an analysis of childhood malnutrition in rural india role of gender income and other household characteristics there are controversies regarding the role of individual and household characteristics in childhood nutritional status measured by anthropometric indicators using a nutrition index based on weight for age of children in rural india the paper re examines this issue ordered probit estimates of nutritional status suggest female literacy improves the nutritional status of boys at the cost of girls while higher per capita current income improves that of both boys and girls though the impact is higher for boys however effect of income is not robust when we use instruments of longer run income but more income and literacy give more ways to discriminate between boys and girls

a more general approach to fertility determination in a developing country the importance of biological supply considerations endogenous tastes and unperceived jointness the chicago columbia economic model of fertility emphasizes that both the number quantity and the unobservable quality of children are arguments in the parental preference function focus is generally on demand determinants with fixed tastes biological supply considerations gernerally are deemphasized the major alternative to the chicago columbia model is the pennsylvaina model which emphasizes that parental utility is conditional on norms regarding family size and own consumption empirical tests which shed some light on the relevance of the chicago columbia versus the pennsylvania models for understanding fertility determination in a developing country were conducted on a sample of nicaraguan women aged 15 45 using a more general fertility model epw which encompasses features of both models the estimation of a linear approximation to the fertility determination relation resulting from a generalized model includes 3 sets of variables 1 those included in standard chicago columbia empirical estimates 2 some related to the pennsylvaina models emphasis on natural fertility supply factors and 3 some related to the latter models emphasis on endogenous norms tastes the pennsylvania model with its emphasis on supply tastes and unperceived jointness adds to the understanding of the empirical completed fertility experience in the nicaraguan sample beyond that of the standard chicago columbia model the implications of this basic result are numerous and may be quite important in understanding fertility behavior in developing economies and in devising appropriate related policies 4 examples are given 1 fertility behavior may be more complicated than assumed in conventional chicago columbia analyses 2 results suggest that it may be important to analyze fertility and to formulate policy within a larger framework which integrates fertility and health and nutrition concerns 3 if tastes are important and endogenous as the results suggest they are interpretations of the impact of fertility changes on private welfare are much more ambiguous than often is realised 4 some conventional interpretations of the variables in the standard model may be misleading in understanding and in policy formulation standard chicago columbia variables are womens schooling and household income the full epw pennsylvania model correlates the supply variables parasites therapeutically treatable medically preventable womens age age of 1st cohabitation months breastfed nutrition the taste variables religious or civil marriage religious services month residence birth rate siblings parents present migration currently or in childhood and compares them to the chicago columbia variables outcome on the nicaraguan sample

industry s response to market liberalization in china evidence from jiangsu province introduction more than a decade has passed since china s communist party endorsed major economic reform at the third plenum of the eleventh central committee in december 1978 the reforms have addressed many problems but efficiency has been the focus of concern to improve efficiency china has introduced market mechanisms and reversed its import substitution policies the purpose of this article is to investigate whether industrial productivity has increased as a result using jiangsu province as a case study the background of market liberalization in china is years of development centered on a radical import substitution strategy which was both international and regional china is not alone in its reconsideration of import substitution and the role of the market versus the public sector the oil price increases in the 1970s resulted in serious debt problems for many developing countries forcing them to turn to market liberalization and export promotion the former eastern bloc countries are also in the process of radical domestic and international market reorientation as they restructure their formerly planned systems that had favored import substitution some discussions in the development literature have also been critical of import substitution in favor of outward looking strategies 1 while others argue that markets and export promotion are not a panacea 2 in these discussions the example of china is often raised with respect to its particular experience with import substitution followed by an open door policy with market liberalization but while it is clear that reforms have caused radical changes in china s economic system well beyond what might have been expected to ensue in 1978 the question remains as to whether economic performance improved during the 1980s as a result of the reform efforts

the role of exports fdi and imports in development evidence from sub saharan african countries the disappointing economic performance of sub saharan african ssa economies in the late 1980s prompted reforms in foreign trade and foreign direct investment fdi in the early 1990s using the autoregressive distributed lag ardl approach and pedroni panel estimation procedures that allow for heterogeneity this study found that exports and fdi have a significant impact on economic growth granger type causality tests show the interrelatedness of exports fdi imports and income variables the results also provide evidence of a two stage causal chain of exports imports and income this article calls for more market oriented policy reforms in ssa countries

learning asymmetries in real business cycles when a boom ends the downturn is generally sharp and short when growth resumes the boom is more gradual our explanation rests on learning about productivity when agents believe productivity is high they work invest and produce more more production generates higher precision information when the boom ends precise estimates of the slowdown prompt decisive reactions investment and labor fall sharply when growth resumes low production yields noisy estimates of recovery noise impedes learning slows recovery and makes booms more gradual than downturns a calibrated model generates growth rate asymmetry similar to macroeconomic aggregates fluctuations in agents forecast precision match observed countercyclical errors of forecasters

federal reserve information and the behavior of interest rates this paper tests for the existence of asymmetric information between the federal reserve and the public by examining federal reserve and commercial inflation forecasts it demonstrates that the federal reserve has considerable information about inflation beyond what is known to commercial forecasters it also shows that monetary policy actions provide signals of the federal reserve s information and that commercial forecasters modify their forecasts in response to those signals these findings may explain why long term interest rates typically rise in response to shifts to tighter monetary policy jel e52 e43 d82 asymmetric information between the federal reserve and the public is a phenomenon that is often posited but rarely tested numerous models of central bank behavior for example show that the existence of asymmetric information has important implications for the effectiveness of policy and the consequences of dynamic inconsistency yet there

women s education and fertility an analysis of the relationship between education and birth spacing in indonesia abstract the negative relationship between women s education and fertility is one of the strongest empirical regularities in social science yet there are few empirical studies that identify the mechanisms through which education affects fertility this article goes beyond the usual interpretation of education as a proxy for wage by testing whether education affects fertility through demand for children or through availability of contraceptives using the indonesian case it examines one aspect of fertility namely birth spacing over the period 1970 93 i find that higher levels of female education are associated with a shorter birth interval among earlier cohorts but with a longer birth interval among later cohorts the key finding is that changes in the effects of education on birth hazard over time are primarily driven by changes in the availability of contraceptives rather than by changes in the demand for children in the context of contraceptive technology the result can be interpreted as evidenc

