market state and civil organizations in latin america beyond the debt crisis the context for rural development abstract the development strategy emerging in latin america implies a sharply redefined balance in the relative roles of the market the state and civil organizations market liberalization has been extensive and intense efforts have been undertaken to make the new rules credible the state has been divested of many productive and regulatory activities but descaling is a reflection of short run stabilization policies and signaling not of long term tendencies since an active state remains strongly in demand civil organizations are assuming active roles as alternative forms to produce and service members and as pressure groups agriculture has gained considerably from the policy reforms together with democratic representation and decentralization of governance this gives renewed opportunities for successful rural development initiatives

microstructure noise realized variance and optimal sampling a recent and extensive literature has pioneered the summing of squared observed intra daily returns realized variance to estimate the daily integrated variance of financial asset prices a traditional object of economic interest we show that in the presence of market microstructure noise realized variance does not identify the daily integrated variance of the frictionless equilibrium price however we demonstrate that the noise induced bias at very high sampling frequencies can be appropriately traded off with the variance reduction obtained by high frequency sampling and derive a mean squared error mse optimal sampling theory for the purpose of integrated variance estimation we show how our theory naturally leads to an identification procedure which allows us to recover the moments of the unobserved noise this procedure may be useful in other applications finally using the profits obtained by option traders on the basis of alternative variance forecasts as our economic metric we find that explicit optimization of realized variance s finite sample mse properties results in accurate forecasts and considerable economic gains copyright 2008 wiley blackwell

decentralizing an economy the role of bureaucratic corruption in china s economic reforms government interventions in markets through price quality and quantity controls impose disequilibria on that process by disallowing cash price fluctuations to clear markets contracting parties are thus forced to create alternative exchange channels to achieve consumption and production equilibria the process of solving government induced market disequilibria using alternative and particularly sub rosa methods of decentralized transacting is popularly termed corruption in the case of centrally controlled economies the most prominent practitioners of corruption are the officials of the government their simultaneous actions of enforcing and breaking the system s rules substantially influence the level and distribution of income in an economy for these reasons its study is important in this note i discuss the role of corruption within one economy in particular that of the people s republic of china since 1949 the people s republic of china has been organised and administered at least on paper and depending on the year to a greater or lesser degree as a centrally controlled economy beginning in 1978 however deng xiaoping and his co leaders set out to re establish some private incentives in china s economy their intentions were to assert individuals right to transact with each other and therefore ease problems encountered in the central coordination of agricultural and industrial production to do this they re established some private property rights and allowed decentralized markets a larger role in allocating scarce goods within these markets they allowed prices to fluctuate they by no means however relinquished all control still today the government maintains economic plans and quantity targets and closely monitors price fluctuations these reforms begun in 1978 and on going today have provoked a barrage of articles decrying the extensive amount of corruption they supposedly have incited within the chinese system journalistic criticism comes not only from international but domestic sources as well mainland newspapers for example document corruption s various forms in a single month december of 1985

political economic markets perts and pests in food and agriculture j i lyniversity of california berkeley jjept of agricultural and resource economic l working paper al cljdare i lorking paper 0 231 politic eco lic l rxets a d pests i j food l ti achiculture by per ts cordon c rausser ja nlnl tt junot tlon a riii ent st ticn giannini fou 1cl itiol1of ar ricultllrnj econo ll i cs july 11 w

credible commitment and success with public enterprise reform abstract this paper studies why some efforts at public enterprise reform fail and why others succeed economic reforms are intended to increase efficiency and thus help sustain long term growth yet many governments have had difficulty sustaining the reforms they initiated and have reintroduced rigid controls over markets and enterprises this is because either in the process of implementation the government discovers that the costs of carrying the reform further are greater than the expected efficiency gains or the public is skeptical that the new policies can be sustained and does not take the actions necessary for the gains to be realized this paper develops a new institutionalist framework and employs various measures of policy commitment and net gain from continued reform to analyze these issues the paper suggests ways in which the potential success or failure of a reform can be assessed with implications for the steps that reformers might take to increase the chances of success

