benefit incidence public spending reforms and the timing of program capture assessments of the distributional effects of public spending reforms have generally been based on average rates of program participation by income or expenditure group this practice can be deceptive because the socioeconomic composition of participants can change as a social program expands or contracts the geographic variation found in 1993 94 household survey data for rural india is used to estimate the marginal odds of participating in schooling and antipoverty programs the results suggest early capture of these programs by the non poor it is shown that conventional methods for assessing benefit incidence underestimate the gains to the poor from higher public outlays and underestimate the losses from cuts

welfare dominance an application to commodity taxation in this paper the authors propose a method to identify commodity tax changes that will be favored by all individuals who can agree on certain weak assumptions with regard to the social welfare function the method is based on an extension of the criterion of second degree stochastic dominance and is illustrated using data from israel copyright 1991 by american economic association

an interest group model of direct income redistribution an interest group model of the determinants of policies which directly re distribute income to low income persons is developed and tested the model assum es that altruistic taxpayers nonaltruistic taxpayers and needy beneficiaries f orm separate interest groups from which politicians seek support benefit levels depend on variables such as taxpayer income and the price of benefits but unlike median voter models the model also implies a role for interest group strengt h and competition between political parties the author uses latent variable met hods and data on the aid to families with dependent children program to demonstr ate empirical support forthe model copyright 1986 by mit press

price clustering in australian water markets the finding of clustering in financial prices on particular digits is common across a broad range of financial markets this article explores whether price clustering is also present in the case of the weekly market for seasonal water in rural victoria australia we find a similar degree of clustering in the seasonal water market this suggests that the trading activities of the market produce characteristics that are similar to more sophisticated and deeper financial markets

capture and governance at local and national levels 135 despite the importance of this issue not much systematic research appears to have been devoted to assessing the relative susceptibility of national and local governments to interestgroup capture here we describe a model of two party electoral competition with probabilistic voting behavior and lobbying by specialinterest groups based on david baron 1994 and gene grossman and elhanan helpman 1996 that helps identify determinants of relative capture at different levels of government these include relative levels of voter awareness and interest group cohesiveness electoral uncertainty electoral competition heterogeneity of districts with respect to inequality and the electoral system while some of these uphold the traditional madisonian presumption others are likely to create a tendency for lower capture at the local level so the net effect is theoretically ambiguous this suggests that the extent of relative capture may be context specific and needs to be assessed empirically

stock price clustering and discreteness stock prices cluster on round fractions clustering increases with price level and volatility and decreases with capitalization and transaction frequency clustering is pervasive price clustering will occur if traders use discrete price sets to simplify their negotiations exchange regulations require that most stocks be traded on eighths clustering on larger fractions will occur if traders choose to use discrete price sets based on quarters halves or whole numbers an econometric model of clustering is derived and estimated projections from the results suggest that traders would frequently use odd sixteenths when trading low price stocks if exchange regulations permitted trading on sixteenths article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

the social appraisal of local public spending using revealed fiscal preferences abstract growth rate differentials between local governments are used to reveal preferences over local spending policies when fiscal tastes vary according to income and housing tenure and are constrained by local budgets and housing markets conditions are derived which indicate whether or not a locally financed fiscal expansion is desirable according to a generalized utilitarian social welfare function the setting for the empirical work is sydney australia

do local officials know something we don t decentralization of targeted transfers in albania abstract albania provides a small amount of social assistance to nearly 20 of its population through a system which allows a degree of community discretion in determining distribution this study indicates that relative to other safety net programs in low income countries social assistance in albania is fairly well targeted to the poor moreover the poverty targeting exceeds that which could be expected on the basis of proxy indicators of targeting alone communes appear to be using local information unlikely to be obtained on the basis of a questionnaire or formula this remains the case conditional on the level of funding allocated from the central government

assessing the welfare impacts of public spending an important objective of public spending is to raise household living standards particularly for the poor but how can final impacts on this objective best be assessed evaluating a policy s impact requires assessing how different things would have been in its absence but the counterfactual of no intervention is tricky to quantify the author surveys the methods most often used to assess the welfare effects of public spending limitations of current practices are studied and implications for future best practices are drawn the methods used to assess welfare impacts broadly fall into two groups benefit incidence studies and behavioral approaches benefit incidence studies ignore behavioral responses and second round effects using the provision cost as a proxy for benefits received behavioral approaches present quite different drawbacks in attempting to represent individual benefits correctly a number of recent studies usefully combine both approaches it is still uncertain whether behaviorally consistent methods actually point to fundamentally different policy recommendations what can be concluded is that we need to diversify and compare results from our evaluation methods and broaden our definition of well being to see how various facets of living standard are affected by public spending

