about wildfire activity our analysis demonstrates the potential gains to versions of our single stage model over existing hiring decisions equivalent to a benefit cost ratio of 22 the research also identified additional gains accruing from imposing biases on the single stage model associated with asymmetric penalties from contracting decisions copyright 2008 oxford university press

measuring the impacts of agricultural research on poverty reduction policymakers are increasingly calling upon agricultural research managers to consider poverty reduction objectives when making resource allocations the authors present a simple method to measure the impact of agricultural research on the poor this method has the advantage that it presents the results in a manner consistent with commonly used measures of poverty this consistency and focus should facilitate and enhance dialogue between policymakers and research managers when deciding on resource allocations and assessing impacts on poverty reduction an illustrative application is presented using data from malawi

concentration and dispersion in global industries remote electronic access and the location of economic activities we explore how the possibility of remote electronic access to markets resources and knowledge enabled by the new information and communication technologies icts might change the motivations of firms to locate activities internationally and in turn affect worldwide dispersion and concentration in an industry preliminary results from an exploratory analysis of the spatial distribution of firms in financial services suggest that the introduction of a business to business b2b trading network increases the global market participation of firms from peripheral countries but does not appear to reduce the importance of locational clusters a set of propositions is derived that provide guidance for more detailed research on the impact of icts on the strategy and structure of global industries

pollution policy and trade liberalization of environmental goods during the doha round at the world trade organization reductions in trade barriers on environmental goods eg were put forward as a means of helping developed and developing countries alike deal with current environmental problems we examine the potential effectiveness of such a strategy in a developing country that imports all its consumption of eg from an imperfectly competitive foreign eco industry we point out that trade liberalization of eg might in fact lead to less stringent pollution taxes which can result in an actual rise in pollution levels we then show that the environmental effectiveness objective of this trade reform can be achieved when the regulator uses quantitative abatement standards as an alternative pollution policy instrument however this environmental achievement comes at the expense of social welfare

oil and the macroeconomy since world war ii all but one of the u s recessions since world war ii have been preceded typically with a lag of around three fourths of a year by a dramatic increase in the price of crude petroleum this does not mean that oil shocks caused these recessions evidence is presented however that even over the period 1948 72 this correlation is statistically significant and nonspurious supporting the proposition that oil shocks were a contributing factor in at least some of the u s recessions prior to 1972 by extension energy price increases may account for much of post opec macroeconomic performance

advertising information and product quality the case of butter this study examines the roles of cholesterol information and advertising in explaining consumption trends for fats and oils focusing on butter results suggest increased consumer awareness of the health effects of blood cholesterol has contributed to the secular decline in butter consumption in canada although consumers responses to negative information appear to outweigh their responses to positive information the industry advertising campaign launched in 1978 by the dairy bureau of canada has had a positive effect on butter demand

benefits and costs of food safety regulation abstract this paper begins with a review of the concepts and methods that can be used to quantify the benefits and costs of food safety regulations on the cost side where research is only beginning to emerge this paper also provides an analytical framework for measurement of the costs of statutory regulations in the form of design and performance standards this paper also discusses the use and limitations of currently available benefit and cost information for quantitative regulatory impact assessment using the assessment of the mandatory haccp and pathogen reduction regulations in the united states as an example the paper concludes with suggestions for future research on quantifying benefits and costs of food safety regulations

on functions quality and timeliness of economic information economic decisions confront more uncertainty as they grow in scope and reach further into the future they are likely to do so increasingly in decentralized economies that expand and diversify the economic incentives to reduce uncertainty and improve predictions and decisions give rise to the demand for large amounts of diverse information this is not a new phenomenon of course but it is revealed more clearly than ever in the present era of great advances in informational technology for now the demand is to a large extent visibly satisfied the knowledge industries or services of inquiring comthe uncertainty about economic information increases with the probability of error in the underlying data and their processing and interpretation many errors cannot be promptly detected and eliminated but can be gradually reduced over time as attested by the revisions in economic statistics this paper presents substantial evidence on the accuracy of provisional estimates of quarterly and monthly changes in 18 important variables measures of several aspects of data quality and of average lags of data release and signal detection are provided for a collection of 110 widely used economic indicators these materials help identify the location of the more serious measurement errors by variables and period and they show that informational lags of 5 and more months are frequent this paper is part of the national bureau of economic research program on economic fluctuations it was presented at the first international symposium on forecasting in quebec city on may 27 1981 and at the ifo institute for economics research in munich on september 23 1981 financial support from the national science foundation and the aid of the graduate school of business of the university of chicago and nber are gratefully acknowledged i am indebted to louis lambros for helpful suggestions and efficient research and to john gould and geoffrey moore for useful comments 1 growth in the modem economy is motivated by the desire to accumulate human and physical resources capital in the most general sense and is accomplished by actions that necessarily have long term consequences the decisions to choose these particular courses of action strategies must therefore be based on similarly long expectations which are fallible as the risk is high so is the premium on any knowledge that might help the decision maker