common drifting volatility in large bayesian vars the general pattern of estimated volatilities of macroeconomic and financial variables is often broadly similar we propose two models in which conditional volatilities feature comovement and study them using u s macroeconomic data the first model specifies the conditional volatilities as driven by a single common unobserved factor plus an idiosyncratic component we label this model bvar with general factor stochastic volatility bvar gfsv and we show that the loss in terms of marginal likelihood from assuming a common factor for volatility is moderate the second model which we label bvar with common stochastic volatility bvar csv is a special case of the bvar gfsv in which the idiosyncratic component is eliminated and the loadings to the factor are set to 1 for all the conditional volatilities such restrictions permit a convenient kronecker structure for the posterior variance of the var coefficients which in turn permits estimating the model even with large datasets while perhaps misspecifi

exports and economic growth in industrialized countries the prima facie causal relationships between growth exports and factor inputs capital and labour are investigated in five industrialized countries germany itlay japan united kingdom and united states over the period 1960 87 by analysing a four variable vector autoregressive var model for each country our results indicate that germany and japan experienced export led growth reverse causality between exports and growth is found in the case of the us and uk while to causal relationship between exports and output is found for itlay

mortality decline in the low income world causes and consequences the causes and consequences of the mortality decline that has occurred in developing countries over the course of the twentieth century are reviewed influential factors identified include female education and improved nutrition annotation

the simple analytics of contraceptive social marketing abstract contraceptive social marketing csm programs have been advocated for the dissemination of contraceptives in developing countries this paper considers csm programs from a simple economic perspective it begins with a review of the major economic models of private fertility determinants and the associated private demand for contraceptives and then adds private contraceptive supply to obtain market equilibrium next inefficiencies due to negative externalities of added children and due to imperfect information and distributional concerns are considered finally this framework is utilized to point to lacunae in our knowledge of csm programs and their impact and to suggest some promising areas for research

monetary policy in a data rich environment abstract most empirical analyses of monetary policy have been confined to frameworks in which the federal reserve is implicitly assumed to exploit only a limited amount of information despite the fact that the fed actively monitors literally thousands of economic time series this article explores the feasibility of incorporating richer information sets into the analysis both positive and normative of fed policymaking we employ a factor model approach developed by stock j h watson m w diffusion indices journal of business economic statistics 2002 20 2 147 forecasting inflation 1999 journal of monetary economics 44 2 293 that permits the systematic information in large data sets to be summarized by relatively few estimated factors with this framework we reconfirm stock and watson s result that the use of large data sets can improve forecast accuracy and we show that this result does not seem to depend on the use of finally revised as opposed to real time data we estimate policy reaction functions for the fed that take into account its data rich environment and provide a test of the hypothesis that fed actions are explained solely by its forecasts of inflation and real activity finally we explore the possibility of developing an expert system that could aggregate diverse information and provide benchmark policy settings

the quality of schooling quantity alone is misleading although much research discusses the quantity of schooling as an effective impact on productivity and earnings most such research leaves out the idea of the quality of schooling which may cause biases in the estimated returns to schooling this paper consequently attempts to extend the standard mincerian approach to incorporate school quality as well as quantity it demonstrates how exclusion of quality in the standard procedure may cause biases in the estimated returns to years of schooling probably in the upward direction the paper explores the implications of this extension of the standard model for the case of young brazilian males it shows that the estimate of the private return to years of schooling using the preferred quality inclusive specification is only one half the estimate using the standard procedure indicating substantial upward bias in the standard estimates it further outlines a method for estimating a social return to quality and finds that it exceeds substantially the social return to quantity the paper then shows why this in turn suggests there may be an equity productivity trade off in schooling investments

the fomc versus the staff where can monetary policymakers add value a key issue in monetary policymaking is the appropriate division of labor between the profes sional staff of the central bank and the appointed policymakers lars e o svensson 1999 argues that the appropriate role of a policymaking group such as the federal open market com mittee fomc in the united states is to make judgments about social welfare taking as given the likely outcomes of different policies as esti mated by the staff in this division the staff is relied upon to assess current and prospective economic conditions and to forecast the effects of different policies policymakers only role is to decide which of the various options should be chosen

the open economy consequences of u s monetary policy a failure to identify movements in the federal funds rate that are both unpredictable and independent of other determinants of open economy variables may lead to attenuation bias in the estimated effects of u s monetary policy on the exchange rate and foreign variables using a u s monetary policy measure which isolates unpredictable and independent federal funds rate changes we quantify the magnitude of the attenuation bias for the exchange rate and foreign variables the exchange rate appreciation following a monetary contraction is up to 4 times larger than a recursively identified var estimate there is stronger evidence of foreign interest rate pass through the expenditure reducing effects of a u s monetary policy contraction dominate any expenditure switching effects leading to a positive conditional correlation of international outputs and prices we compare our results with those obtained using identification based upon 1 non recursive var restrictions and 2 restrictions derived from high frequency asset price behavior

trade foreign direct investment and economic growth in asian economies despite the increasing role of foreign direct investment fdi in economic development very limited research has been carried out on the causal links between trade fdi and economic growth in asian economies this study examines empirically the inter play between exports imports fdi and economic growth for nine asian economies by conducting multivariate causality tests in the vector error correction model vecm framework the results reveal two way causal connections between trade inward fdi inward merger and acquisitions m as and growth for most of the sample economies there is a unidirectional causal link running from outward m as to growth and trade these findings suggest that export expansion import liberalization fdi inflows and inward m as are integral elements of the growth process in asian economies

determinants of women s health status and health care utilization in a developing country a latent variable approach a latent variable representation of health is used in a system that determines health and various indicators of health and health care utilization for nicaraguan women estimates differ somewhat from standard estimates they imply that women s schooling increases health care utilization literate women report less disease incidence women s childhood backgrounds affect their adult health and health care utilization and general resources favor childbirth related care but women s full income favors general care the most significant result is that several important characteristics usually associated with development women s schooling household resources and women s labor force participation have inverse or no associations with women s health health status is hypothesized to be important in developing countries both as a direct indicator of welfare and because of its possible impact on productivity health care utilization also is of interest both because of its relation to health status and because it is a particular manifestation of demand and supply for a 1 modem service work on the determinants of health status and health care utilization in developing economies however is flawed because true health status is not directly observable the indicators of health status that have been used in empirical studies anthropometric measures days ill self reported or clinical disease records inputs such as nutrients and health care utilization indicesare imperfect indicators of underlying health status and generally do not give a congruent representation of that status thereby they may not measure adequately health status and their use may lead to biases in estimates and incorrect interpretations we use a latent variable methodology for the first time to explore health status and health care utilization in a developing country this approach employs systematic relations between various indicators of health status and health status itself and between health status and various related outcomes so that it is possible to estimate the determinants of health status and control for health status in other relations even though health status is not directly observed by using this methodology we obtain more satisfactory estimates of the determinants of health status and of health care utilization in a developing country context than previous estimates using direct but imperfect proxies this should improve the empirical bases for evaluating health and related policies in the developing world i latent variable model of health status and health care utilization in the human capital tradition of analysis of health individual health status is viewed as determined by individual demand factors given supply prices environment age and resources including genes health care utilization is a derived demand for a service which is used to produce better health to incorporate the latent variable representation of the unobserved health status we assume that the demand supply health status and health care utilization interactions as well as the relation of other health indicators to health status can be represented by the following linear system of relations

