competing models of international lending activity abstract four competing models of the world bank s lending to developing countries are constructed and econometrically estimated by pooled time series and cross section data the analysis suggests that a model combining economic and political determinants performs best besides per capita income inflation balance of payment and budget deficit external debt and past growth political determinants such as the capitalist climate or political instability are also important as well as a recipient country s former status as a colony or dominion this politico economic model is successfully used to forecast the distribution of ibrd loans and ida credits among the developing countries

united states export subsidies in wheat strategic trade policy or expensive beggar thy neighbor tactic this paper examines the domestic and international impacts of the u s export enhancement program eep for wheat eep uses targeted in kind subsidies to expand u s exports and was designed specifically to compete with subsidized exports from the european community ec we argue eep cannot be welfare improving for the u s even considering strategic trade theory we then model eep as an in kind constrained targeted export subsidy and determine its price quantity and budgetary effects empirical results show that no exporting country gains from eep and that the intended loser the ec is only slightly harmed we find the export subsidies generate only a small increase in u s wheat exports eep is an expensive program based on our estimates for 1988 government cost of additional wheat exports under eep reached 469 per metric ton

approaches and methods for the econometric analysis of market power a survey and empirical comparison this study discusses two widely used approaches in the new empirical industrial organization neio literature and examines the strengths and weaknesses of the production theoretic approach pta and the general identification method gim for the econometric analysis of market power in agricultural and food markets we provide a framework that may help researchers to evaluate and improve structural models of market power starting with the specification of the approaches in question we compare published empirical studies of market power with respect to the choice of the applied approach functional forms estimation methods and derived estimates of the degree of market power thereafter we use our framework to evaluate several structural models based on pta and gim to measure oligopsony power in the ukrainian dairy industry the pta based results suggest that the estimated parameters of oligopsony power are significantly different from zero while gim based results do not indicate any evidence of oligopsony market power in the ukrainian dairy industry moreover estimations results vary substantially due to the employed estimation procedure

the interaction of foreign exchange and market power effects on german domestic prices this paper illustrates the importance of international influences on domestic markets a model is presented in which changes in a country s terms of trade pass through to industrial prices in varying degrees depending on import penetration and seller concentration empirical results suggest that the 8 4 percent decline in the real external value of the deutsche mark from 1977 to 1983 allowed upward movement of about 2 percent in domestic producer prices of traded goods relative to the gnp price deflator increased market concentration led to a reduced effect while increased import penetration led to some increase in the exchange rate passthrough standard industrial organization models stress the impact of market power and entry conditions on economic performance with particular interest in price effects at the industry level greater concentration is expected to lead to higher prices ceteris paribus while greater ease in entry or a larger competitive fringe implies lower prices the international economics literature indicates that in the absence of trade barriers transactions and transportation costs and market power foreign exchange rate changes will be fully passed through to import and export prices implying that domestic prices of traded goods for an appreciating currency will be adjusted downward by the full amount of the exchange rate change the dramatic changes in exchange rates since the early 1970s provided exporters with new opportunities to enter markets of nations that had a strong currency west germany has been regarded as one such country this paper investigates the effect of exchange rate movements on particular german industrial prices i test to see whether the prominence of imports

foreign aid taxes and public investment abstract using time series data for india we test the foreign aid public investment hypothesis behavioral equations derived from a maximizing framework are estimated after correcting for econometric and data inadequacies of earlier models the results confirm earlier findings regarding the negative relationship between taxes and government investment in the presence of aid however in contrast to the earlier work we find that grants and loans generally go into development projects with no leakages into consumption moreover bilateral aid actually pulls resources out of consumption and puts them into development projects

motivations for aid to developing countries abstract this paper attempts to identify the underlying principles of aid allocation and particularly the balance of motivations as between the needs of recipient countries and the interests of donor countries two alternative models are fitted by cross country regressions to bilateral and multilateral aid flows to some 80 developing countries in 1969 1970 and 1978 1980 the first recipient need model assumes that all aid is given to compensate for shortfalls in domestic resources this model provides a reasonable explanation for the distribution of multilateral aid but it is clearly not applicable for bilateral aid flows the second donor interest model assumes that all aid serves only donor interests defined to cover political security investment and trade interests this model gives generally good explanations of bilateral aid but is a poor fit for multilateral aid the relative importance of the various donor interests differs sharply among donors the paper ends with an analysis of the shift in the balance of aid over the 1970s towards the recipient need element and with a reference to the sharp change in policy in the 1980s towards increasing emphasis on donor interest aid