a three gap model of foreign transfers and the gdp growth rate in developing countries abstract a simplified macroeconomic framework is developed for the fiscal gap which is considered to be an important stumbling block for adjustment with growth in highly indebted developing countries distinctive characteristics of a fiscally constrained economy are compared with those of economies constrained either by the availability of savings or foreign exchange tentative implications for external conditionality accompanying debt relief measures are derived

technological capabilities and industrialization abstract this paper reviews the implications for industrial strategy of recent research on technological capabilities at the firm and national levels after exploring the nature and determinants of microlevel technological development a simple framework for explaining the growth of national capabilities is set out based on the interplay of incentives capabilities and institutions each may suffer market failure and so require corrective intervention the experience of some industrializing countries is described to assess the validity of this framework it is concluded that interventions carefully and selectively applied are necessary for industrial success

brazilian privatization in the 1990s abstract this paper makes a partial assessment of the brazilian privatization program in the 1990s the article focuses mainly on the fiscal impact of asset sales which we argue has been relatively small we conclude that the failure of the governments attemps has reduced the fiscal benefits of privatization and inhibited the goverment s capacity to impose limits on buyers who have increased their market power through the acquisition of state owned enterprises in practice the main objective of the privatization program has been to highlight the commitment to market orieted reforms in a certain sense privatization has created its own logic beyond its original objectives

the political economy of inflation and stabilization in developing countries the traditional literature on inflation in developing countries has focused on three main determinants of inflationary pressures a money creation b fiscal imbalances and c cost push elements while the first two factors have been emphasized by authors of a monetarist persuasion cost factors have played a crucial role in the structuralist theories developed during the 1950s and 1960s however more recent analyses on inflation and stabilization have shifted their attention away from traditional direct economic causes of inflation such as money creation toward political and institutional determinants of inflationary forces this new literature which has come to be known as the political economy approach to macroeconomic policy has built on some important insights of game theory and the theory of public choice trying to explain why some governments decide to run large fiscal deficits and to rely heavily on the inflation tax typically in answering these questions this recent strand of the literature has emphasized the role of political instability credibility reputation and political cycles 2 in spite of providing some important new insights into the determinants of inflation this new literature is subject to two limitations first until recently most of the contributions have been theoretical without providing empirical tests on their most important implications and second the emphasis has been almost exclusively on the industrialized countries ignoring the developing nations the purpose of this article is to discuss selectively some of the most important insights of this new literature on policy making from the developing countries perspective i will emphasize the policy implications of this approach to inflationary analysis and discuss some of the limited empirical results

resistance to reform status quo bias in the presence of individual specific uncertainty comment why do governments so often fail to adopt policies which economists consider to be efficiency enhancing our answer to this question relies on uncertainty regarding the distribution of gains and losses from reform we show that there is a bias towards the status quo and hence against efficiency enhancing reforms whenever some of the individual gainers and losers from reform cannot be identified beforehand there are reforms which once adopted will receive adequate political support but would have failed to carry the day ex ante the argument does not rely on risk aversion irrationality or hysteresis due to sunk costs jel d72 f13 why do governments so often fail to adopt policies that economists consider to be efficiency enhancing this is one of the fundamental questions of political economy the answer usually relies on what may be

semiparametric duration models in this article we consider semiparametric duration models and efficient estimation of the parameters in a non iid environment in contrast to classical time series models where innovations are assumed to be iid we show that in for example the often used autoregressive conditional duration acd model the assumption of independent innovations is too restrictive to describe financial durations accurately therefore we consider semiparametric extensions of the standard specification that allow for arbitrary kinds of dependencies between the innovations the exact nonparametric specification of these dependencies determines the flexibility of the semiparametric model we calculate semiparametric efficiency bounds for the acd parameters discuss the construction of efficient estimators and study the efficiency loss of the exponential pseudolikelihood procedure this efficiency loss proves to be sizeable in applications for durations observed on the paris bourse for the alcatel stock in july and august 1