consumer demand and household production the relationship between fertility and child mortality forces which link biological and behavioral factors to infant mortality and fertility in the united states are examined estimates can be arrived at if all of the important types of behavior affecting infant survival prices and income constraints facing households are diligently gathered using equations to determine the relationship between a family health endowment index in conjunction with a childs health information about optimal prenatal and postnatal behavior can be estimated and observed this estimate which is strongly a factor of parental and environmental health related factors attempts to characterize the biological effects of parents behavior on birthweight gestation and the rate of fetal growth another estimate presented is one which establishes a link between biological effects of birth order on infant mortality in this analysis factors such as medical care during pregnancy mothers rate of smoking mothers age duration of breastfeeding mothers race and childs sex were included household socioeconomic and health data were also estimated in order to understand state and county ability to provide adequate health facilities for pre and postnatal maternal care in particular results suggest that child mortality declines in developed countries and that mothers seek prenatal medical care in early stages of their pregnancy when risk is anticipated further study of the differential pattern of black and white fertility behavior in regard to seeking medical care is warranted

performance of monetary policy with internal central bank forecasting abstract recent models of monetary policy have analyzed the desirability of different optimal and ad hoc interest rules under the restrictive assumption that forecasts of the private sector and the central bank are homogeneous this paper studies the implications of heterogeneity in forecasting by the central bank and private agents for the performance of interest rules in a framework of econometric learning

macroeconomic forecasting and structural change the aim of this paper is to assess whether explicitly modeling structural change increases the accuracy of macroeconomic forecasts we produce real time out of sample forecasts for inflation the unemployment rate and the interest rate using a time varying coefficients var with stochastic volatility tv var for the us the model generates accurate predictions for the three variables in particular for inflation the tv var outperforms in terms of mean square forecast error all the competing models fixed coefficients vars time varying ars and the na ove random walk model these results are also shown to hold over the period commonly referred to as the great moderation

monetary policy trend inflation and the great moderation an alternative interpretation with positive trend inflation the taylor principle does not guarantee a determinate equilibrium we provide new theoretical results on determinacy in new keynesian models with positive trend inflation and new empirical findings on the federal reserve s reaction function before and after the volcker disinflation to find that i while the fed likely satisfied the taylor principle before volcker the us economy was still subject to self fulfilling fluctuations in the 1970s ii the us economy switched to determinacy during the volcker disinflation and iii the switch reflected changes in the fed s response to macroeconomic variables and the decline in trend inflation jel e12 e23 e31 e32 e52

a theory of ambiguity credibility and inflation under discretion and asymmetric information this paper develops a positive theory of credibility ambiguity and inflation under discretion and asymmetric information the monetary policymaker maximizes his own politically motivated objective function that is positively related to economic stimulation through monetary surprises and negatively related to monetary growth the relative importance he assigns to each target shifts stochastically through time his current preference trade off is known to him but not to the public when choosing the state contingent path of money growth for the present and the future the policymaker compares the benefits from current stimulation with the costs associated with higher future inflation expectations current monetary growth conveys information to the public about future money growth because there is persistence in the policymaker s objectives although expectations are rational information is imperfect because monetary control procedures are imprecise as a result the public cannot correctly distinguish persistent changes of emphasis on different policy objectives from transitory monetary control errors the public becomes aware of changes gradually by observing past monetary growth credibility is defined in terms of the speed with which the public recognizes changes in the objectives of the policymaker credibility is lower the noisier monetary control and the more stable the objectives of the policymaker looser monetary control and a higher degree of time preference on the part of the policymaker induce him to produce higher and more variable monetary growth when the policymaker is free to determine the accuracy of monetary control he does not always choose the most effective control available in spite of the fact that monetary surprises always have an expected value of zero the reason is that ambiguous control procedures enable the policymaker to generate positive surprises when he cares more than on average about economic stimulation he leaves the inevitable negative surprises for periods in which he cares more about inflation prevention this result provides an explanation for the fed s preference for ambiguity recently documented by goodfriend 1986 the policymaker is more likely to pick more ambiguous control procedures the more uncertain his objectives and the higher his time preference the paper also provides a theoretical underpinning for the well documented crosscountry positive correlation between the level and the variability of inflation

health as a family matter do intra household education externalities matter for maternal and child health abstract this paper is concerned with the role of education as a determinant of health care choices the central premise of the paper is that utilisation of health services is determined not solely by an individual s own education but rather by a notion of effective education which incorporates the educational attainment of other household members the paper sets out a general framework for representing intra household education externalities and proposes a number of specific hypotheses concerning the way in which the education of different household members affects health care choices these hypotheses are tested on data from mozambique focusing on maternity services child immunisations and child malnutrition we draw four major conclusions from the analysis first while maternal education seems to be the education variable of primary importance for the health service and malnutrition variables under consideration the education of other household members does have a significant and sometimes larg

bias in federal reserve inflation forecasts is the federal reserve irrational or just cautious abstract inflation forecasts of the federal reserve seem to have systematically under predicted inflation from the fourth quarter of 1968 until volcker s appointment as chairman and to systematically over predict it afterwards until the second quarter of 1998 furthermore under quadratic loss commercial forecasts seem to have information not contained in those forecasts to investigate the cause of this apparent irrationality this paper recovers the loss function implied by federal reserve s inflation forecasts the results suggest that the cost of having inflation above an implicit time varying target was larger than the cost of having inflation below it for the period since volcker and that the opposite was true for the pre volcker era once these asymmetries are taken into account the federal reserve s inflation forecasts are found to be rational

