a bargaining theory of inefficient redistribution policies when two policies are available to achieve the same goal why is the relatively inefficient one often observed we address this question in the context of policies used to redistribute income towards special interest groups sigs in a two stage model in the first stage the set of constraints on policy instruments is chosen in the second stage the government and sigs bargain over the level of the available transfer policies restrictions on the use of efficient policies and the use of inefficient ones reduce the surplus over which sigs and governments can bargain there is however an offsetting effect not generally recognized in models of inefficient redistribution an improvement in the government s bargaining position which allows it to capture a larger share of the surplus we show that this positive effect for the government dominates under plausible conditions inefficient policies are the equilibrium outcome under alternative first stage mechanisms for policy selection such as the election of policymakers or in some cases bargaining between sigs and the government jel classification d7 f13 c70 h23

can socioeconomic heritage produce a lost generation with regard to entrepreneurship a considerable amount of literature deals with the influence of institutions on entrepreneurship but for all that little is known about the interplay between institutions and personal determinants of entrepreneurship in this paper the empirical evidence that older people in transition economies have low engagement in entrepreneurial activity is the starting point for analyzing how institutions moderate the relationship between individual characteristics and entrepreneurial choice the results show that the socioeconomic heritage of being exposed to socialism deters entrepreneurship an effect that is more pronounced for high impact entrepreneurship detailed analyses reveal that the effect is driven by devaluation of socialist work experience and the influence of socialism on mindset

development trajectories and new comparative advantages costa rica and the dominican republic under globalization summary this paper compares the experiences of costa rica and the dominican republic in creating new comparative advantages in manufacturing exports and its impact on economic development it makes three main arguments first the apparel sector is currently unlikely to act as an engine of economic development second high public spending in health and education and selective targeting of foreign investment have been fundamental in the creation of comparative advantages away from apparel into exports with higher technological content in costa rica third the new export sectors still lack sufficient linkages to the rest of the economy and most of their value added goes into profits for the transnational corporations

corporate strategies for fdi in the context of latin america s new economic model abstract the nem in latin america radically altered foreign direct investment inflows to the region previously restrictive national policies became ones that facilitated foreign direct investment fdi in the context of new business opportunities transnational corporations tncs took a new look at the region in the context of their evolving corporate strategies examples being efficiency seeking corporate strategies in the automotive mexico and the apparel industry caribbean basin and the market access strategy for services in the telecommunications and electrical energy industries brazil two interrelated problems arose a tnc objectives were often attained but those linked to national development goals often were not and b national policies did not channel fdi to priority development activities

transaction costs and institutional performance in market based environmental water allocation policy reforms in the columbia basin spurred water rights reallocation for ecological recovery transaction costs have caused implementation to lag this paper examines transaction costs and institutional performance in environmental water allocation it evaluates spatial and temporal performance trends in watershed cases along three dimensions of adaptive efficiency water recovery transaction costs and program budgets performance trends demonstrate intrastate variability and volatility over time due to the importance of local institutional capacity which is uneven within states higher levels of water recovery may coincide with moderate to high transaction costs and program budgets particularly during initial implementation efforts this finding reflects investments in multilevel policy reform to strengthen enabling conditions and adapt to unintended consequences jel q25 q58

the rise of europe atlantic trade institutional change and economic growth the rise of western europe after 1500 is due largely to growth in countries with access to the atlantic ocean and with substantial trade with the new world africa and asia via the atlantic this trade and the associatedcolonialism affected europe not only directly but also indirectly by inducing institutional change where initial political institutions those established before 1500 placed significant checks on the monarchy the growth of atlantic trade strengthened merchant groups by constraining the power of the monarchy and helped merchants obtain changes in institutions to protect property rights these changes were central to subsequent economic growth

share issue privatizations as financial means to political and economic ends abstract this study examines how political and economic factors affect the offer price share allocation and other terms governments choose when they privatize state owned enterprises via a public share offering using a 59 country sample of 630 share issue privatizations sips with total proceeds of over 446 billion during the period 1977 1997 we find that governments consistently underprice sip offers tilt their share allocation patterns to favour domestic investors impose control restrictions on privatized firms and typically use fixed price offers rather than book building or competitive tender offers all to further political and economic policy objectives