a simulation model of the u s export enhancement program for wheat nash bargaining game models representing negotiations of export enhancement program eep sales are combined with a quarterly spatial price equilibrium model representing non eep world wheat trade to simulate the eep s impact in late 1985 and early 1986 the benefits of the eep in terms of increased u s export revenues adjusted for subsidy costs are estimated to be less than one percent of total u s revenues for the first quarter of 1986 model simulations also show a lowering of the ccc loan rate to have a much greater potential for increasing u s wheat exports than the eep as operated

samaritan agents on the strategic delegation of aid policy abstract should a donor delegate the responsibility for allocating its aid budget to a less inequality averse agent to alleviate the consequences of the samaritan s dilemma it is facing i show that when aid impact differs across recipients the optimal type of agent depends on whether or not committing to a greater share for countries where the productivity of aid is low raises the combined domestic incomes of recipients this is the case for donors too concerned with efficiency ex post they therefore delegate the decision on the discretionary aid allocation rule to agents more sensitive to distributional issues than themselves

oligopolistic behavior by public agencies in international trade the world wheat market a model of the world wheat market is presented which treats public policies as endogenous the oligopolistic nature of international wheat trade is captured by assuming policy makers form conjectures on the slope of the excess demand function they face and use that information to determine domestic and trade policies the policies reflect differing influences of political interest groups a u s crop shortfall scenario illustrates the different results with endogenous policies compared to the traditional model

price discrimination by u s and german exporters the insensitivity of the u s trade balance to the sharp depreciation of the dollar in the past three years has revived interest in the relationship between exchange rates and the trade balance a central issue in most analyses of the relation between the current account and the exchange rate concerns the price adjustment process the simple integrated competitive market model predicts that local currency prices should change in proportion to the nominal exchange rate for a country too small to influence world prices the relationship between local currency import prices and exchange rates has been referred to as the pass through relationship in the empirical literature in international economics if the proportional relationship between import prices and exchange rates holds pass through is said to be complete accounts of recent u s experience cite the failure of dollar prices of imported goods to rise in proportion to exchange rates i e incomplete pass through as an important factor in explaining the persistence of the trade deficit unfortunately observations on pass through alone provide limited insight into the behavior of markets since incomplete pass through is consistent with at least two fundamentally different paradigms one is the standard competitive model of trade in which the law of one price holds but exchange rate fluctuations are associated with large changes in import demand due to other factors for example if dollar appreciation is correlated with increases in world demand and industry marginal cost is increasing then pass through will be less than complete the other is an imperfectly competitive model in which exporters are capable of price discriminating across destination markets a phenomenon paul krugman 1987 has labeled pricing to market in this model incomplete pass through is typically associated with fluctuations in the markup of price over marginal cost on exports 2 these fluctuations in markups are believed to be countryspecific they do not reflect the behavior of prices to other export destinations both models are plausible explanations of recent u s experience unfortunately it is impossible to distinguish between these competing models using only information on import prices and exchange rates for a single country in order to distinguish between the competing models an empirical analysis of goods prices and exchange rates must be capable of measuring either marginal cost or the markup over marginal cost either of these tasks poses formidable empirical problems much of the empirical literature in industrial organization has been concerned with precisely these issues since markups are an important measure of the competitiveness of industries

estimating aid allocation criteria with panel data in 1990 the net amount of economic aid or official development assistance to all recipients from all multilateral and bilateral sources was about 62 billion an amount that exceeded the gdps of greece and portugal despite the size of this yearly transfer there has been no rigors modeling and estimation of the criteria by which it occurs as a result there is little agreement about the extent to which oda is allocated according to the needs of the recipient countries the purpose of this paper is to develop a rigorous theoretical model of oda allocation that can be used to provide consistent estimates of the importance of recipient needs copyright 1994 by royal economic society