estimation of high frequency volatility an autoregressive conditional duration approach we propose a method to estimate the intraday volatility of a stock by integrating the instantaneous conditional return variance per unit time obtained from the autoregressive conditional duration acd model called the acd icv method we compare the daily volatility estimated using the acd icv method against several versions of the realized volatility rv method including the bipower variation rv with subsampling the realized kernel estimate and the duration based rv our monte carlo results show that the acd icv method has lower root mean squared error than the rv methods in almost all cases considered this article has online supplementary material

why are prices sticky preliminary results from an interview study this paper reports preliminary results from a large research project on business pricing which is currently underway the idea is to use interviews with actual price setters to assess the validity of a dozen theories of price stickiness the rather unorthodox for economists methodology is defended the research design is described briefly and a few results based on the first 72 interviews out of a projected 200 are presented this sample suggests that the median firm changes its price annually and that price adjustments typically lag 3 4 months behind shocks to demand or cost this abstract was borrowed from another version of this item

the special problems of small countries abstract the paper describes the characteristics of small economies and discusses the advantages and disadvantages arising from these characteristics it is shown that small economies by their very nature tend to be less diversified and to have relatively high foreign trade risks in spite of these drawbacks a number of small economies have achieved high rates of economic growth some reasons given to explain this success are the relatively small size of the agricultural sector concentration on labor intensive exports and sociological and psychological factors such as the ability to respond in a flexible manner to changes the paper ends with a discussion on whether the drawbacks of small size can be overcome by economic integration it is argued that the experience in this regard is disappointing

why are stabilizations delayed when a stabilization has significant distributional implications e g tax increases to eliminate a large budget deficit socioeconomic groups may attempt to shift the burden of stabilization onto other groups the process leading to stabilization becomes a war of attrition each group attempting to wait the others out and stabilization occurring only when one group concedes and bears a disproportionate share of the burden the authors solve for the expected time of stabilization in a model of rational delay and relate it to several political and economic variables they motivate this approach and its results by comparison to historical and current episodes copyright 1991 by american economic association

rent seeking and international commodity agreements the case of coffee although quotas are known to create opportunities for rent seeking such effects have not been examined in the context of international commodity agreements we hypothesize that export quotas imposed by the international coffee agreement ica by creating quota rents in coffee exporting countries encourage directly unproductive dup behavior by domestic groups seeking to capture such rents such behavior can cause substantial economic waste and undesirably alter income distribution the allocational and distributional effects of even moderate rent seeking behavior could be sufficient to transform a coffee exporting country s expected welfare gain from ica quotas into a welfare loss an understanding of these effects and a measure of their magnitude is crucial to any evaluation of the ica the classic analyses of international commodity agreements have focused on how such agreements affect the commodity terms of trade and export revenue instability 2 surprisingly little work exists on the welfare effects of commodity agreements within exporting countries particularly on the income distribution effects or dup activity the agreements might engender 3 the papers by g mcmahon and h dick and colleagues are partial exceptions 4 mcmahon shows that kenya s response to ica quotas the government banned new coffee plantings in an effort to control output was inefficient and had regressive income effects dick and colleagues compare the effects of buffer stocks and export quotas on a domestic economy using a general equilibrium model and find that quotas are better because they shift resources from

the implications of increasing economic openness for real wages in developing countries 1973 1990 abstract our study shows that increasing economic openness is neither necessarily good nor necessarily bad for real wage growth in developing countries economic growth investment share growth and productivity growth not export share growth are the determinants of real wage growth we also find that the story of wage determination changed in the 1980s compared to the 1970s this change may be due to the implications of heightened competitive pressures in the world market or it may be the result of the debt crisis the main policy implication of our findings is that governments who want to promote growth and the living standards of their workers have to focus explicitly and primarily on increasing investment and productivity growth

directly unproductive profit seeking dup activities this paper propses directly unproductive profit seeking dup activities as a general concept that embraces a wide range of recently analyzed economic activities including the subset of rent seeking activities considered by krueger it then proceeds to provide a synthesis and generalization of the welfare theoretic analysis of such activities by developing a fourfold categorization of cases depending on the levels of distortions before and after the dup activity thus a unification and overview of the subject are achieved