convergence and migration among provinces have regional disparities in canada changed over the past thirty years this paper assesses the robustness of earlier findings of convergence in the levels and growth rates of provincial per capita gdp and then estimates the extent to which interprovincial and international migration is being influenced by regional differences in incomes and employment excerpt

neoliberal economic policies and infant and child mortality simulation analysis of a chilean paradox abstract the paradox of deteriorating living standards for the poorest coexisting with declining infant and child mortality rates during the 1970s is explained by a simultaneous model where these rates and the birth rate are endogenous partial and general equilibrium results conflict some apparently satisfactory policy tools have counterproductive impacts action on small groups of selected policy variables is more effective than overall economic and social welfare expansion and policy effects differ according to social class the role of midwife visits average real earnings and cheap energy for poor urban households are emphasized perversely high unemployment also contributed to the actual mortality decline during the period

labor force participation and earnings determinants for women in the special conditions of developing countries abstract little systematic analysis exists regarding hypothesized special labor market conditions for women in developing countries this study explores such conditions in nicaragua major results are i small children affect participation less than in developed countries due to child care from extended families or while on informal sector jobs and the necessity for poor mothers to work ii schooling and experience have major roles affecting work sector and earnings but the primary school return is half that cited by the world bank iii other human capital variables particularly nutrition have some impact

monetary policy and market interest rates this thesis contains four chapters each of which examines different aspects of the uncertainty facing monetary policymakers monetary policy and market interest rates investigates how interest rates set on financial markets respond to policy actions taken by the monetary authorities the reaction of market rates is shown to depend crucially on market participants interpretation of the factors underlying the policy move these theoretical predictions find support in an empirical analysis of the u s financial markets predicting monetary policy using federal funds futures prices examines how prices of federal funds futures contracts can be used to predict policy moves by the federal reserve although the futures prices exhibit systematic variation across trading days and calendar months they are shown to be fairly successful in predicting the federal funds rate target that will prevailafter the next meeting of the federal open market committee from 1994 to 1998 monetary policy with uncertain parameters examines the effects of parameter uncertainty on the optimal monetary policy strategy under certain parameter configurations increasing uncertainty is shown to lead to more aggressive policy in contrast to the accepted wisdom should central banks be more aggressive examines why a certain class of monetary policy models leads to more aggressive policy prescriptions than what is observed in reality these counterfactual results are shown to be due to model restrictions rather than central banks being too cautious in their policy behavior an unrestricted model taking the dynamics of the economy and multiplicative parameter uncertainty into account leads to optimal policy prescriptions which are very close to observed federal reserve behavior

international transmission of aggregate shocks under fixed and flexible exchange rate regimes united kingdom france and germany 1959 to 1985 abstract this paper analyzes the transmission of aggregate shocks between the usa and three major european economies the uk france and germany under fixed and flexible exchange rate regimes using time series techniques short run linkages are investigated in the context of vector autoregression models while long run relations are analyzed by testing for cointegration empirical findings indicate that flexible exchange rates have not in general completely insulated domestic economies from foreign shocks and that the degree of insulation and interdependence across exchange rate regimes and over the long and short runs differs substantially across the european countries

household behaviour and nutrition in developing countries abstract this article reviews some of the recent major research findings concerning the effect of household behaviour on food consumption and nutrition important extensions to the understanding of household behaviour have been made in the areas of the impact of income and price changes agricultural households the effects of agricultural commercialization the new household economics and particularly the effect of time as a scarce economic resource the intrahousehold allocation of food and the determinants of nutritional status this knowledge is important because the response by households affects the final impact of economic changes and government actions on the nutritional status of the population

income distribution and infant mortality comparing two countries in which the poor have equal real incomes the one in which the rich are wealthier is likely to have a higher infant mortality rate this anomalous result does not appear to spring from measurement error in estimating the income of the poor and the association between high infant mortality and income inequality is still present after controlling for other factors such as education medical personnel and fertility the positive association of infant mortality and the income of the rich suggests that measured real incomes may be a poor measure of social welfare this paper considers and tests several possible explanations such as the provision of medical services the degree of urbanization the extent of female literacy and differences in the composition of births among different income groups none of these factors adequately accounts for the positive association between the incomes of the rich and infant mortality the geographical scope is worldwide excerpt

more evidence on nutrition demand income seems overrated and women s schooling underemphasized abstract malnutrition is widespread in the developing world controversy continues concerning the roles of income household size and women s schooling on nutrient demand empirical estimates for nicaragua suggest that income elasticities are small and inversely associated with income levels there are some economies of scale in household size the elasticity for women s schooling is higher than those for income or household size and women s backgrounds are important the results cast doubt on the strong emphasis the world bank and others have placed on income and suggest that schooling may be working through tastes not only through productivity

the fisher hypothesis and the forecastability and persistence of inflation abstract for the period 1860 to 1939 the simple correlation of the u s commercial paper rate with the contemporaneous inflation rate is 0 17 the corresponding correlation for the period 1950 to 1979 is 0 71 this paper attributes this apparent change in the fisher relation to differences in the stochastic process of inflation rather than a change in any structural relationship between interest rates and expected inflation contrary to recent claims in the literature there is little evidence of inflation non neutrality in data from the pre world war i period

how well do experts predict interbank loan rates and spreads abstract this study examines blue chip forecasts of the 3 month london interbank offered rate libor federal funds rate ffr and libor ffr for 1988 2008 we show that the interest rate spread forecasts while directionally accurate imply asymmetric symmetric loss

economic and other determinants of infant and child mortality in small developing countries the case of central america and the caribbean inter country differences in infant and child mortality are explained by looking at demographic economic health and educational factors a model is presented in which the infant mortality rate the child mortality rate and the birth rate are endogenous the model is tested using cross national multiple regression analysis and simulations the presence of simultaneity is confirmed introducing non economic factors transforms the character of the relationship between exogenous and endogenous variables from a diminishing returns to an increasing returns one the role played by public expenditure in education vaccination coverage low birth weight female schooling number of nurses access to safe water or malnutrition can be assessed as well as that played by structural adjustment variables such as the inflation rate or the external debt to gnp ratio infant and child mortality can be diminished everywhere in the region with relatively small amounts of expenditure disappointing outcomes in som