collective learning effective demand loss of work and loss of direction the growing regional divide within the uk mackay r r and davies r collective learning effective demand loss of work and loss of direction the growing regional divide within the uk regional studies the local economy relies on a division of labour that develops highly specialized skills in searching for an understanding of the growing work gap within the united kingdom emphasis is placed on recessions that connect to loss and redundancy of physical and human capital high levels of regional unemployment following deindustrialization convert into high levels of regional non work in later years the loss of an economic base leaves a gap in the community and economy that people struggle to bridge market forces work strongly against certain groups in society including those at some disadvantage in the labour market mackay r r and davies r

latin america s new economic model micro responses and economic restructuring abstract this paper introduces a special issue on the microeconomics of latin america under the new economic model nem the paper reviews the rationale and policies of the nem and analyzes the impact of the reforms at the macroeconomic sectoral and microeconomic levels at the firm level the contributions to this issue demonstrate that a considerable adjustment process is taking place as sectoral structural change indices demonstrate however this has not resulted in widespread shifts of resources between sectors nor has it resulted in significant improvement in overall employment productivity and growth the authors analyze the reasons for this disjuncture and suggest policy alternatives

economic impacts of el nino southern oscillation evidence from the colombian coffee market el nino southern oscillation enso is a naturally occurring phenomenon that affects weather around the world past enso episodes have had severe impacts on the economy of colombia we study the influence of enso on colombian coffee production exports and price our structural econometric specification is consistent with an economic model of the market for colombian coffee which in the short run is characterized by a downward sloping demand curve and by a vertical supply curve we show that el nino i e positive shocks to enso is beneficial for colombian production and exports and decreases the real price of colombian coffee on the contrary la nina i e negative shocks to enso depresses colombian coffee production and exports and increases price however the overall impact of enso shocks is small both in the short run and in the long run shocks to international demand for colombian coffee are more relevant than supply side shocks in colombia in explaining the dynamics of the price of colombian coffee our results suggest that a given coffee price shock can have beneficial detrimental or negligible effects on the colombian economy depending on its underlying cause as a consequence policy responses to coffee price shocks should be designed by looking at the causes of the shocks

factor endowments inequality and paths of development among new world economies whereas traditional explanations of differences in long run paths of development across the americas generally point to the significance of differences in national heritage or religion we highlight the relevance of stark contrasts in the degree of inequality in wealth human capital and political power in accounting for how fundamental economic institutions evolved over time we argue moreover that the roots of these disparities in the extent of inequality lay in differences in the initial factor endowments dating back to the era of european colonization we document through comparative studies of suffrage public land and schooling policies systematic patterns by which societies in the americas that began with more extreme inequality or heterogeneity in the population were more likely to develop institutional structures that greatly advantaged members of elite classes and disadvantaging the bulk of the population by providing them with more political influence and access to economic opportunities the clear implication is that institutions should not be presumed to be exogenous economists need to learn more about where they come from to understand their relation to economic development our findings not only contribute to our knowledge of why extreme differences in the extent of inequality across new world economies have persisted for centuries but also to the study of processes of long run economic growth past and present

the state and economic involution russia through a china lens abstract why has the russian economy declined at the rate the chinese economy has grown in china the party state has made possible the decentralization of property relations and the hardening of budget constraints whereas in russia the disintegration of the party state has led to privatization and soft budget constraints whereas the former combination entailed accumulation the latter combination entailed involution that is an economy that eats away at its own foundations by funnelling resources from production to exchange russia s involution has proceeded in a combined mode that is through a series of phases in which government policies try to rectify the unintended consequences of previous policies involution is also uneven as different industries adopt different strategies some rapidly exited from the old order and then disintegrated while others voiced their demands to the state and declined more slowly