market power in international commodity trade the case of coffee this paper studies the impact of market power on international commodity prices i use a standard oligopoly model and exploit historical variations in the structure of the international coffee bean market to assess the impact of a cartel treaty on coffee prices and its global welfare consequences the results suggest that the international coffee agreement ica 1965 89 raised its price by 75 above the cournot competitive level annually transferring approximately 12 billion from consumers to exporting countries and its lapse in 1989 explains four fifths of the subsequent price decline that is the coffee crisis

why and when do governments initiate public enterprise reform initiating public enterprise reform is a complex decision influenced by economic factors as well as the ideological biases and personalities of political leaders nevertheless the use of a contracting framework yields important generalizations about what drives the decision this article argues that the decision depends fundamentally on the potential efficiency gains from the reform and its associated transactions costs costs arise because of asymmetries in information and opportunism problems that usually plague contract negotiations the article identifies observable variables that may affect either the potential gains or the transactions costs uses them to construct a simple probit decision making model and tests the model using data from fifteen developing countries over a twenty year period

menu costs posted prices and multiproduct retailers we use a unique store level data set to directly measure menu costs and to study the price change process at a large u s drugstore chain we compare and contrast the magnitude of these measures with similar measures from four large u s supermarket chains we find that 1 the actual magnitude of menu costs as a share of revenues 2 menu costs per price change 3 the frequent use of promotional pricing and 4 the use of weekly pricing rules are similar across both retail formats given that the main common features of these two types of retail formats are that i they both use posted prices and ii both are multiproduct retailers selling a large number of products our findings suggest that the magnitude of the menu cost components we measure and the price change practices we document may be generalizable across retail formats with these two features

on estimating market microstructure noise variance abstract we study the market microstructure noise variance estimation of high frequency stock prices based on the hansen and lunde 2006 approach we propose estimates using subsampling method at different time scales we conduct a monte carlo study to compare our method against others in the literature our results show that our proposed estimates have lower absolute mean error and root mean squared error and their performance is quite stable at different time scales

the income distribution effects of the kenyan coffee marketing system abstract in order to meet its obligations to the international coffee agreement kenya regulated output from 1964 1972 and 1981 1985 by banning the planting of new coffee trees with the use of a large dynamic computable general equilibrium model we attempt to show that kenya suffered significant income losses due to the inefficiency of its internal quota system more importantly as coffee has been the most lucrative crop in kenya over the last 30 years the restriction of coffee expansion resulted in very large distributional effects the use of a coffee tax coupled with an increased expansion of coffee hectarage in the quota years would likely have significantly reduced the incidence of poverty in kenya by redistributing income towards farmers in coffee zones who historically did not grow coffee farmers in non coffee zones and landless rural labourers

industrial policy and exchange rate scepticism the aim of the present paper is to put in historical perspective the development thinking on the relationship between industrial and exchange rate policies the first section focuses on the thought of the so called pioneers of development economics specifically their preference for protectionism and their belated recognition that an exchange rate policy could act as a substitute to it in the second one we analyze the exchange rate skepticism that arises out of the theories that identify a foreign constraint to growth in addition to the one revealed by the pioneers the third section briefly complements the previous discussion with reference to macroeconomic formulations that allow for short run contractionary effects of a devaluation reinforcing the skepticism in question in the fourth section we discuss the revival of development thinking in the 1980s and its discussion about east asian trajectories a literature that placed great emphasis on industrial policy finally in the fifth section we discuss the new historical facts and the new development macroeconomics models that are putting an end to exchange rate skepticism

sustainable development an introduction abstract the methodologies and key results of the papers in this special issue are summarized with emphasis on the limits to growth that developing and postsocialist economies are likely to face over the coming 5 to 10 years