nutrients impacts and determinants understanding the determinants of nutrient intake and the influence of nutrition on performance is critical in designing policies to alleviate hunger and malnutrition a series of studies undertaken by the authors which are synthesized here analyzes the influence of prices income and women s schooling on the nutrient intake of those in developing countries and the effect of nutrition on health productivity wages and fertility these studies suggest that the impact of food price increases may be strong particularly among those with the lowest incomes that the growth of income may be less likely to improve nutrient intake than has been suggested by others and that womzen s schooling is important in improving nutrition these studies also indicate that nutrition exerts a positive influence on wages productivity and fertility our limited knowledge of the role and determinants of nutrition is reflected in the finding of unduly strong effects of seasonalitv on price nutrition relations and the lack of a direct association between nutrition and health the nutrition of poor populations is of substantial interest because of the widespread and plausible presumption that better nutrition improves the welfare of individuals in such populations nutrition also is of interest because of the common conjecture that better nutrition improves productivity a series of our studies have analyzed the relations between nutrition and health labor productivity and fertility and the relations between prices income women s schooling and nutrition intake here we synthesize the results of these studies and address some of the puzzles and policy implications that have arisen

determinants of child mortality health and nutrition in a developing country abstract child health and nutrition status are important determinants of adult productivities and earnings and thus are an important channel of intergenerational socioeconomic mobility building upon economic models of household behavior we investigate the determinants of child mortality and health and nutrition status in regions defined by the degree of urbanization in the developing country of nicaragua and offer some policy suggestions our estimates suggest that determinants differ significantly across regions income is not an important factor there is an inverse relation with number of siblings and there are positive associations with calorie intake schooling except in the relatively low income rural areas the availability of refrigeration and the quality of sewage systems

stock returns over the fomc cycle we document that since 1994 the equity premium is earned entirely in weeks 0 2 4 and 6 in federal open market committee fomc cycle time that is even weeks starting from the last fomc meeting we causally tie this fact to the fed by studying intermeeting target changes fed funds futures and internal board of governors meetings the fed has affected the stock market via unexpectedly accommodating policy leading to large reductions in the equity premium evidence suggests systematic informal communication of fed officials with the media and financial sector as a channel through which news about monetary policy has reached the market

exports and growth is the export led growth hypothesis valid for provincial economies this paper re examines the export led growth hypothesis using provincial data unlike other studies that concentrate on country level data this study investigates the validity of the hypothesis for four largest provinces in korea seoul kyunggee kyungnam and pusan the causal implication of the export led growth hypothesis is generally supported for all provinces in the sample the framework of analysis is two and four variable autoregressive models that include provincial exports provincial output terms of trade and national output shocks granger causal orderings from exports to output growth are generally supported in bivariate causal models in multivariate models variance decompositions and impulse response functions further indicate that export growth has a significant impact on output growth for all provinces although a feedback effect from output to export growth appears in seoul and the kyungnam province

monetary policy surprises and interest rates choosing between the inflation revelation and excess sensitivity hypotheses author affiliation willem thorbecke george mason university and senior fellow research institute of economy trade and industry 1 3 1 kasumigaseki chiyoda ku tokyo 100 8901 japan tel 81 3 35018286 e mail wthorbec gmu edu corresponding author hanjiang zhang department of finance mccombs school of business university of texas at austin 1 university station b6000 austin tx 78712 usa e mail hanjiang zhang mccombs utexas edu acknowledgment we thank the co editor kent kimbrough two anonymous referees and seminar participants at the research institute of economy trade and industry for many helpful comments we also thank andrew swiston for generously providing us data on unexpected changes in the federal funds rate target 1 introductionwhy do increases in the federal reserve s fed s target for the federal funds rate raise interest rates on long term treasury securities one might expect that contractionary monetary policy would raise short term rates because of a liquidity effect and reduce long term rates by lowering expected inflation yet cook and hahn 1989 reported that increases in the fed s target for the federal funds rate from september 1974 to september 1979 raised interest rates at all horizons similarly kuttner 2001 found that unanticipated increases in the federal funds rate target over the june 1989 to february 2000 period increased interest rates at all maturities one interpretation of the results of cook and hahn 1989 and kuttner 2001 is that contractionary monetary policy raises longer term real interest rates the nominal interest rate equals the real interest rate plus the expected inflation rate if contractionary monetary policy lowers expected inflation or leaves it unchanged then evidence that it increases the nominal interest rate implies that it must also be increasing the real interest rate romer and romer 2000 provided an alternative explanation for these findings they showed that the fed has substantially more information about future inflation than is available from commercial forecasts their results imply that the optimal strategy for individuals with access to both the fed s forecasts and commercial forecasts would be to rely exclusively on the fed s forecasts they also demonstrated that federal reserve policy actions reveal some of the fed s private information about inflation an increase in the federal funds rate target could thus increase interest rates by raising expectations of future inflation gurkaynak sack and swanson 2005a presented evidence indicating that increases in the federal funds rate target have the opposite effect lowering expected inflation from 1990 2002 they found that unexpected increases in the funds rate target lower the one year forward rate 10 years ahead they also found that real long term forward rates derived from inflation indexed treasury securities do not respond to monetary policy surprises while the compensation for inflation responds with a significant negative coefficient to positive innovations in the federal funds rate target they interpreted these findings to mean that surprise increases in the federal funds rate target lower future expected inflation their conclusion is thus exactly the opposite of romer and romer s 2000 information revelation explanation ellingsen and soderstrom 2001 presented a model that encompasses the models of romer and romer 2000 and gurkaynak sack and swanson 2005a in their model unanticipated changes in the central bank rate can occur because the central bank has private information about the economy or because the central bank changes its preferences for inflation stabilization relative to output stabilization romer and romer focused on the first effect and gurkaynak sack and swanson focused on the second campbell 1995 noted that the effect of funds rate increases on inflation expectations should depend on the fed s credibility in fighting inflation

the demand for energy using assets among the world s rising middle classes we study household decisions to acquire energy using assets in the presence of rising incomes we develop a theoretical framework to characterize the effect of income growth on asset purchases when consumers face credit constraints we use large and plausibly exogenous shocks to household income generated by the conditional cash transfer program in mexico oportunidades to show that asset acquisition is nonlinear depends as predicted in the presence of credit constraints on the pace of income growth and both effects are economically large among beneficiaries our results may help explain important worldwide trends in the relationship between energy use and income growth