on the vote purchasing behavior of incumbent governments a couple of months before the swedish election in 1998 the incumbent government distributed 2 3 billion sek to 42 out of 115 applying municipalities this was the first wave of a four year long grant program intended to support local investment programs aimed at an ecological sustainable development this temporary grant program differs from traditional intergovernmental grants in several aspects most importantly in the sovereign decision making power given to the incumbent central government in this paper we investigate whether there were any tactical motives behind the distribution of these grants we find support for the hypothesis that the incumbent government used the grant program under study in order to win votes in particular we find strong support for the lindbeck weibull dixit londregan model in which parties distribute transfers to regions where there are many swing voters this result is statistically as well as economically significant we do however not find any support for the model that predicts that the incumbent government transfer money to its own supporters

balanced budget redistribution as the outcome of political competition this paper models balanced budget redistribution between socio economic groups as the outcome of electoral competition between two political parties equilibrium is unique in the present model and a sufficient condition for existence is given requiring that there be enough stochastic heterogeneity with respect to party preferences in the electorate the validity of hotelling s principle of minimum differentiation and of director s law are examined under alternative hypotheses concerning administrative costs of redistributions and voter s possibilities both of abstaining from voting and of becoming campaign activists for one of the parties the policy strategy of expected plurality maximization is contrasted with the strategy of maximizing the probability of gaining a plurality incomes are fixed and known so lump sum taxation is feasible however constraints on tax transfer differentiation between individuals are permitted in the analysis

the industrial organization of congress or why legislatures like firms are not organized as markets this paper provides a theory of legislative institutions that parallels the theory of the firm and the theory of contractual institutions like market institutions legislative institutions reflect two key components the goals or preferences of individuals here representatives seeking reelection and the relevant transactions costs we present three conclusions first we show how the legislative institutions enforce bargains among legislators second we explain why given the peculiar form of bargaining problems found in legislatures specific forms of nonmarket exchange prove superior to market exchange third our approach shows how the committee system limits the types of coalitions that may form on a particular issue

political preferences for the pork barrel a generalization this paper provides a rational explanation for the observation of oversized coalitions often approaching unanimous size in the realm of distributive policies distributive policies are those which concentrate benefits in specific geographic areas states congressional districts while spreading costs through general taxation the explanation offered here that legislators may rationally prefer universalism to hard ball coalition politics generalizes earlier work of weingast and fiorina in particular it extends their results to pork barrel politics i e projects that are economically inefficient and demonstrates how packages of economically inefficient projects can nevertheless be politically popular the main theoretical feature that induces preferences for universalism is uncertainty over the composition of winning coalitions and consequently the desire for the political insurance that universalism provides

distributive politics and the allocation of federal grants understanding the dynamics of policy distribution requires an appreciation of federal grant programs that have achieved a prominent place in nearly all areas of domestic policy the theoretical literature on distributive politics however focuses almost exclusively on a centralized top down view of policy distribution by examining the role of presidents legislators and bureaucrats scholars have ignored participants who have become key actors in the distribution of federal expenditures the recipient jurisdictions this analysis of the allocation patterns under six federal programs shows that local governments exert important influences on the distribution of federal grants and that the distributional patterns and their determinants vary over time the analysis also points out the importance of disaggregation by focusing on programs and recipient jurisdictions as opposed to total federal expenditures and regions states or congressional districts

measuring the intensity of competition in export markets abstract this paper develops an approach to measuring the intensity of competition in international markets using readily available data on destination specific values and quantities of exports at the seven digit industry level the intensity of competition a group of exporters faces in a particular export market is measured by the residual demand elasticity the group faces this elasticity is identified by exchange rate shocks which rotate the supply relation of the source country export group relative to competitors located in other countries we apply this method to german exports of beer and us exports of linerboard paper the resulting estimates of market power appear to be plausible and consistent with other indicators of competition e g market shares the number of competitors providing support for the applicability of our framework in measuring competition in international markets

presidential particularism and divide the dollar politics when inuencing the allocation of federal dollars across the country do presidents strictly pursue maximally ecient outcomes or do they systematically target dollars to politically inuential constituencies in a county level analysis of federal spending from 1984 to 2008 we nd that presidents are not universalistic but particularistic that is they reliably direct dollars to specic constituents to further their political goals as others have noted presidents target districts represented by their co partisans in congress in the pursuit of inuence visavis the legislature but we show that at much higher levels presidents target both counties within swing states and counties in core states that strongly supported the president in recent elections swing state particularism is especially salient during presidential reelection years and core partisan counties within swing states are most heavily rewarded rather than strictly pursuing visions of good public policy or pandering to the national median voter our results suggest that presidents systematically prioritize the needs of politically important constituents