the welfare implications of brazil s coffee export price subsidies during the ica to increase coffee export revenues during the international coffee agreement brazil provided selected purchasers with export rebates that could be used to pay for future coffee purchases this subsidy mutated and grew over time encouraged by rent seeking the subsidy had huge cost to the brazilian treasury 9 8 billion in constant 1982 us dollars or about 13 of coffee export revenues as exports were usually quota constrained the subsidy increased brazil s international coffee price particularly during 1980 1986 absolutely and relative to its competitors prices the unexpected variation in brazil s price also caused the new york coffee sugar and cocoa exchange to terminate trading in brazilian coffee futures making it more costly to hedge brazilian coffee until today the econometric evidence is mixed but it seems likely the subsidy reduced brazil s net economic welfare and redistributed income from the treasury to foreign roasters domestic exporters and government bureaucrats

exports economic growth and the consolidation of peace in el salvador abstract the pillars of inclusive growth in el salvador have to be nontraditional export growth investment and government determination to reduce income inequality and poverty this article analyzes the key obstacles to the development of a competitive and dynamic export sector dutch disease driven by aid and remittances a significant decline in real wages and lack of productivity growth policies can and must focus on productivity growth rather than wage repression in the pursuit of peace consolidation and long term competitiveness

markets and states against minimalism abstract this paper argues against the currently fashionable case for state minimalism or laissez faire it not only argues for a strong state but also for an activist one though operating on a different basis from the many recently failed interventionist states the argument is developed via a critique of a series of overstated or one sided propositions that bolster the state minimalist position these include the notion of price distortions of inherently inefficient public enterprise of an unambiguous dividing line between the public and the private sectors and of statism as inherently rent seeking the paper seeks to rescue alternative perspectives from outside neoclassical political economy approach such as the importance of civil society and the need for a nonmaximizing theory of the state successful liberalization programs may require more intervention of a different kind at least for a transitional period a broad view of democracy is required allowing the possibility of state action guided by motives of public interest

the state and industrial strategy abstract the debate about the role of the state in promoting industrial growth in developing economies is reviewed we begin with the ideas of the early development economists of the 1950s and 1960s then take up two waves of neoclassical criticism respectively emphasizing the primacy of the market and the lack of autonomy and competence of the developmentalist state and sketch the elements of a countercritique the fact that all successfully developing economies apply industrial strategies incorporating institutional change is emphasized and boundary conditions and lessons from experience which delimit sensible strategic choices are pointed out

controls corruption and competitive rent seeking in ldcs the paper establishes that equality between the average return of factors engaged in rent seeking and those in productive activity does not generally imply equality between the efficiency losses from rent seeking and the rents themselves such equality is often assumed in the literature a stylized cge model is used to illustrate the sensitivity of the estimated losses to the specification of the rent seeking mechanism it also illustrates the interdependence between the effects of taxes or subsidies and rent seeking for example when rent seeking involves post secondary graduates competing for government jobs which yield incomes from corruption the efficiency losses are affected by subsidies to education

the economics of special interest politics the case of the tariff this paper investigates the interaction of politicians and special interest lobbies the goal is to model the equilibrium levels of redistributive policies such as taxes subsidies tariffs and regulatory decisions the model is applied throughout to the setting of tariffs by contributing to political campaigns special interest lobbies generate economic returns higher tariffs generate revenue for import competing industries through higher product prices higher milk support prices raise dairy farm income and so forth the lobby invests to maximize these net economic returns in evaluating their chances of election politicians weigh the favorable effects of special interest money against the unfavorable association with the lobby and the social cost of the redistributive policy section i explores the lobby s problem it describes a formalization of mancur olson s discussion of the voluntary provision of public goods and optimal contributions by lobbies to political campaigns section ii describes determination of the equilibrium tariff positions of each politician in a political campaign

staggering and synchronization in price setting evidence from multiproduct firms theoretical work on price setting behavior focuses on the single product case while in reality a single price setter sells many products the authors use retail store level multiproduct pricing data to learn about price dynamics they find that while the timing of a product s price changes is staggered across stores selling the same product the timing of the price changes of different products sold within the same store is highly synchronized this finding validates the usual assumption that decisions are staggered across price setters and suggests that price rigidity is due mostly to mechanical reasons and not to informational asymmetries copyright 1996 by american economic association