man bites dog business cycles the newsworthiness of an event is partly determined by how unusual it is and this paper investigates the business cycle implications of this fact signals that are more likely to be observed after unusual events may increase both uncertainty and disagreement among agents in a simple business cycle model such signals can explain why we observe i occasional large changes in macro economic aggregate variables without a correspondingly large change in underlying fundamentals ii persistent periods of high macroeconomic volatility and iii a positive correlation between absolute changes in macro variables and the cross sectional dispersion of survey expectations

the poor and the social sectors during a period of macroeconomic adjustment empirical evidence for jamaica considerable uncertainty remains about the human impact of macroeconomic adjustment analysis of the impact of adjustment on the poor and on the social sectors is difficult because it involves evaluating a counterfactual situation in which households are affected by prices incomes and public services with the possibility of substantial substitutions all within an economywide framework with complicated concurrent and lagged interactions time series data for jamaica is utilized in this article to examine whether macroeconomic adjustment initiated in the early 1980s but intensified in 1984 85 was associated with significant deterioration in various indicators of health nutritional and welfare outcomes particularly among the poor although the authors find evidence of substantial cuts in governmental expenditures on social services there is little confirmation of significant short run deterioration in human capital indicators during the adjustment period

the dynamic effects of aggregate demand and supply disturbances we interpret fluctuations in gnp and unemployment as due to two types of disturbances disturbances that have a permanent effect on output and disturbances that do not we interpret the first as supply disturbances the second as demand disturbances demand disturbances have a hump shaped mirror image effect on output and unemployment the effect of supply disturbances on output increases steadily over time peaking after two years and reaching a plateau after five years

investments in schooling in two generations in pre revolutionary nicaragua the roles of family background and school supply abstract family background and school supply underlie the demand and supply for schooling but are usually ignored in empirical estimates these considerations are investigated for two generations in nicaragua using unique data on adult sisters and their offspring to identify inter versus intrafamilial effects and to control for unobserved family background the results suggest that the standard interpretations are misleading 1 unobserved family background and school supply factors are important in schooling determination 2 omission of these factors leads to overestimates of impacts of parental schooling and family size 3 both parental schooling and family size primarily represent unobserved family background and school supply in standard estimates

schooling and economic well being the role of nonmarket effects standard estimates of the economic value of additional schooling based on earnings differences associated with differences in the level of schooling attained cover only a portion of the total effects of education that are valued by citizens we first identify a catalog of nonmarketed effects many of which have been recently studied by economists and then propose a procedure for estimating a willingness to pay value for these effects using empirical estimates of the magnitude of a selection of these effects found in the literature we calculate willingness to pay values using our proposed procedure these illustrative calculations suggest that standard estimates of the benefit of incremental schooling substantially understate the full value of such investments

atheoretical macroeconometrics a critique abstract the spurious nature of the restrictions used to identify many macroeconometric models has led some researchers to advocate a style of econometric inquiry that is less dependent on prior theoretical restrictions of the sort that were central to the approach of the cowles commission this development which we call atheoretical macroeconometrics is summarized and evaluated in the current paper it is contrasted with an updated version of the cowles commission approach we conclude that while some of the exercises of atheoretical macroeconometrics are valid those that have attracted the most attention and appear the most innovative exogeneity testing impulse response analysis and policy analysis using estimated vector autoregressions are based on incorrect analysis

the effect of changes in the federal funds rate target on market interest rates in the 1970s abstract this paper examines the influence of monetary policy on interest rates by estimating the effect of changes in the federal funds rate target the federal reserve s policy instrument on market interest rates in the 1970s we find that changes in the target caused large movements in short term rates and smaller but significant movements in intermediate and long term rates we hypothesize that the similarity of the reactions of three six and twelve month rates to changes in the target offers a possible explanation for the lack of support for the expectations theory from studies that have tested the theory using these rates

autoregressive modelling and money income causality detection abstract a step wise procedure based on granger s concept of causality and abaike s final prediction error criterion is suggested as a practical means to identify the order of lags of each variable in a multivariate autoregressive process the model seems useful because it can serve as a reduced form formulation to avoid imposing often spurious or false restrictions of the model it also provides a reasonably powerful test of causality the idea is applied to u s postwar money and income data it is found that between m1 and gnp a bivariate feedback model fits the data best between m2 and gnp a one way causal model from money to income performs better diagnostic checks applied to our model seem to indicate the adequacy of our approach

competence implies credibility the credibility of monetary policy under discretion has been traditionally linked to the central bank s conservatism we show that another trait of the central bank cb her competence at doing her job or reputation thereof can be just as important to make her policy credible and transparent we analyze a static barro and gordon 1983 s game where the effects of monetary policy depend on an unknown state of the economy the cb forms her own private and imprecise view of this state that she may announce to p in a cheap talk game to explain and motivate her policy intentions the precision of the noise in the cb s view measures her competence the more accurate her assessment the clearer an idea she has about what to do the fineness of the equilibrium message space measures monetary policy s transparency in any equilibrium of the cheap talk game the cb credibly announces one of finite inflation targets that differ by at least a multiple of the inflation bias competence ratio if this ratio is too large the cb can credibly communicate only the direction of monetary policy as the cb s competence rises and this ratio falls p knows that the cb puts increasing weight on pursuing her objective targets relative to surprising expectations to stimulate output therefore the equilibrium message space becomes finer a more competent cb is also less likely to erroneously observe extreme realizations of the shocks so she is more able tofine tune expectations at times of business as usual

on credible monetary policy and private government information credible and optimal monetary policies are considered in environments in which the government observes a signal that is correlated with the state of the economy when the signal is public information it is optimal for monetary policy to be conditioned upon it the extent to which such conditioning should occur when the signal is the private information of the government depends upon the government s incentives to misrepresent information it is shown that in some cases the ramsey policy is incentive compatible in others it is not in the latter cases policy must be constrained to be incentive compatible this may result in penalty phases along the equilibrium path following apparent mistakes by the policy maker it may result in the optimal monetary policy making no use of the signal journal of economic literature classification numbers c73 e52 e58

the impact of demographic changes on income distribution in a developing country abstract a common hypothesis regarding the distribution of income is that it tends to become more unequal in the initial and middle stages of economic development in part because of demographic changes however previous studies of the effect of demographic changes on income distribution are not based on the underlying micro determinants of the income components we provide such estimates the micro determinants of the probability of receipt and amount received conditional on receipt of four income components are estimated for three regions defined by the degree of urbanization five simulations of hypothetical demographic changes are conducted the simulated effects on some of the regional income component distributions are fairly considerable in regard both to equalizing the distributions and increasing the shares of the poorest however the overall effects are regressive in both urban and rural regions