knowledge measurement and productivity in a research program we introduce a metric based on bayesian probability theory to evaluate the determinants of scientific discovery and use it to assess an international aquacultural research program consisting of a large number of highly varied projects the metric accommodates not only project variety but a detailed breakdown of the sources of research productivity accounting for example for the contributions of failed as well as successful investigations a mean absolute deviation loss functional form permits decomposition of knowledge gain into an outcome probability shift mean surprise and outcome variance reduction statistical precision allowing productivity to be estimated for each of them separately then combined into a single knowledge production relationship laboratory size is found to moderately boost mean surprise but has no effect on statistical precision while investigator education greatly improves precision but has no effect on mean surprise returns to research scale are decreasing in the size dimension alone but increasing when size and education are taken together suggesting the importance of measuring human capital at both the quantitative and qualitative margins

complementarities and comovements short run interindustry comovement may be due either to common shocks or to complementarities that progagate shocks across sectors this paper assesses the importance of input output linkages aggregate activity spillovers and local activity spillovers to comovement in postwar u s manufacturing i find that input output linkages and local activity spillovers are important to comovement while aggregate activity spillovers are not important i find that complementarities are important to aggregate volatility even after i remove observable aggregate shocks from the data local spillovers are particularly important explaining between 15 and 36 percent of manufacturing employment volatility the importance of local spillovers stems from the fact that industries that cluster together in space also comove through time contrary to the marshallian idea that industries with negatively correlated fluctuations should cluster together in order to stabilize local demand

peanut research and poverty reduction impacts of variety improvement to control peanut viruses in uganda a procedure is developed and applied for predicting ex ante impacts of agricultural research on aggregate poverty using as an example the poverty reducing impact of peanut research in uganda market level information on economic surplus changes is combined with a procedure for allocating income changes to individual households characteristics of farmers that affect their likelihood of technology adoption are used to create a technology adoption profile associated changes in poverty resulting from adoption are computed using poverty indices predicted income changes at the household level are aggregated to the market level and reconciled with calculations of economic surplus changes

institutional change in the common agricultural policy of the european community the common agricultural policy cap of the european community ec is a complex institutional structure with major effects on world agriculture this study analyzes the cap from a public choice perspective as a case of induced institutional innovation the demand for change is analyzed as a function of a newly enlarged community time consuming decisions unequal distribution of net benefits increasing budget expenditures and rising pressures to renationalize farm subsidies drive the demand for change alternative institutional arrangements respond to these demands which reflect preferences for fairness and equity as well as improved efficiency in the cap

how should food safety certification be financed an analytical framework where consumers are imperfectly informed about the safety of products is used to investigate the welfare effects of a public certification system several certification fees under alternative structures of certification cost are analyzed by maintaining competition among numerous sellers voluntary certification financed by a per unit fee is efficient and sufficient to signal product safety however mandatory certification linked with a fixed user fee may be necessary if a seller wields monopoly power further certification by a single private agency results in a distorted fee copyright 2001 oxford university press

cost function estimation and quality bias the regulated automobile insurance industry this article explores the implications of endogenous product quality and therefore endogenous output in the empirical estimation of cost functions for regulated automobile collision insurance firms it contains a structural model of such a firm and provides an illustration of the types of biases that can result if data on quality of service are unavailable or otherwise omitted the analysis shows how the directions of biases depend on the nature of the variations in the observed nonquality data a new test suggests that such bias is present in insurance cost functions

monopoly with incomplete information recent theoretical research on principal agent relationships has emphasized incentive problems that arise when the parties involved are constrained by either asymmetric information or their inability to monitor each other s actions here we concentrate on the former constraint and consider the case of a single principal the monopolist the main contribution is to show that under a separability assumption strong conclusions can be drawn about the nature of optimal incentive schemes although the primary focus is on optimal quantity discounts in a monopolized market the results also shed light on related topics such as optimal income taxation and commodity bundling

efficiency effects of agricultural economics research in the united states allocations of research funds across programs are often made for efficiency reasons social science research is shown to have small lagged but significant effects on u s agricultural efficiency when public agricultural r d and extension are simultaneously taken into account farm management and marketing research variables are used to explain variations in estimates of allocative and technical efficiency using a bayesian approach that incorporates stylized facts concerning lagged research impacts in a way that is less restrictive than popular polynomial distributed lags results are reported in terms of means and standard deviations of estimated probability distributions of parameters and long run total multipliers extension is estimated to have a greater impact on both allocative and technical efficiency than either r d or social science research