nominal rigidities without literal menu costs evidence from e commerce abstract using price data from online book retailers amazon com and barnes and noble com we show that nominal rigidities persist in an environment that is free from literal menu costs menu costs therefore are not the prime reason for nominal rigidities

relative efficiency self containment and comparative costs of less developed countries international differences in comparative costs can in principle be attributed to three kinds of forces factor proportions economies of scale and relative efficiency to take a specific example the low relative price of certain services in less developed countries might be attributed to the fact that the services in question are not at all intensive in either physical or human capital the factor proportions account that economies of scale are unimportant in these services or that ldcs are relatively efficient in producing these services as compared to their efficiency in producing say manufactured products while it is obvious that differences in relative efficiency can affect comparative costs and trade patterns economists have tended to emphasize the factor proportions theory and economies of scale in their explanations part of the reason for this emphasis is that the relative efficiency explanation is rather empty unless one can come up with explanations for the patterns of relative efficiency the present article attempts to address these issues by looking at some data on relative product prices in a sample of less developed countries ldcs and more developed countries mdcs the data are taken from the purchasing power parities collected by the international comparison project in the course of the research project it was discovered that neither the factor proportions theory nor the economies of scale phenomenon could account for more than a rather small part of the observed variation in relative product prices the research was then directed toward explaining the remaining variation in relative product prices by looking at some product characteristics that were thought to affect relative efficiency there are many characteristics of goods that may be hypothesized to affect the relative efficiency of ldcs compared to mdcs these

international commodity agreements an obituary notice abstract it is widely believed that international commodity agreements have lapsed because they have failed the reality is more complex the tin agreement did collapse but for sugar and cocoa adverse market conditions and lack of general support made stabilization impractical control of the coffee market ceased largely because of disagreements both between and within the producing countries on the division of the benefits resulting from higher prices overall commodity control fits uneasily in an increasingly globalized and competitive world and this perception has resulted in a diminished willingness to resolve the practical difficulties of price stabilization

synchronization of price changes by multiproduct firms evidence from canadian newspaper prices abstract using data for canadian daily newspapers we find that price changes of papers owned by the same firm are synchronized on the other hand independently owned newspapers do not appear to change their prices together

the rocky road to reform trade industrial financial and agricultural strategies abstract this paper reviews recent issues of economic reform in developing countries based on studies undertaken for the world institute for development economics research wider emphasis is placed on a novel 3 gap adjustment model for savings investment trade and fiscal limitations at the macro level and a distinction between allocative and productive efficiency microeconomically issues of stabilization and adjustment and trade industrial policy financial reform privatization market deregulation and the agrarian question are discussed

rent seeking and the two track price system in china a simple general equilibrium model is specified to analyse the impact on the chinese economy of the introduction of a two track price system on to a centrally planned economy it is shown that national income will rise as a result together with a fall in the costs associated with rent seeking some estimates of welfare gains and costs of rent seeking are provided for seven commodities within a partial equilibrium framework they are shown to be dependent on the price elasticities of demand and supply the latter determine the ratio of plan to market prices and the share of plan in total output

the political economy of inaction abstract this paper develops a simple model of political inaction in a two party democracy i e it shows the conditions under which both parties will prefer to live with an unsatisfactory and inefficient status quo rather than to raise an issue the risk of raising the issue to either party is the fear of ending up with the other party s policy for example by losing the electron regarded as even worse than the status quo the model shows that the problem is likely to be particularly serious the more evenly matched is political competition the more risk averse the parties the less voters trust the parties the more divided is public opinion and the more important the issue the model is illustrated with a number of examples of real world inaction e g on fiscal deficits abortion the transition to socialism and the fall of the weimar republic in general the analysis also suggests that over a range more representation of political viewpoints implies a smaller likelihood of political action so that democracy implies a tradeoff between representation and the capacity for political action

trade patterns in developing countries 1964 82 this paper presents a regression analysis of import and export shares of gdp for 14 commodity and service categories in 55 developing countries over the period 1964 82 explanatory variables include gnp per capita population domestic capacity utilization the effective exchange rate and oecd real gnp for exports among other findings it is shown that countries trade patterns are not closely related to their growth performance and that developing countries on average run surpluses of exports over non capital goods imports on merchandise trade the current commodity surplus is required to offset imports of capital goods and a structural deficit on factor and non factor service trade