radio s impact on public spending if informed voters receive favorable policies then the invention of a new mass medium may affect government policies since it affects who is informed and who is not these ideas are developed in a voting model the model forms the basis for an empirical investigation of a major new deal relief program implemented in the middle of the expansion period of radio the main empirical finding is that u s counties with many radio listeners received more relief funds more funds were allocated to poor counties with high unemployment but controlling for these and other variables the effects of radio are large and highly significant

on the trade impact of nominal exchange rate volatility what is the effect of nominal exchange rate variability on trade i argue that the methods conventionally used to answer this perennial question are plagued by a variety of sources of systematic bias i propose a novel approach that simultaneously addresses all of these biases and present new estimates from a broad sample of countries from 1970 to 1997 the estimates indicate that nominal exchange rate variability has no significant impact on trade flows

price discrimination in the context of vertical differentiation an application to canadian wheat exports this study examines the ability of the canadian wheat board cwb to price discriminate in bread wheat exports this study models wheat as a vertically differentiated intermediate good and modifies the model of vertical differentiation by mussa and rosen to the realities of wheat import demand the conceptual model isolates the bases of price discrimination and demonstrates that the cwb s ability to exploit cost differences in pricing depends on the extent of the differentiation between canadian and u s wheat this model is implemented using monthly confidential price data provided by the cwb for exports to japan the united kingdom and two markets aggregating remaining exports through canada s west and east coasts for 1982 1994 the data indicate that the cwb charges different prices to different countries for wheat of the same grade and protein content results from the model indicate that the price difference between any two markets is not completely explained by elements of perfect competition however the evidence is mixed regarding the ability of the cwb to utilize all the instruments available to price discriminate thus the cwb s pricing strategy may be more complex and dynamic than the prescription for static producer surplus maximization derived in this study

the president and the distribution of federal spending scholarship on distributive politics focuses almost exclusively on the internal operations of congress paying particular attention to committees and majority parties this article highlights the president who has extensive opportunities both ex ante and ex post to influence the distribution of federal outlays we analyze two databases that track the geographic spending of nearly every domestic program over a 24 year period the largest and most comprehensive panels of federal spending patterns ever assembled using district and county fixed effects estimation strategies we find no evidence of committee influence and mixed evidence that majority party members receive larger shares of federal outlays we find that districts and counties receive systematically more federal outlays when legislators in the president s party represent them

the distribution of public services an exploration of local governmental preferences a local governmental welfare function is specified to explore two of its central characteristics the equity productivity trade off and differential weights across neighborhoods the constrained maximization model is estimated using service outcomes safety in the welfare function as opposed to publicly provided inputs police over neighborhoods the equity productivity trade off is found to be considerable and not all neighborhoods are weighted equally the results show that inequality aversion and unequal concern by local government over service outcomes must be addressed explicitly to understand the observed distribution of publicly provided inputs with important implications for standard analysis of local governmental behavior copyright 1987 by american economic association

political influence in the distribution of agricultural disaster payments this paper examines the impact of committee membership and electoral votes on the distribution of ad hoc agricultural disaster payments across u s counties our results show that both house oversi

party control of state government and the distribution of public expenditures this paper examines the effects of party control of state governments on the distribution of intergovernmental transfers across counties from 1957 to 1997 we find that the governing parties skew the distribution of funds in favor of areas that provide them with the strongest electoral support this is borne out in two ways i counties that traditionally give the highest vote share to the governing party receive larger shares of state transfers to local governments ii when control of the state government changes the distribution of funds shifts in the direction of the new governing party we find only weak evidence that parties reward electorally pivotal counties or counties in electorally pivotal legislative districts finally we find that increased spending in a county increases voter turnout in subsequent elections this suggests that parties have an electoral incentive to skew the distribution of funds to influence future election results and the mechanism through which this works is mobilization rather than conversion of voters in a fixed electorate

election goals and income redistribution recent evidence from albania this paper examines the impact of political competition on block grants from federal to sub federal levels of government we model the extent and direction of income redistribution as determined proximately by the political agendas of central decision makers and at a deeper level by the institutions within which they nd themselves operating we contrast two political objective functions that yield di erent empirical predictions of the ways in which politics should a ect scal policy lessons learned here may prove important in understanding limits on the types of redistribution possible via block grants given the institutional framework in both developing and developed countries 2001 elsevier science b v all rights reserved jel classixcation h1 h7 o1