winter blues a sad stock market cycle and god said let there be light and there was light and god saw that the light was good genesis 1 3 depression has been linked with seasonal affective disorder sad a condition that affects many people during the seasons of relatively fewer hours of daylight experimental research in psychology has documented a clear link between depression and lowered risktaking behavior in a wide range of settings including those of a financial nature through the links between sad and depression and between depression and risk aversion seasonal variation in length of day can translate into seasonal variation in equity returns based on supportive evidence from psychology which suggests sad is linked closely with hours of daylight we consider stock market index data from countries at various latitudes and on both sides of the equator we model differences in the seasonal variation of daylight across coun

economic performance through time prize lecture to the memory of alfred nobel december 9 1993 this abstract was borrowed from another version of this item

debt and communications technology diffusion retrospective evidence this study has evaluated the relationship between debt in the capital structure of firms and the dynamics of broadband and digital technology adoption in the united states based on a large dataset on local exchange carriers in the united states over a contemporary historical fourteen year period from 1988 to 2001 using treatment effects modeling the impact of debt in impacting the levels of firms broadband deployment has been found to be negative and significant the primary source of debt in the sector has been in the form of arm s length corporate bonds and the assumptions of the monitoring hypothesis associated with such debt that lenders in the face of information and collective actions problems might not be able to control managers and hence invest less in highly technology intensive situations are supported by the data additionally the data set has been split into separate sets for two periods one between 1988 and 1995 for the period before the telecommunications act of 1996 came into force and the other set between 1996 and 2001 and the results have stayed consistent a test of the coefficients between the two periods has shown that the negative impact of leverage on broadband deployment has become stronger after the introduction of competition in the sector and this has suggested that the change in the institutional logics between the two periods has been of material impact in influencing lenders perceptions

export processing zones in the dominican republic transforming manufactures into commodities this paper examines the performance of export processing zones in the dominican republic it shows that in specializing in unskilled labor intensive export processing in the context of competitive devaluations between central american countries the dominican republic has experienced immiserizing employment growth in these circumstances the export of labor intensive manufactures is akin to that of primary commodities exporting countries which rely on unskilled labor and which fail to make the transition to higher value added production exports are thus likely to experience declining terms of trade the conclusions of this case study are considered to have wider relevance to world bank and international monetary fund inspired structural adjustment programs in the region

maquila economic reform and corporate strategies abstract corporate strategies in maquila have changed over time while they were originally geared only to the exploitation of low paid low skilled labor nowadays firms are upgrading human capital and increasing the scope and technological complexity of production processes the adoption of the new economic model in host countries aimed precisely at this type of strategy change but cannot solely be credited for it in addition policies regarding maquila under the nem did not achieve all the stated goals regarding corporate strategy change trends in local procurement and technology transfer are still unsatisfactory strengthening of local supply and absorption capabilities is required

meso economic filters along the policy chain understanding the links between policy reforms and rural poverty in latin america abstract the paper clarifies the meso economy concept by defining it as comprising both the market mechanisms and administrative procedures through which policy decisions and market signals trickle down to the household level three main bodies of literature are reviewed the policy oriented literature in which the meso economy was initially considered the transaction cost approach analyzing market and policy failures and the micro economy level of agricultural household models the paper develops a synthesis of macro meso and micro economic perspectives which focuses on the roles played by three levels of filters intervening along the policy chain implications for policy and research are drawn

a review of avner greif s institutions and the path to the modern economy lessons from medieval trade avner greif s institutions and the path to the modern economy lessons from medieval trade cambridge university press 2006 is a major work in the ongoing project of many economists and economic historians to show that institutions are the fundamental driver of all economic history and of all contemporary differences in economic performance this review outlines the contribution of this book to the project and the general status of this long standing ambition

social divisions and institutions assessing institutional parameter variation this paper investigates the hypothesis that the association between property rights institutions and income is weaker in countries with high social divisions it argues that social divisions should have a negative effect on perceived institutional inclusiveness which in turn should depress institutional payoffs absent a property rights indicator that captures the perceived inclusiveness of institutions social divisions should then weaken the observed association between property rights institutions and income the empirical results support this hypothesis and highlight the importance of evaluating whether the institutions measure used captures the institutional framework applying to the population at large