do crises induce reform a critical review of conception methodology and empirical evidence of the crisis hypothesis the notion that economic crises induce the adoption of reform ranks among the most widely accepted concepts in the political economics literature however the underlying mechanism of the so called crisis hypothesis has yet to be fully understood this paper provides a comprehensive survey of the relevant empirical evidence to date and scrutinizes the operationalization of the hypothesis key concepts crisis reform and the political mediation of reform during crises we argue that the social perception of both crises and the subsequent cost of reform requires consideration of how these concepts are operationalized as a product of the broader economic and institutional environment social perceptions largely determine the manner in which the political mediation of reform during crises works present day methodological approaches fail to adequately reflect social perceptions and consequently compromise the determination of what constitutes both crisis and the cost of reform in the context of the crisis hypothesis most notably the identification of crises by fixed thresholds constructed around macroeconomic variables impedes the interpretation of the hypothesis underlying mechanism a fuller treatment of social perception within the operationalization of the hypothesis key concepts can enhance our understanding of how economic crises influence political dynamics in bringing about reform

responding to the coffee crisis what can we learn from price dynamics an econometric model of coffee price dynamics is specified and estimated to capture the evolution of coffee prices at the farm wholesale and retail levels it investigates the historical influence of the international coffee agreement ica through its effects on yield and planting decisions in the short run the ica caused brazilian farm prices to become disconnected from international prices the ica helped coffee producers to better incorporate current world price information into planting decisions this created a price cycle that did not exist in non ica periods the low coffee prices experienced since the disintegration of the ica are consistent with low supply response to price information asymmetric price transmission at the retail level helped roasters and retailers benefit from upstream price interventions our results urge caution when considering future coffee price interventions

a theory of competition among pressure groups for political influence this paper presents a theory of competition among pressure groups for political influence political equilibrium depends on the efficiency of each group in producing pressure the effect of additional pressure on their influence the number of persons in different groups and the deadweight cost of taxes and subsidies an increase in deadweight costs discourages pressure by subsidized groups and encourages pressure by taxpayers this analysis unifies the view that governments correct market failures with the view that they favor the politically powerful both are produced by the competition for political favors

liberalization and rent seeking in china s labor market communist party membership can generate labor market benefits in at least two ways first the party may hand out direct benefits to favored groups in the form of higher earnings alternatively the party may function in much the same way as education in western countries screening workers for talent and motivation we find very little evidence of earnings premiums to party membership or to cadre status prior to chinese market liberalization with liberalization comes less emphasis on being red and a greater capacity to earn wages that reflect ability both observed through schooling and identified by the party we find that party premiums are inversely related to education modest premiums to cadre status appear in 1995

estimation of time varying adjusted probability of informed trading and probability of symmetric order flow shock summary recently duarte and young 2009 studied the probability of informed trading pin proposed by easley et al 2002 and decomposed it into two parts the adjusted pin apin as a measure of asymmetric information and the probability of symmetric order flow shock psos as a measure of illiquidity they provide some cross section estimates of these measures using daily data over annual periods in this paper we propose a method to estimate daily apin and psos by extending the method in tay et al 2009 using high frequency transaction data our empirical results show that while pin is positively contemporaneously correlated with variance apin is not on the other hand psos is positively correlated with daily average effective spread and variance which is consistent with the interpretation of psos as a measure of illiquidity compared to apin psos exhibits clustering and sporadic bursts over time copyright 2012 john wiley sons ltd

can the east asian model of development be generalized abstract export led growth has become increasingly popular among analysts and some governments as a development strategy besides contrasting its virtues to the distortions of the import substitution model popular through the 1960s advocates of the model frequently illustrate its merits by pointing to the remarkable success of its most prominent practitioners the east asian gang of four hong kong korea singapore and taiwan this study explores a possible limitation of the model known as the fallacy of composition while the model may work well if pursued by a limited number of countries it may break down if a large majority of developing countries seeks to pursue it at the same time because the resulting outpouring of manufactured exports might be more than western markets could absorb protectionist response might be the result of attempts to generalize the east asian export model of growth