the competitive structure of u s agricultural exports the competitive structure of u s agricultural exports is examined using a model of exporter behavior based on pricing decisions across destination markets market power is revealed in the adjustment patterns of export prices in response to exchange rate movements the results reject the hypothesis that the export pricing decisions by u s firms are consistent with price discrimination across destination markets for cotton corn and soybeans the strongest evidence against the competitive market structure is obtained for international trade in wheat where results indicate that the two largest importers soviet union and prc may exert market power to obtain lower prices

the macroeconomic impact of development aid a critical survey the early literature explained aid s macroeconomic impact in the context of the dual gap model showing a clear link between aid and growth many now believe that the empirical evidence shows there to be no such relationship this paper critically reviews the different theoretical perspectives the dual gap model the savings debate recipient fiscal response and aid as dutch disease and the empirical debates on aid savings and growth the basis for denying a relationship between aid and growth is shown to be weak though more recent areas of research offer promising directions for future work

donor preferences and recipient fiscal behavior a simultaneous analysis of foreign aid we theoretically develop and empirically estimate a preference model determining foreign aid donor behavior aid access and levels are separately determined by endogenous budgetary allocations the international economic environment the distribution of income between countries basic human needs the small country effect and regional bias we find fungibility of aid in recipient budgets is due to donor and recipient preferences despite the importance of other economic influences we find a significant pro poor country bias in aid allocations although little aggregate influence of basic human needs or regional bias the small country effect is significant for two of six donors jel f35 o19 h 77

estimating the residual demand curve facing a single firm this paper presents an econometric technique for estimating the single firm residual demand curve that does not require the estimation of demand cross elasticities the technique is particularly suited for the estimation of firm market power in product differentiated industries where cross elasticities are notoriously difficult to measure one estimated parameter is directly related to a firm s markup of price over marginal cost when product differentiation is extensive when an industry consists of a dominant firm and a price taking fringe when a consistent conjectures equilibrium is the correct oligopoly solution concept when firms are stackelberg leaders relative to their environment or when firms are perfect competitors the estimates can indicate power over price in other circumstances an instrumental variables technique is employed using firm individuated factor prices to identify firm specific residual demand yet even when instruments are unavailable the technique produces elasticity estimates biased in the conservative direction of disproving market power this methodology is applied to estimate the market power of three firms in an industry characterized by product differentiation brewing over our 1962 82 sample period pabst and coors had similar national market shares and each had high shares in several states yet pabst was virtually a price taker while coors possessed substantial market power anheuser busch had market power in the early part of the sample but little after 1975 when miller brewing changed the competitive nature of the industry

international charity under asymmetric information abstract international charity is often subject to moral hazard and adverse selection problems we show that the burden of informational asymmetries are borne by the most needy countries even when charities design incentive contracts which limit the rents that some countries can extract

goods prices and exchange rates what have we learned import prices typically change by a smaller proportion than the exchange rate between the exporting and importing country recent research indicates that common currency relative prices for similar goods exported to different markets are highly correlated with exchange rates between those markets this evidence suggests that incomplete pass through is a consequence of third degree price discrimination while distance matters for market segmentation borders have independent effects the source of the border effect has not been clearly identified furthermore there is little evidence yet to suggest substantial market power is implied by the observed price discrimination

giving the people what they want the distribution of earmarks in the u s house of representatives the common wisdom in journalistic accounts of earmarking is that congress distributes earmarks on a purely political basis without any consideration for the demand for federal spending academic accounts similarly argue that factors internal to congress are preeminent in determining where earmarks go even more than for other types of pork barrel spending using earmarks appearing in the fiscal year 2008 appropriations bills i search for both chamber based and demand side determinants of the distribution of earmarks i find that both types of factors are significantly related to the number of earmarks that a house member receives this result indicates that even while earmarking members of congress are at least minimally responsive to voter preferences and calls into question whether earmarks should be treated as an outlier within the universe of spending allocation mechanisms