applied welfare economics with discrete choice models economists have been paying increasing attention to the study of situations in which consumers face a discrete rather than a continuous set of choices such models are potentially very important in evaluating the impact of government programs upon consumer welfare but very little has been said in general regarding the tools of applied welfare economics indiscrete choice situations this paper shows how the conventional methods of applied welfare economics can be modified to handle such cases it focuses on the computation of the excess burden of taxation and the evaluation of quality change the results are applied to stochastic utility models including the popular cases of probit and logit analysis throughout the emphasis is on providing rigorous guidelines for carrying out applied work this abstract was borrowed from another version of this item

modeling and explaining the dynamics of european union allowance prices at high frequency in this paper we model the adjustment process of european union allowance eua prices to the releases of announcements at high frequency controlling for intraday periodicity volatility clustering and volatility persistence we find that the high frequency eua price dynamics are very well captured by a fractionally integrated asymmetric power garch process the decisions of the european commission on second national allocation plans have a strong and immediate impact on eua prices on the other hand our results suggest that eua prices are only weakly connected to indicators about the future economic development as well as the current economic activity

industry equilibrium uncertainty and futures markets abstract this paper studies competitive long run industry equilibrium with uncertainty and futures trading we also provide a long run analysis of futures trading instead of the conventional short run analysis it is shown without using a general equilibrium model that given uncertain demand and risk aversion a bias backwardation or contango arises in long run industry equilibrium given risk neutrality such a bias however disappears we find that the occurrence of the bias depends not only on the existence of a risk premium but also on the length of the period considered each risk averse firm operates at a less efficient scale and moreover an expected spot price never accords with marginal cost when the expected spot price is less than marginal cost the risk averse firm can secure profit by selling futures contracts more than the amount of its output in the presence of production supply uncertainty a risk neutral firm operates with excess capacity under additive risk while the firm operates with proper capacity under multiplicative risk the key lies in whether its average cost curve is shifted by production risk

shadow economies size causes and consequences using various methods the size of the shadow economy in 76 developing transition and oecd countries is estimated average size varies from 12 percent of gdp for oecd countries to 23 percent for transition countries and 39 percent for developing countries increasing taxation and social security contributions combined with rising state regulations are driving forces for the increase of the shadow economy especially in oecd countries according to some findings corruption has a positive impact on the size of the shadow economy and a growing shadow economy has a negative effect on official gdp growth

the impacts of liquidity dynamics on emissions allowances price different evidence from china s emissions trading pilots abstract the liquidities of china s emissions trading markets have significant impacts on emissions allowances price movement and pricing efficiency liquidity measures on illiquidity ratio and trade values indicate hubei emissions allowances hbea product has the highest liquidity shenzhen allowances sza and guangdong emissions allowances gdea products have the higher liquidity than beijing emissions allowances bea and shanghai emissions allowances shea products while tianjin emissions allowances tjea product has the lowest market liquidity in considered china s emissions trading pilots the dynamics of the illiquidity ratios for all selected emissions allowances products are negatively related with emissions allowances returns and trade volumes for bea tjea sza and hbea products are also negatively related with emissions allowances returns the dynamics of daily illiquidity ratios and trade based liquidity in beijing tianjin guangdong shenzhen hubei emissions pilots have significant volatility clustering impacts on the variances of regional emissions allowances returns previous market shocks of overnight and intraday price variations have the more persistent influences on the gdea returns than hbea returns reflecting greater inter day price ranges clustering effect

risk aversion supply response and the optimality of random prices a diagrammatic analysis this paper analyzes the effect of commodity price stabilization on producers and consumers both in the short run and in the long run when producers have adjusted their production decisions to take account of the change in the price distribution we derive conditions under which a both producers and consumers may be better off and b both producers and consumers may be worse off moreover we show that the long run effects may differ not only quantitatively but also qualitatively from the short run effects the anomalous results may occur even with reasonable assumptions concerning production functions and utility functions of producers and consumers

information and the operation of markets tests based on a general equilibrium model of land leasing in india abstract this paper develops an estimable general equilibrium model of land leasing to test the extent to which information is commonly held in a village and whether village markets are efficient information regarding the relative farming skill of households is found to be widespread but the assumption of perfectly efficient markets within the village is rejected these results have ramifications for the estimation of agricultural household models and for our understanding of rural institutions the model is derived from the primitives of the production technology the extent of information and the distributions of assets and several household unobservables simultaneity and selection issues are dealt with explicitly in a two stage maximum likelihood estimation procedure using panel data from india