optimal expenditures for agricultural research and extension implications of underfunding significant increases in agricultural productivity will be needed for the united states to meet its future food policy goals related to an abundant and stable food supply the nation s ability to meet this challenge will depend on the level of investment in agricultural research and extension each dollar of underfunding relative to the economically efficient level of research and extension expenditures a will cost the government 2 56 1 50 discounted if it later makes up for the low investment level or b will cost consumers 4 39 3 07 discounted if the government does not make up for the low level of investment

strategic environmental policy clean technologies and the learning curve in the political discussion it is often emphasized that the environmental service industry which produces a clean factor of production benefits from an early and strong environmental policy this is especially likely if the costs of production are decreasing over time due to learning curve effects surprisingly the environmental service industry has not been integrated into the theory of strategic environmental policy yet our main question is whether a national leadership in environmental policy can pay off if profits of the environmental service industry are taken into account we consider a two period model with one firm in each country competing on a third market emissions can be substituted by the clean factor when deciding upon the production technology the unit costs of producing the clean factor in the second period are decreasing in the quantity produced in the initial period we derive the optimal environmental policy for both periods from a national point of view and show that the presence of the environmental service industry can indeed lead to a national leadership in pollution control

taxes and subsidies for pollution intensive industries as trade policy abstract this paper constructs a model of international oligopoly with negative externalities in production in which optimal environmental policy responses to foreign emission tax and subsidy programs can be calculated it is shown that by granting subsidies for abatement efforts or for a heavily taxed polluting input domestic net welfare is improved by capturing a greater share of the world market since the subsidy programs are supposed to improve the quality of the global environment they can be justified on environmental grounds in addition we show that a pigouvion emission tax restores efficiency in natural resource allocation whereas subsidy programs are in principle used as instruments in imperfectly competitive international markets

sources of output fluctuations in the united states during the inter war and post war years abstract this paper attempts to decompose the sources of fluctuations in industry output into 1 an aggregate national shock 2 industry group specific shocks and 3 idiosyncratic factors the empirical methodology is the engle watson dynamic mimic model the work is motivated as an attempt to compare empirically aggregate single factor theories of the cycle with real business cycle theories emphasizing technology shocks disaggregate data from the inter war and post war periods are examined conclusions on the relative importance of the various shocks seem to be dependent on the period being considered the single index theory of the cycle seems more appropriate for the inter war period

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

evolution of subjective hurricane risk perceptions a bayesian approach abstract how do decision makers weight private and official information sources which are correlated and differ in accuracy and bias this paper studies how traders update subjective risk perceptions after receiving expert opinions using a unique data set from a prediction market the hurricane futures market hfm we derive a theoretical bayesian framework which predicts how traders update the probability of a hurricane making landfall in a certain range of coastline after receiving correlated track forecast information from official and unofficial sources our results suggest that traders behave in a way not inconsistent with bayesian updating but this behavior is based on the perceived quality of the information received official information sources are discounted when a perception of bias and credible alternatives exist

a new data set measuring income inequality this article presents a new data set on inequality in the distribution of income the authors explain the criteria they applied in selecting data on gini coefficients and on individual quintile groups income shares comparison of the new data set with existing compilations reveals that the data assembled here represent an improvement in quality and a significant expansion in coverage although differences in the definition of the underlying data might still affect inter temporal and international comparability based on this new data set the authors do not find a systematic link between growth and changes in aggregate inequality they do find a strong positive relationship between growth and reduction of poverty

social value of public information re examined abstract as an extension of hirshleifer s horse race example into a competitive exchange market framework this paper quantitatively re examines the condition under which social value of public information can be positive for a prototype economy of two risk averse traders we prove that their discordance of beliefs makes the social value of a certain class of inconclusive information either positive or negative depending on whether their endowments are or are not predominantly associated with states they regard as more probable whereas it has been known that information acquisition is always socially wasteful under concordant beliefs

the mystery of the vanishing benefits an introduction to impact evaluation this article provides an introduction to the concepts and methods of impact evaluation the author provides an intuitive explanation in the context of a concrete application the article takes the form of a short story about a fictional character s on the job training in evaluation ms speedy analyst is an economist in the ministry of finance in the fictional country of labas in the process of figuring out how to evaluate a human resource program targeted to the poor ms analyst learns the strengths and weaknesses of the main methods of ex post impact evaluation