a two part sample selection model of british bilateral foreign aid allocation the allocation of british bilateral foreign aid among developing countries is simultaneously modelled focusing on allocations during the period 1980 87 two aid allocation decisions are analysed using a variant of the lee maddala econometric model the first decision concerns the determination of developing country eligibility for aid while the second concerns the amount of aid eligible countries are allocated given the implied two part decision making process sample selection techniques are employed it is hypothesized that british bilateral aid eligibility and amount decisions are based on bristain s humanitarian commercial and political interests in developing countries results obtained indicate that these decisions are generally consistent with each of these interests especially those relating to the political importance of commonwealth members

congressional committees and the political economy of federal outlays the literature on the organization of the united states congress has been dominated by distributive and informational theory one important source of disagreement between these two theories is their characterization of whether individual legislators can engage in pork barrel activities here we provide evidence which indicates that the pork barrel is alive and well in the contemporary united states congress we focus on whether members of power and constituency committees can direct disproportionate federal expenditures to their districts finding strong and systematic evidence of pork barrel activities by committee members provides empirical support for distributive theories of legislative organization

international charity for the poor i introduction charities transfer billions of dollars annually to help people in other countries survive famines and other hardships due to natural and man made disasters such as droughts and civil wars in this article we address the difficulties charities have ensuring the survival of the life threatened poor overseas without exacerbating income inequality encouraging free riding or undermining recipient countries incentives to invest in the kinds of public works that could reduce their needs international charitable activities are subject to moral hazard principal agent and adverse selection problems due to information asymmetries thus too little charity can go to the truly needy and too much to countries that exaggerate their needs and or shirk indeed the empirical literature is rich with evidence of these effects for example lele and jain 1991 ruttan 1993 kanbur et al 1994 maren 1997 and the world bank 1998 document the disincentive effects of aid alesina and weder 1999 show that more aid goes to countries that are more corrupt cashel cordo and craig 1997 provide empirical evidence that the more aid a country receives the less it taxes cashel cordo and craig 1997 found statistically significant evidence of an inverse relationship between the amount of soft aid grants received and the amount of tax revenues subsequently collected by recipient governments in addition to this evidence of shirking they also found significant evidence of fungibility in which the recipient government spends released funds on other nontargeted budget items furthermore they show that donors appear to be complicit in this fungibility larger soft aid is associated with higher institutional spending such as for public administrators salaries inflows of hard aid loans targeted explicitly to economic development or public works projects show up in expanded spending on social services not expanded investment in public works alesina and weder 1999 found statistically significant evidence of a positive relationship between the share of aid in a government s budget and corruption they argued that high corruption may imply that domestically raised public resources are low and that a higher fraction of public resources are covered by foreign aid 14 also according to tornell and lane s 1999 voracity effect when power over redistributive mechanisms is highly concentrated aid encourages shirking by recipient governments thus in this article we model charities that expect recipients to reallocate revenues but not to reduce tax collections or spending on public works to formally analyze this international income transfer problem we apply the mechanism design techniques of laffont and tirole 1986 that have proven very useful in the design of domestic income maintenance programs there is a long tradition of optimal tax income maintenance program design literature about how aid encourages personal choices that are socially inefficient or self enriching see for example mirlees 1971 besley and coate 1992 or crane 1996 the key issue is that participants may reduce work effort or migrate to qualify for more benefits the impacts of information asymmetries on domestic program costs and implementation are also well known as in besley and coate 1991 1995 but with the exception of besley and coate 1998 the emphasis in that literature is on the design of domestic policies with respect to the incentives of individuals in this article we focus on charity with respect to the incentives of national governments our work on this problem is motivated by the desire to design programs that can address acute life threatening poverty defined as the inability to acquire the level of consumption goods necessary for life as in sen 1985 or ravaillon 1997 we assume that the charitable objective is that everyone has at least a minimum income

recovery and reinvestment act spending at the state level keynesian stimulus or distributive politics we examine the us state level pattern of american recovery and reinvestment act arra spending we relate spending to 1 keynesian determinants of countercyclical policy 2 congressional power and dominance and 3 presidential electoral vote importance we find that the arra is in practice poorly designed countercyclical stimulus after controlling for political variables coefficients on keynesian variables are often statistically insignificant when they are statistically significant they are often the incorrect sign on the other hand statistically significant effects are associated with majority party house of representative appropriations subcommittee and authorization committee membership one striking result is that the elasticity of arra spending with respect to the pre arra ratio of federal grants and payments to federal taxes paid is estimated to be greater than unity in most specifications states previously capturing large amounts of federal funds continue to do so under the arra stimulus