policy directions for the new economic model in latin america abstract the new economic model nem has been extremely successful in reducing inflation and in increasing exports but quite disappointing in terms of the growth of output and productivity it is argued that this calls for a second generation of reforms especially centered at the plant level and its surrounding factor markets to close the huge productivity gap separating firms from best practice and so enable the accelerated growth rates typical of successful late starters policies should emphasize the systematic identification of those technologies and practices best suited to local conditions and their rapid transfer adaptation and diffusion throughout the economy

rationality in psychology and economics the task i shall undertake here is to compare and contrast the concepts of rationality that are prevalent in psychology and economics respectively economics has almost uniformly treated human behavior as rational psychology on the other hand has always been concerned with both the irrational and the rational aspects of behavior in this paper irrationality will be mentioned only obliquely my concern is with rationality economics sometimes uses the term irrationality rather broadly e g becker 1962 and the term rationality correspondingly narrowly so as to exclude from the domain of the rational many phenomena that psychology would include in it for my purposes of comparison i will have to use the broader conception of psychology one point should be set immediately outside dispute everyone agrees that people have reasons for what they do they have motivations and they use reason well or badly to respond to these motivations and reach their goals even much or most of the behavior that is called abnormal involves the exercise of thought and reason freud was most insistent that there is method in madness that neuroses and psychoses were patients solutions not very satisfactory solutions in the long run for the problems that troubled them the assumption that actors maximize subjective expected utility economic rationality supplies only a small part of the premises in economic reasoning and that often not the essential part the remainder of the premises are auxiliary empirical assumptions about actors utilities beliefs expectations and the like making these assumptions correctly requires an empirically founded theory of choice that specifies what information decision makers use and how they actually process it this behavioral empirical base is largely lacking in contemporary economic analysis and supplying it is essential for enhancing the explanatory and predictive power of economics

el nino la nina and world coffee price dynamics coffee is produced in equatorial and subequatorial regions of the world which are also most affected by el ni no southern oscillation enso enso events have a tendency to amplify weather conditions such as droughts or excess precipitation in the affected regions resulting in production shortage or excess supply subsequently impacting agricultural commodity prices in this research we assess effects of enso events on world coffee price dynamics using the monthly data between march 1989 and december 2010 we employ smooth transition autoregression framework to examine nonlinear dynamics of enso and coffee prices and illustrate the results of this research using generalized impulse response functions we find that enso events indeed have short term impacts on coffee prices the research findings are of interest to coffee producers and intermediaries in the coffee markets as well as researchers in the fields of environmental and development economics jel classifications c32 q11 q54

are there enso signals in the macroeconomy abstract whether enso has affected u s macroeconomic performance has been a matter of dispute to address the issue we explore whether there has been any co cyclicality of enso fluctuations and the rates of inflation and economic growth over the 1894 1999 timespan and failing this whether aperiodic enso shocks have had any impact on these variables neither co cyclicality nor aperiodic shocks are discernible while enso may briefly influence the performance of particular sectors of the economy in particular regions as documented by the previous literature such locally important effects vanish into the noise surrounding macroeconomic trends in an economy as large and complex as that of the u s

export processing zones in the dominican republic schools or stopgaps summary the following paper explores the variable consequences of offshore manufacturing in the dominican republic while foreign transplants have been treated as tenants in most of the country and have thereby made transitory contributions to export and employment growth they have been treated as tutors in the cibao valley and have thereby made more lasting contributions of skill and technology what accounts for the variation i find that the agro commercial elites who have traditionally dominated the cibao valley are simultaneously more tolerant of foreign investment than the import competing industrialists found in the capital of santo domingo and more likely to diversify into manufacturing than the absentee landlords found elsewhere in the country

rational choice the contrast between economics and psychology rational choice the published record of a conference on economics and psychology frames the issues as a contest between economic theory and the falsifying evidence from psychology according to a third perspective that of experimental economics most standard theory provides a correct first approximation in predicting motivated behavior in laboratory experimental markets but the theory is incomplete particularly in articulating convergence processes in time and in ignoring decision cost this view has roots in the work of herbert simon and sidney siegel but it is not plainly represented in contemporary research in economic pyschology