a nonparametric analysis of the influence of research on agricultural productivity nonparametric productivity analysis is extended by modeling technical progress as a function of public and private research expenditures results indicate that 30 year lags are required to fully capture the effects of public research expenditures on u s agricultural productivity compared to public research private research has a stronger influence on farm productivity in the short term but a smaller influence in the longer term the internal rate of return is 0 28 for public research and 0 17 for private research

the global configuration of a speculative trading operation an empirical study of foreign exchange trading this paper proposes a theory of firm boundaries based on fore knowledge development and exploitation in speculative or informed trading foreign exchange trading provides this study s empirical context from research on information economics we suggest optimal speculative trading operations are multiunit and globally dispersed alternatively transaction cost economics suggests atomistic actors prevail in the market for fungible commodities like currencies we also develop competing hypotheses about information technology s effects on foreign exchange trading operations speculation arguments predict that the global scope of trading operations will expand after the introduction of generic information technologies transaction cost economics proposes that when atomistic actors do not prevail trading operations will contract after this introduction we test competing predictions with models of the expansion contraction and net change in a firm s global dispersion we estimate these models with data from the population of banks worldwide engaged in interbank foreign exchange currency fx trading from 1974 to 1993 our results uncover two types of firms those that approach the atomistic actor of transaction cost economics and those that resemble the globally dispersed multiunit configuration from our speculation discussion these results encourage reflection on how the theory of the firm differs when firms trade to produce versus speculate

interest rates and expected future budget deficits in the united states several recent empirical studies have found no evidence of a positive association between interest rates and current and past budget deficits one possible explanation for this finding is that interest rates are related much more to the expectation of future budget deficits than to current and past budget deficits in this paper i investigate whether this explanation is valid finding no evidence that it is section ii briefly formulates and discusses the hypothesis under consideration stating some of its implications section iii presents the results of regressing the commercial paper rate moody s aaa bond rate and the ex post real commercial paper rate on current and past government spending budget deficits and real money supplies the regressions have been fitted to the entire sample of monthly data spanning the period between june 1908 and march 1984 and to 11

what is the value of agricultural economics research the output of agricultural economics research is information much of it aimed at designing or improving institutions bayesian decision theory and economic surplus analysis have been suggested as possible approaches to evaluate that information this article takes a critical look at the strengths and weaknesses of combining those approaches for empirical evaluation of agricultural economics research it presents three case studies utilizing prior and posterior probabilities elicited from key decision makers direct application of the probabilities to a simple set of states and actions is best suited to situations involving a single policy making center or a consensus decision making process most economists feel their work has value but few can say how much economists have made significant contributions to our understanding of the value of technology oriented research but have devoted little attention to assessing the benefits of social science research ssr including agricultural economics research aer as accountability concerns have increased federal and state officials increasingly ask for evidence of research impacts many professional associations in the production sciences have drawn on quantitative estimates provided by economists to bolster their claims that research in their areas is a good investment social sciences make do with anecdotal evidence a nascent literature on evaluating social science research including agricultural economics includes studies by gardner

strategic environmental policy under incomplete information this paper introduces incomplete information into recent analyses of strategic environmental policy it is shown how asymmetric information between planners and producers affects national incentives to impose strategic environmental standards on domestic industries in international oligopolistic competition relative to the full information case incomplete information is likely to mitigate allocative distortions originating from strategic behaviour a countervailing effect tending to raise distortion is however revealed from the analysis this effect is absent when governments intervene in free trade through direct production subsidies the results suggest that incentives to capture foreign rents are less reduced due to private information when environmental standards rather than direct production subsidies are the strategic instrument

world country and sector factors in international business cycles do sector specific factors common to all countries play an important role in explaining business cycle co movement we address this question by analyzing international co movements of value added va growth in a multi sector dynamic factor model the model contains a world factor country specific factors sector specific factors and idiosyncratic components we estimate the model using bayesian methods for 30 disaggregated sectors in the g7 economies for the 1974 2004 period our findings show that although there is a substantial role for sector specific factors fluctuations are dominated by country factors the world factor appears to play a minimal role because when using aggregate data the world factor captures both the factor common to all countries and industries and the factor common to the same industry across countries we then examine how these factors evolved as globalization deepened over the past two decades our results suggest that business cycles at a disaggregate level have not become more synchronized internationally this is mainly driven by a substantial fall in the volatility of world shocks during the globalization period rather than a lower sensitivity of sectoral growth to world factors our results also reveal that world factors appear to be more important for industries with a higher level of international vertical integration