market distortions and government transparency in this paper we investigate how government transparency depends on economic distortions we first consider an abstract class of economies in which a benevolent policy maker is privately informed about the exogenous state of the economy and contemplates whether to release this information our key result is that distortions limit communication even if transparency is ex ante pareto superior to opaqueness it cannot constitute an equilibrium when distortions are sufficiently high we next confirm this broad insight in two applied contexts in which monopoly power and income taxes are the specific sources of distortions jel d82 e61

causality between export growth and industrial development empirial evidence from the nics abstract this paper investigates the causal relationship between export growth and industrial development in eight newly industrializing countries nics results of sims causality test show that for most of the nics there is a strong bidirectional causality between the growth of exports and industrial development these findings support the export led growth strategy in that expansion in exports not only promote the growth of national income but also lead to structural transformation of the developing countries

is there a dead spot new evidence on fomc decisions before elections using new data that chronicle the fed s internal forecast of the output gap from 1973 to 1998 this paper tests for an electoral cycle in the decisions of the federal open market committee fomc the paper provides evidence of a dead spot in the committee s decisions before presidential elections for given values of these internal forecasts the fomc is less likely to decide to tighten monetary policy in the year preceding a presidential election than at other times

forecast uncertainty ex ante and ex post u s inflation and output growth survey respondents who make point predictions and histogram forecasts of macro variables reveal both how uncertain they believe the future to be ex ante as well as their ex post performance macroeconomic forecasters tend to be overconfident at horizons of a year or more but overestimate i e are underconfident regarding the uncertainty surrounding their predictions at short horizons ex ante uncertainty remains at a high level compared to the ex post measure as the forecast horizon shortens there is little evidence of a link between individuals ex post forecast accuracy and their ex ante subjective assessments

export expansion and economic growth testing for cointegration and causality this paper develops a multivariate error correction model to test the causality between exports and growth in 15 asian countries 1967 91 the underlying series are tested as non stationary in levels but stationary in first differences the causal factors are cointegrated in five of these countries only causality test results indicate that export expansion causes growth in two third of these countries corrected for simultaneity between the causal factors a country with a large public sector higher level of economic development and which is less vulnerable to external economic shocks is more likely to reap the benefits of export promotion strategies the causal inferences are fairly stable over the sample period

evolution of infant and child mortality in chile a model a model in which the birth rate and the infant and child mortality rates are jointly determined is used to explain the coexistence of declining infant and child mortality with increasing unemployment and falling living standards for at least part of the population the causes of the mortality decline are complex and include economic health care welfare urbanization and other aspects unemployment affected the birth rate and therefore the child mortality rate but the fall in infant mortality obeyed different factors such as midwife visits health expenditure and access to cheap energy policies require careful designing since often there is a trade off between infant and child mortality specially if the birth rate is high progress in one of these areas may prove counterproductive in the other if choices along the economy s phillips curve are possible solely on infant and child mortality grounds higher earnings should be preferred to lower unemployment

the federal funds rate and the channels of monetary transmission the authors show that the interest rate on federal funds is extremely informative about future movements of real macroeconomic variables then they argue that the reason for this forecasting success is that the funds rate sensitively records shocks to the supply of bank reserves that is the funds rate is a good indicator of monetary policy actions finally using innovations to the funds rate as a measure of changes in policy the authors present evidence consistent with the view that monetary policy works at least in part through credit i e bank loans as well as through money i e bank deposits copyright 1992 by american economic association

real time density forecasts from bayesian vector autoregressions with stochastic volatility central banks and other forecasters are increasingly interested in various aspects of density forecasts however recent sharp changes in macroeconomic volatility including the great moderation and the more recent sharp rise in volatility associated with increased variation in energy prices and the deep global recession pose significant challenges to density forecasting accordingly this paper examines with real time data density forecasts of u s gdp growth unemployment inflation and the federal funds rate from bayesian vector autoregression bvar models with stochastic volatility the results indicate that adding stochastic volatility to bvars materially improves the real time accuracy of density forecasts this article has supplementary material online

on the export led growth hypothesis the econometric evidence from china the export led growth hypothesis is tested by estimating an augmented growth equation on the basis of times series data from china the granger no causality procedure developed by toda and yamamoto journal of econometrics 66 1995 was applied to test the causality link between exports and economic growth in a var system three distinct features in this paper stand out compared to earlier studies on china first we have gone beyond the traditional two variable relationship by building a var model in the production function context to avoid a possible specification bias second we follow riezman whiteman and summers empirical economics 21 1996 to test the export led growth hypothesis while controlling for the growth of imports to avoid producing a spurious causality result third we test the sensitivity of causality test results under different lag structures along with the choice of optimal lags in particular the methodology developed by toda and yamamoto 1995 is expected to improve the stan

presidents and the u s economy an econometric exploration the us economy has performed better when the president of the united states is a democrat rather than a republican almost regardless of how one measures performance for many measures including real gdp growth our focus the performance gap is large and significant this paper asks why the answer is not found in technical time series matters nor in systematically more expansionary monetary or fiscal policy under democrats rather it appears that the democratic edge stems mainly from more benign oil shocks superior total factor productivity tfp performance a more favorable international environment and perhaps more optimistic consumer expectations about the near term future jel d72 e23 e32 e65 n12 n42 an extensive and well known literature of scholarly research documents and explores the fact that macroeconomic performance is a strong predictor of us presidential election outcomes scores of papers find that better performance boosts the vote of the incumbent s party 1 in stark contrast economists have paid scant attention to predictive power running in the opposite direction from election outcomes to subsequent macroeconomic performance the answer while hardly a secret is not nearly as widely known as it should be 2 the us economy performs much better when a democrat is president than when a republican is

one size fits all monetary policy and asymmetric household debt cycles in u s states i investigate the nonlinear effects of monetary policy through differences in household debt across u s states after constructing a novel indicator of inflation for the states i compute state specific monetary policy stances as deviations from an aggregate taylor rule i find that the effectiveness of monetary policy is curtailed during periods of large household debt imbalances moreover a common u s monetary policy does not fit all it may have asymmetric effects on the economic performance across states particularly at times of high dispersion in the household debt imbalances as it may have been the case around the great recession