the politics of adjustment the african case abstract food aid has been used consciously and increasingly for promoting structural adjustment and has had a major impact on the economic programmes of many states in the 1980s particularly in africa this article considers the politics of adjustment programmes and food aid and the dilemmas which arise including the effects of food subsidies conditionality overhead costs varying food needs and attitudes towards food aid new approaches and more coordination are needed if food aid to africa in particular is to be even moderately effective in aiding countries making major policy changes

what is new keynesian economics this research was supported by the national science foundation i am grateful to george williams for help with the data and to steven allen laurence ball olivier j blanchard timothy bresnahan charles calomiris dennis carlton robert chirinko russell cooper stanley fischer herschel grossman r glenn hubbard david laidler john leahy assar lindbeck n gregory mankiw david romer julio rotemberg dennis snower john taylor andrew weiss and two anonymous referees for comments on one or more earlier drafts i am also indebted to michael parkin and edmund s phelps for helping to establish the etymology of the phrase new keynesian

the rise and decline of rent seeking activity in the brazilian coffee sector lessons from the imposition and removal of coffee export quotas summary brazil the world s largest coffee exporter encouraged efforts in the 1960s to form the international coffee agreement ica which restricted total coffee exports via country export quotas the quotas led to significant domestic quota rents in producing countries this paper analyzes the effects of rent seeking in brazil the brazilian institute of coffee ibc which was responsible for coffee policy was the focus of rent seeking the paper models the policy instruments used by the ibc shows how rent seeking affected policy industry efficiency and the distribution of rents explains the causes and effects of ibc reforms in the late 1980s and draws lessons from the experience

the politics of adjustment lessons from the imf s extended fund facility the international debt crisis has forced painful economic adjustments on the developing world in the short run it has forced governments to seek to correct payments imbalances through stabilization programs usually undertaken with conditional assistance from the international monetary fund imf the crisis has also revealed deeper weaknesses in many third world economies weaknesses demanding more basic reforms in the structure of incentives prices and investment

conditional duration models for high frequency data a review on recent developments this paper reviews the recent literature on conditional duration modeling in high frequency finance these conditional duration models are associated with the time interval between trades price and volume changes of stocks traded in a financial market an earlier review by pacurar provides an exhaustive survey of the first and some of the second generation conditional duration models we consider almost all of the third generation and some of the second generation conditional duration models notable applications of these models and related empirical studies are discussed the paper may be seen as an extension to pacurar

trade strategy in medium term adjustment abstract trade strategy is prominent in current discussions of stabilization and adjustment the orientation of trade strategy can be categorized according to revealed trade performance or characteristics of incentive structures or the nature of the main policy instruments the record of trade stratedy in developing countries has been richer and more complex than currently fashionable dichotomous categorizations in terms of inward or outward orientation suggest many trade strategy and policy issues remain unsettled these include the effects and optimal timing of import liberalization the appropriate instruments for export promotion trade policy concomitants of productivity change and interactions with microeconomic experience and policies among others more country specific and industry specific empirical research is necessary

the origins and sustainability of mexico s free trade policy standard explanations for trade liberalization do not fully account for mexico s turn toward free trade during the 1980s to a large extent the initiative came from within the country even many mexican entrepreneurs whose sectors seem likely to lose from increased competition now support trade liberalization four conditions lowered the political cost benefit ratio for policymakers and entrepreneurs first mexico s leaders dispersed implementation into several financial ministries thereby better insulating this policy from lobbying by the likely losers second potential losers were less well informed than were likely winners third under these conditions the liberal ideological biases of mexican elite policymakers and investors flourished prompting them to accept a higher political cost than would have been tolerated otherwise finally many mexicans came to perceive trade liberalization as a necessary tool in the fight against inflation each of these hypotheses however also flags a possible threat to the policy s future political survival