social science knowledge and institutional change over the last several decades agricultural economists have made major contributions to our understanding of the impact of advances in natural science knowledge on technical change and of the impact of technical change on economic growth we have also significantly advanced our understanding of the sources of demand for and supply of technical change work carried out within the framework of the induced technical change paradigm has demonstrated that technical change can be treated as largely endogenous to the development process hayami and ruttan 1971 binswanger and ruttan we have made less progress in our attempts to understand the contributions of advances in social science knowledge to institutional innovation or of the contribution of institutional innovation to economic political or social change and our knowledge of the sources of demand for and supply of institutional change remains rudimentary in this paper i suggest an approach to thinking about the sources of demand and supply for institutional change i then proceed to explore the use of social science knowledge and the role of social scientists in the design and evolution of institutional innovations finally i examine the contribution of agricultural economics research and of agricultural economists to the design and evolution of the direct payment approach to farm price and income policy i follow the lead of commons and knight and define institution to include both the behavioral rules that govern patterns of relationships and action as well as decision making units such as government bureaus firms and families the term institutional change will at times be used to refer to both institutional innovation and to changes in institutional performance i

re examining the reported rates of return to food and agricultural research and development reply hurley rao and pardey 2014 analytically and empirically evaluate the internal rate of return irr vis a vis the modified internal rate of return mirr for investments in agricultural research and development r d they find that estimates of the irr are 2 5 to 5 times larger than the mirr for a wide range of assumptions leading them to question the value of the irr as a metric to represent the rate of return to agricultural r d oehmke 2016 defends the irr by arguing that it has important properties that the mirr does not possess in this article we critically examine these properties demonstrating that some are not inherent to the mirr for other properties we simply disagree with oehmke s assessment of their desirability therefore we are not compelled to change our original recommendation

optimal sharing of foodborne illness prevention between consumers and industry the effect of regulation and liability consumers and the food industry can both prevent foodborne illness two questions are explored what is the socially optimal level of preventative effort by each and can tort and regulatory instruments induce such behavior analysis is complicated by two aspects of food safety technology one party s effort can affect the marginal effectiveness of the other party s effort and damage functions can be nonconvex previous analysis of accidents under torts and regulation fails to consider these generalizations indeed results concerning the ability of tort and regulatory instruments to induce first best and second best behavior often contradict previous results in the literature

consumer loss aversion product experimentation and tacit collusion abstract two firms compete to attract loss averse consumers that are uncertain about how well the goods on sale fit their needs to resolve valuation uncertainty firms can allow prospective customers to test experiment their products before purchase we investigate firms dynamic incentives to allow experimentation and analyze the resulting effects on the profitability and the stability of tacit collusion depending on the regulatory regime in place i e whether experimentation is forbidden mandated or simply allowed but not imposed laissez faire the degree of loss aversion has ambiguous effects both on the profits that firms can achieve through tacit collusion and on the stability of these agreements while in static environments consumer welfare is always maximized by a policy that forbids experimentation the opposite happens in a dynamic environment

demand elasticities asymmetry and strategic trade policy abstract this paper shows that demand elasticities and cost asymmetry are important determinants of strategic trade policy in the symmetric case the direction of intervention is critically dependent upon the elasticity of demand under unit elastic demand free trade is optimal under symmetry and a subsidy tax is optimal if the exporting firm has lower higher marginal cost than its competitor if both the exporting governments intervene then the conventional result that the lower cost firm gets the higher subsidy is reversed for inelastic demand however such an equilibrium is unstable in policy space

the rate of return to public sector agricultural r d in the uk 1965 80 1989 the rate of return to public sector agricultural r d in the uk 1965 80 applied economics vol 21 no 8 pp 1063 1086

impact assessment of policy oriented international agricultural research evidence and insights from case studies summary assessing the impact of policy oriented research is fraught with methodological difficulties ranging from attributing influence on policy change to constructing an appropriate counterfactual the six case studies in this special section address these challenges in the context of international agricultural research methodological and analytical lessons are drawn about the uptake and influence of policy oriented research on policy change and about the conduct of cost benefit analysis for such research the authors of the studies effectively used a key informant approach to document uptake and influence for policy reforms that were believed to have incorporated well defined outputs from policy research

toward a theory of induced institutional innovation in this paper we elaborate a theory of institutional innovation in which changes in the demand for institutional innovation are induced by changes in relative resource endowments and by technical change we illustrate from agricultural history how changes in resource endowments and technical change have induced changes in private property rights and in the development of non market institutions we also consider the impact of advances in social science knowledge and of cultural endowments on the supply of institutional change in a final section we present the elements of a model of institutional innovation that maps the relationships among resource endowments cultural endowments technology and institutions