can buy me love the effect of child welfare expenditures on maltreatment outcomes i consider the effect of state level child welfare expenditures on child abuse victimization and fatality rates the main result is that these expenditures are strongly associated with improved child maltreatment outcomes further the well known negative association between income and child abuse is overstated if one fails to control for relevant policy differences that are correlated with economic circumstances the effect of income diminishes further upon controlling for social attitudes correlated with income the source of identification is a set of large and explicitly exogenous changes in child welfare expenditures induced by the circa 2000 recession i show that endogeneity problems are small and tend to work against the result

monetary policy and long term interest rates in germany abstract in this paper we provide new empirical evidence on the relationship between short and long run interest rates for germany we find a positive correlation after a supply and demand shock and a negative correlation after a monetary policy shock this finding is consistent with the theory of ellingsen and soderstrom american economic review 2001 91 5 1594 1607

monetary policy announcements and expectations evidence from german firms abstract we assess empirically whether monetary policy announcements impact firm expectations two features of our data set are key first we rely on a survey of production and price expectations of german firms that is expectations of actual price setters second we observe the day on which firms submit their answers to the survey we compare the responses of firms before and after monetary policy surprises and obtain two results first firm expectations respond to policy surprises second the response becomes weaker as the surprise becomes bigger a contractionary surprise of moderate size reduces firm expectations while a moderate expansionary surprise raises them large surprises both negative and positive fail to alter expectations consistent with this result we find that many of the ecb s announcements of non conventional policies did not affect expectations significantly overall our results are consistent with the notion that monetary policy surprises generate an information effect which is endogenous to the size of the policy surprise

central bank communication and monetary policy a survey of theory and evidence over the last two decades communication has become an increasingly important aspect of monetary policy these real world developments have spawned a huge new scholarly literature on central bank communication mostly empirical and almost all of it written in this decade we survey this ever growing literature the evidence suggests that communication can be an important and powerful part of the central bank s toolkit since it has the ability to move financial markets to enhance the predictability of monetary policy decisions and potentially to help achieve central banks macroeconomic objectives however the large variation in communication strategies across central banks suggests that a consensus has yet to emerge on what constitutes an optimal communication strategy

why are professional forecasters biased agency versus behavioral explanations professional forecasters may not simply aim to minimize expected squared forecast errors in models with repeated forecasts the pattern of forecasts reveals valuable information about the forecasters even before the outcome is realized rational forecasters will compromise between minimizing errors and mimicking prediction patterns typical of able forecasters simple models based on this argument imply that forecasts are biased in the direction of forecasts typical of able forecasters our models of strategic bias are rejected empirically as forecasts are biased in directions typical of forecasters with large mean squared forecast errors this observation is consistent with behavioral explanations of forecast bias

the long run information effect of central bank communication abstract why do long run interest rates respond to central bank communication whereas existing explanations imply a common set of signals drives short and long run yields we show that news on economic uncertainty can have increasingly large effects along the yield curve to evaluate this channel we use the publication of the bank of england s inflation report from which we measure a set of high dimensional signals the signals that drive long run interest rates do not affect short run rates and operate primarily through the term premium this suggests communication plays an important role in shaping perceptions of long run uncertainty

are economic time series asymmetric over the business cycle it has long been argued that major cyclical variables such as the unemployment rate display an asymmetric behavior over various phases of the business cycle the paper provides a statistical test for this hypothesis using the framework of finite state markov processes i implement a test to see if the behavior of the unemployment rate is characterized by sudden jumps and slower drops it is argued that the framework provided in the paper can also be used to test other sample path properties of economic time series

growth forecast revisions over business cycles evidence from the survey of professional forecasters abstract this paper studies how expectations regarding current and future output growth are revised as the state of the economy evolves we study this issue using gdp growth forecasts from the survey of professional forecasters we find an asymmetric relationship between forecast revisions and gdp growth forecasters make larger forecast revisions during contractions than during expansions when the deviation of the economy from its normal state is controlled for

exports growth and causality in developing countries abstract previous empirical studies have interpreted results in regressions of output variables on export variables as providing support for an export promotion development strategy such an interpretation is questionable since these regressions provide no means of determining the direction of causality this paper performs causality tests between exports and growth for 37 developing countries the results cast considerable doubt on the validity of the export promotion hypothesis

does the federal reserve possess an exploitable informational advantage abstract this paper provides evidence that the federal reserve has an informational advantage over the public that can be exploited to improve activist monetary policy the informational superiority does not result from the fed having earlier access to publicly released financial data instead this advantage is generated by confidential supervisory knowledge about troubled non publicly traded institutions as a result this information can remain confidential for an extended period since these banks have neither the desire to fully disclose the extent of their financial troubles nor the requirement to do so the informational advantage is both statistically significant and economically important providing a potential justification for activist monetary policy

is the fed s news perception different from the private sector s the recent literature on monetary policy has dedicated considerable attention to modelling agents processing of information about the future in real time this paper contributes to this growing st

comment on the long run information effect of central bank communication by stephen hansen michael mcmahon and matthew tong abstract hansen et al 2019 highlight an uncertainty effect on long term interest rates particularly term premia of central bank communication using novel measures constructed directly from the text of the bank of england s inflation report this comment takes a more in depth look at these narrative measures showing that the measures identified as being important for explaining the short rate expectations and term premia components of interest rates are equally important for explaining overall interest rate movements at all maturities furthermore the signals identified as being important for long term rates and term premia are indeed correlated with perceptions of uncertainty but are also related to changes in longer horizon economic forecasts this suggests a more balanced view of central bank communications transmitting to long term interest rates through both short rate expectations and uncertainty

the relative importance of foreign and domestic disturbances for aggregate fluctuations in the open economy switzerland 1964 1981 abstract this paper studies whether the advent of floating exchange rates served to insulate switzerland from economic shocks of foreign origin it estimates a vector autoregression comprising four swiss and three world aggregate time series and interprets the results in terms of the properties of the vector moving average representation implied by the estimates the chief finding is that foreign shocks explain most of the systematic variation of the swiss variables in both regimes

what you don t know can hurt you or at least mislead you family behaviors unobserved heterogeneities and the determinants and impacts of human resources over the life cycle what one does not know in the form of unobserved heterogeneity can mislead one in empirical estimates a simple model of intrahousehold allocations illustrates the possible importance of unobserved factors such as abilities in determining human resources and their impacts the author reviews over forty years of studies primarily from latin america and the caribbean but also from elsewhere to illustrate the substantial empirical importance of unobserved heterogeneity with regard to preferences and intrahousehold allocations schooling returns school quality early life nutrition and program evaluation