dynamic games and international trade an application to the world corn market dynamic games are a conceptually useful way of analyzing imperfect markets where both buyers and sellers have potential market power previous analysis of imperfect markets was static and limited to either exporters or importers a dynamic game allows the inclusion of both importers and exporters in a multiperiod framework allowing the derivation of reaction functions a nash noncooperative difference game is applied to the international corn market to explore the plausibility of numerical results the results are reasonable and show that the game approach based on a more comprehensive econometric model has a promising future in policy analysis

major determinants of ocean freight rates for grains an econometric analysis econometric analysis of ocean grain rates suggests that ship size and trade volume are of approximately equal importance with distance in determining rates use of large ships reduces at sea costs and hence the role of distance but larger ships appear to incur higher port costs which suggests that efficient port facilities are required for scale economies to be realized policies to improve shipping technology and increase trade volume can lead to lower rates reduce geographic differences among exporters and thus lead to more competitive markets this implies that the role of transportation in trade analysis should not be ignored

is foreign aid fungible the case of indonesia this paper considers whether foreign aid given for specific categories of expenditure is fungible among them and whether aid reduces tax effort by the recipient government models developed to analyze the fiscal relations among different levels of government in the united states are applied to analysis of the impact of foreign aid econometric analysis of data for indonesia reveals that aid is largely spent as the donors intended that aid does not lead to a reduction in tax effort and that aid is not diverted to nondevelopment current expenditures copyright 1990 by royal economic society

estimating incumbency advantage without bias in this paper we prove theoretically and demonstrate empirically that all existing measures of incumbency advantage in the congressional elections literature are biased or inconsistent we then provide an unbiased estimator based on a very simple linear regression model we apply this new method to congressional elections since 1900 providing the first evidence of a positive incumbency advantage in the first half of the century incumbency advantage is the most frequently studied factor in the last 15 years of congressional elections research discovery of the increase in incum bency advantage has sparked controversy over its origins historical pattern cur rent magnitude and electoral democratic and policy consequences even the most basic descriptive information about incumbency advantage is flawed be cause every previous measure based on aggregate data in this literature is plagued by selection bias inconsistencies and inefficiencies we prove this result and also propose a new unbiased and statistically efficient measure that is very easy to calculate congressional elections from 1900 to the present fit our theoretical model our empirical reanalyses do not challenge the existing scholarly consen sus that incumbency advantage is much larger than it once was however we do challenge the prevailing belief that incumbency advantage was nonexistent and the evidence that it was negative in house elections during the first half of this century alford and brady 1988 we show instead that the average advantage of incumbency in these elections was about two percentage points in section 1 of this paper we define incumbency advantage and section 2 gives an intuitive sense of the problems identifying it even in ideal electoral sys tems section 3 formally proves that sophomore surge and retirement slump are biased estimates of incumbency advantage and section 4 briefly reveals the flaws

foreign aid and the question of fungibility this paper analyzes whether the foreign assistance provided for specific categories of expenditure is shifted among them contrary to the wishes of donors it also considers whether aid reduces the tax effort of recipient governments econometric results are presented for the dominican republic that show that the fungibility of aid has resulted in a thwarting of the intentions of donors an attempt is made to account for the observed differences in behavior of individual countries in altering expenditures copyright 1993 by mit press

residual demand measures of market power of russian wheat exporters traditionally the international wheat market has been considered a good example of a market with perfect competition yet several articles provide evidence of imperfect competition and price discrimination in the wheat trade however these studies focused on traditional high quality wheat exporters such as canada and the united states in contrast this article investigates whether russian wheat exporters exercise market power in eight selected importing countries using the residual demand elasticity rde model the article makes two major contributions first it focuses on a nontraditional exporter who exports mainly wheat of mediocre quality to low and middle income countries second the rde model is estimated for the first time using a nonlinear estimator the instrumental variable poisson pseudo maximum likelihood estimator this is important because the double logarithmic functional form can provide biased results in the presence of heteroskedasticity the results indicate that russian wheat exporters can exercise market power in only a few markets while they are price takers in the majority of importing countries