no such thing as a free safe lunch the cost of food safety regulation in the meat industry this study develops theoretical and econometric cost function models for the meat industry to test the hypothesis of safety exogeneity i e that product safety does not affect productive efficiency using plant level data from the census of manufactures this hypothesis is rejected estimates of the impacts of food safety regulation on variable cost of production in the beef pork and poultry industries show that the efficiency costs of food safety regulations could plausibly exceed benefits estimated by the u s department of agriculture costs of regulation per pound of meat are found to be size neutral for all but the smallest plants copyright 2000 oxford university press

the role of international factors in the business cycle a multi country study abstract empirical research has been conducted on the various theories of the business cycle over many countries however very little research has attempted to undertake a multi country disaggregate investigation into the sources of output change this paper decomposes fluctuations in industry output in a particular country into 1 a nation specific shock 2 an industry specific shock 3 a common shock and 4 an idiosyncratic factor using a dynamic factor analysis state space approach the paper finds that the industry specific impulse explains a significant but small part of the variance of the forecast error this provides limited support for the disaggregated real business cycle paradigm

an inquiry into the sources of macroeconomic fluctuations abstract this paper attempts to decompose the sources of fluctuations in quarterly employment by industry and region into 1 an aggregate national shock 2 region specific shocks 3 industry specific shocks and 4 idiosyncratic factors the empirical analysis is motivated by a dynamic theory of the business cycle the empirical methodology is the engle watson dynamic mimic model implemented via the em algorithm the work is motivated as an attempt to compare empirically aggregate single factor theories of the cycle with real business cycle theories emphasizing industrial or regional shocks

institutional innovation and agricultural development abstract this paper elaborates a theory of institutional innovation in which shifts in the demand for institutional change are induced by changes in relative resource endowments and by technical change the supply of institutional innovations responds to advances in social science knowledge and changes in cultural endowments case studies drawing on 1 innovations in land tenure and labor relations in the philippines 2 export promotion and import substitution of agricultural commodities in east asia and 3 farm commodity policy in the united states are presented elements of a general institutional innovation model are outlined

export liberalization and household welfare the case of rice in vietnam vietnam has rapidly become one of the three largest rice exporters in the world in spite of a binding export quota this article uses a multimarket spatial equilibrium model to examine the effect of further liberalization on regional rice prices household data are then used to calculate the welfare impact of these price changes on different household groups the results suggest that although rice export liberalization would raise food prices and exacerbate regional inequality it would also increase average real income and reduce slightly the incidence and severity of poverty we explore several explanations of these apparently paradoxical results

trade in environmental goods and air pollution a mediation analysis to estimate total direct and indirect effects based on panel data covering 114 countries between 1996 and 2011 this study investigates the impact on pollution of trade in environmental goods egs we check the validity of the implicit consequences assumed by the win win scenario in the current trade climate negotiations arguing that market dynamics should guarantee that egs liberalization is automatically in the interest of all countries regardless their market and institutional capacities we show that trade in egs alone fail to address environmental problems effectively in particular although we found efficiency gains from trade in egs in terms of co2 and so2 emissions per 1 us of gdp and more recurrently for net exporters than for net importers our results often failed to highlight environmental effectiveness in terms of total co2 and so2 emissions a general conclusion that emerges from our empirical results is that trade in egs cannot effectively replace non market based solutions when it comes to non trade objectives however it seems to complement them efficiently our multiple equation gmm estimations reveal specific direct indirect and total effects on pollution depending on the countries net trade status leading to several policy recommendations for an increased environmental effectiveness of trade in egs

the value of economic research economic research generates a wide array of benefits these include information technological change and improved policy there are few quantitative studies of the benefits of economic research and some benefits may be misattributed to biological and physical research to be productive economic research must be transmitted and the user must be able to use it therefore investment in extension outreach and economic literacy are important to improve its impact even casual observation suggests that economic research is valuable but noneconomists must be convinced of this since benefits are likely to be concentrated in a small number of successful projects a useful approach to the assessment of the benefits of research is to identify these projects and their results the analysis must recognize that the accuracy of any estimates of benefits is uncertain in addition the argument behind the estimates should be transparent relying on documentation and testimony from users policymakers and noneconomists assessments of the benefits of economic research provide information that can be used both to justify support for economic research and to allocate monies among lines of research this abstract was borrowed from another version of this item

environmental policy when market structure and plant locations are endogenous abstract a two region two firm model is developed in which firms choose the number and the regional locations of their plants both firms pollute and market structure is endogenous to environmental policy there are increasing returns at the plant level imperfect competition between the home and the foreign firm and transport costs between the two markets at critical levels of environmental policy variables small policy changes cause large discrete jumps in a region s pollution and welfare as a firm closes or opens a plant or shifts production to from a foreign branch plant the implications for optimal environmental policy differ significantly from those suggested by traditional pigouvian marginal analysis

structural and productivity change in us agriculture 1950 1982 this paper tests whether structural change in us agriculture is an important channel to tfp growth and evaluates the relative impact of i public research and education policies ii private r d and market forces and iii government farm programs on structural change we specify a structural econometric model fit it to us state aggregate data 1953 1982 and use the associated reduced form model to perform counter factual policy simulations the findings include structural change is a channel to tfp growth in both crop and livestock subsector i e specialization size and part time farming do impact tfp holding other variables constant public r d and education have been at least as important as private r d and market forces for changing livestock specialization farm size and farmers off farm work participation over the study period but private r d and market forces have been relatively more important for crop specialization changes in farm commodity programs had little impact on farm structure over these study period overall we conclude that if public r d and education policies had been unchanged at their 1950 values over 1950 1982 major structural changes in us agriculture would have occurred anyway the forces of private r d and market forces were at work including a decline in the price of machinery services and agricultural chemicals relative to the farm wage

sizing up social science research economists and especially agricultural economists have invested considerable amounts of time and intellectual effort in the question of measuring the benefits of and returns to scientific research and development extensive sets of estimation techniques have been developed and healthy and productive debates about estimated rates of return to science research and development r d and optimal science r d policies have been carried out by economists and agricultural economists in contrast a virtual methodological and empirical vacuum exists in the economics literature with respect to the benefits of and returns to social science research and more especially agricultural economics research this void poses a serious problem for agricultural economics research in the current public research policy environment policy makers and directors of research institutions are confronted with increasingly tight public budgets for r d part of their response has been to seek credible ex ante estimates of

input demands and inefficiency in u s agriculture markov chain monte carlo mcmc methods are used to estimate a seemingly unrelated regression sur system of input demand functions for u s agriculture our demand functions have flexible forms and allow for nonrandom technical inefficiency concavity constraints are imposed at individual data points and the distributions of measures of relative technical efficiency are constrained to the unit interval results are evaluated in terms of characteristics of the posterior distributions of parameters measures of relative technical efficiency and other nonlinear functions of the parameters

strategic policy and environmental quality helping the domestic industry to provide credible information this paper shows that a country can improve an industry s competitiveness by requiring domestic firms to produce at the environmental standards at which they claim to produce or otherwise impose a penalty on those firms found cheating competitiveness will improve because this regulation will help the domestic industry to provide credible information about the environmental quality of its production the credible information will differentiate domestic products from other products on the world market and in this way increase consumers willingness to pay for domestic products even if the government has no preferences for environmental quality it has incentives to regulate its cheaters in order to help the domestic industry to provide credible information and thereby improve competitiveness

the need to rethink agricultural policy in general and to perform some radical surgery on commodity programs in particular discussion the topic of this session as i understood it was the role of agricultural economics in the formulation of agricultural policy it is with some trepidation then that i must begin this discussion with a general statement of disappointment concerning what i consider to be cochrane s failure to address that specific topic i do this knowing full well that the author has through his career and in his previous publications and presentations made extremely important contributions in this topical area particularly in his insightful reviews and analyses most recently his 1983 examination of the twenty two year history of the economic research service cochrane 1983 it would seem to this congressional consumer of agricultural policy and economic analysis that some fundamental issues should have been addressed by the author as they relate to where we have been and where we

the measurement and sources of technical inefficiency in the indonesian weaving industry production function models are estimated with a time series of cross section data on indonesian weaving establishments the sources of technical inefficiency are investigated three firm attributes are identified as being potentially related to firm efhciency tbey are firm ownership age and size the importance of these attributes as sources of inefficiency in the indonesian weaving industry is investigated and the implications of the find ings discussed

convergence in u s productivity growth for agriculture implications of interstate research spillovers for funding agricultural research state crop livestock and aggregate agricultural total factor productivity tfp data 1950 82 are examined for evidence of convergence to a single tfp level convergence or to a steady state rate of growth or conditional convergence our empirical results do not support convergence but do support convergence the rate of convergence is variable and depends on research and development r d spillins from other states private r d and farmers schooling the finding of strong positive interstate spillover effects implies that independent state planning of agricultural research is inefficient and cooperation across states boundaries including establishment of new political jurisdictions for financing public agricultural research can enhance efficiency

targeting poverty alleviation in priority setting for agricultural research abstract this paper provides a brief overview of research priority setting methods at various levels in national research systems noting the changing emphasis from supply to demand driven approaches at both macro and micro levels of priority setting the scope for incorporating a poverty dimension into priority setting is then reviewed within a general framework that recognises the complexity of the link between research investments and poverty alleviation the effectiveness of this targeting is likely to be very situation specific a case study of macro priority setting in pakistan shows the limited scope to target benefits to the poor through re allocation of research resources among commodities relative to a ranking based on the efficiency objective given present knowledge enhancing the efficiency and effectiveness of research systems in promoting broad based technical change should be emphasised more than major efforts to target poverty directly this will involve a combination of supply and demand driven approaches to priority setting at different levels in the research system that will enhance both the efficiency and poverty alleviation impacts of research

disaggregate stochastic trends in industrial production abstract several industries appear cointegrated at a highly disaggregated level but the cointegration is not sufficient to reduce the system to a single common trend instead the results indicate that ten common trends are present in the industrial production aggregate

young workers and quit behaviour a model is set up to explain the quit behaviour of new entrants to the labour market it uses an incentive opportunity approach to integrate existing relevant arguments from search and information theory and human capital analysis it also provides for impetuous quits the model is tested by an examination of a disaggregated data set concerning a single cohort of 16 year old school leavers in the first year after gaining full time work the theory received strong support for example in the main model seven out of the ten coefficients were highly significant interestingly even in a time of deepening recession the existence of the job shopper seemed to be apparent

cultural endowments and economic development what can we learn from anthropology this article discusses a pattern model used to map the general equilibrium relationship relationship between resource endowments cultural endowments technology and institutions one advantage of the pattern model is that helps to identify areas of ignorance our capacity to model and test the relations between resource endowments and technical change is relatively strong our capacity to model and test the relations between cultural endowments and either technical or institutional change is relatively weak a second advantage of the model is that it is useful in identifying the components that enter into other attempts to account for secular economic and social change failure to analyze historical change in a general equilibrium context tends to result in a unidimensional perspective on the relations bearing on technical and institutional change for example historians working within the marxist tradition often tend to view technical change as dominating both institutional and cultural change cultural endowments including religion and ideology exert at least some influence on the supply of institutional innovation cultural endowments make some forms of institutional change less costly to establish and impose severe costs on others there are a number of reasons that one might look to the field of anthropology for guidance in attempting to understand the sources and impact of cultural endowments on economic development one is that anthropology has traditionally embraced a broad conception of culture ethnographic research through its examination of alternative culture patterns has made substantial contributions to institutional reform

real business cycles in this paper we demonstrate how certain very ordinary economic principles lead maximizing individuals to choose consumption production plans that display many of the characteristics commonly associated with business cycles our explanation is entirely consistent with i rational expectations ii complete current information iii stable preferences iv no technological change v no long lived commodities vi no frictions or adjustment costs vii no government viii no money and ix no serial dependence in the stochastic elements of the environment we also provide a completely worked out example of the type of artificial economy we have in mind the time series properties of the example exhibit some major features of observed business cycles although this type of model may not be capable of explaining all of the regularities in actual business cycles we believe that it provides a useful well defined benchmark for assessing the relative importance of factors e g monetary disturbances

arbitrage pricing and the stochastic inflation tax in a multisector monetary economy abstract a dynamic general equilibrium multifactor asset pricing model for a monetary economy with capital accumulation and multisector production is constructed equilibrium clower constraints on some investment goods and some consumption goods are imposed an equilibrium apt model is constructed where the covariance between the inflation tax distorted equilibrium investment returns and fundamental forcing processes are important in determining equilibrium risk prices the model is used to address issues concerning the relative importance of real and nominal factors in asset pricing raised in recent papers by chen roll and ross 1986 and cochrane 1991 1992

patent quality and research productivity measuring innovation with multiple indicators we analyse the determinants of the decline in research productivity using panel data on manufacturing firms in the us for the period 1980 93 we focus on three factors the level of demand the quality of patents and technological exhaustion we develop an index of patent quality using detailed patent information and show that using multiple indicators substantially reduces the measured variance in quality research productivity at the firm level is inversely related to patent quality and the level of demand as predicted by theory and patent quality is positively associated with the stock market value of firms

relative efficiency of r d activities a cross country study accounting for environmental factors in the dea approach abstract this paper applies the production framework associated with the data envelopment analysis dea method to evaluate the relative efficiency of r d activities across countries r d capital stocks and manpower are treated as inputs while patents and academic publications are considered as outputs a three stage approach which involves using dea for evaluating efficiency and using tobit regressions for controlling the external environment is applied to 30 countries in recent years the results show that less than one half of the countries are fully efficient in r d activities and that more than two thirds are at the stage of increasing returns to scale most countries have a more significant advantage in producing sci cum ei publications than in generating patents