production uncertainty and the market equilibrium of the competitive firm abstract assumptions outputs are planned ex ante by risk neutral firms actual outputs are stochastic with variance function of planned output production costs are function of planned outputs while the market linear demand function is stable if individual outputs as positively correlated expected profit is decreased by the negative covariance between output and price the firms and market equilibria are analyzed in the short run and the long run with varying number of firms they are compared with oi s and tisdell s uncertain demand models

are poorer states worse at targeting their poor abstract as a rule the governments of poor states provinces or countries do not seem to be very good at targeting public spending to their poor yet anti poverty programs often target poor states in the hope of reaching poor people should this change

decentralized targeting of an antipoverty program abstract developing country governments often delegate authority over the targeting of antipoverty programs to community organizations while retaining control over how much goes to each community we offer a theoretical characterization of the information structure in such programs and the interconnected behavior of the various players our model motivates an econometric specification for explaining distributional outcomes results for bangladesh s food for education ffe program indicate that within village targeting improved with program size lower land inequality less remoteness fewer shocks and less private redistribution there is no sign that the center took account of village attributes conducive to reaching the poor

efficient intra household allocations a general characterization and empirical tests the neoclassical theory of demand applies to individuals yet in empirical work it is usually taken as valid for households with many members this paper explores what the theory of individuals implies for households that have more than one member we make minimal assumptions about how the individual members of the household resolve conflicts all we assume is that however decisions are made outcomes are efficient we refer to this as the collective setting we show that in the collective setting household demands must satisfy a symmetry and rank condition on the slutsky matrix we also present some further results on the effects on demands of variables that do not modify preferences but that do affect how decisions are made we apply our theory to a series of surveys of household expenditures from canada the tests of the usual symmetry conditions are rejected for two person households but not for one person households we also show that income pooling is rejected for two person households we then test for our collective setting conditions on the couples data none of the collective setting restrictions are rejected we conclude that the collective setting is a plausible and tractable next step to take in the analysis of household behavior

flexible discrete choice demand models consistent with utility maximization an application to health care demand policies a considerable literature has developed to estimate the economic determinants of health care provider choice one important goal of this literature has been the estimation of price elasticities of health care demand particularly in rural areas of developing countries where debates continue regarding appropriate levels of user fees in government health facilities world bank accurate estimation of price elasticities is crucial to evaluating the trade offs between health promotion and revenue generation in rural areas where poorly funded government clinics are often consumers only accessible health care choices however the exact empirical implementation of demand estimation with discrete data has be

the market microstructure of the european climate exchange abstract this paper analyzes the market microstructure of the european climate exchange the largest eu ets trading venue the ecx captures 2 3 of the screen traded market in eua and more than 90 in cer volume growth has averaged 277 in eua between 2005 and 2009 and 724 in cer since 2007 spreads range from 0 0188 to 0 0406 for eua and 0 0276 to 0 0796 for cer the median proportion of the spread due to adverse selection reaches 76 for eua and 75 for cer realized volatility bid ask spreads and adverse selection costs decline with verified emission releases market impact estimates imply that an average trade will move the eua market by 1 06 euro centimes and the cer market 1 45 the ecx is providing between 75 and 88 of price discovery for eua trading and between 64 and 72 for cer we find imbalances in the order book help predict returns for up to three days a simple trading strategy that enters the market long or short when the order imbalance is strong is profitable even after accounting for spreads and market impact

information learning and wage rates in low income rural areas in this essay we present evidence that employers in rural areas of developing countries have imperfect information with regard to the productivity of heterogeneous workers in addition to obtaining direct measures of the completeness of employer information we consider the implications of information asymmetries for the structure of casual labor markets we then evaluate the extent to which casual labor markets do in fact exhibit these attributes we find that 1 there is adverse selection out of the time rate labor market 2 employers discriminate statistically given two workers with different observed characteristics but the same actual productivity the worker from the group with the higher average productivity will have a higher wage 3 employers exhibit learning over time the extent of employer ignorance is negatively related to labor market exposure on the part of the workers and 4 calorie consumption affects productivity but is not rewarded in the time rate labor market in concluding we argue that an analysis of wage and employment patterns and the implications of these patterns for human capital investment in rural areas of developing countries that ignored the role of information problems could yield misleading conclusions

benefits on the margin benefit incidence analysis has become a popular tool over the past decade especially for researchers at the world bank despite or perhaps because of the popularity of this method recent research has pointed out many of its limitations one of the most common criticisms of benefit incidence analysis is that its description of average participation rates is not necessarily useful in guiding marginal changes in public spending policies this article considers a variety of methods for analyzing the marginal benefit incidence of policy changes a key conceptual point is that despite the fact that the various methods measure marginal incidence they do not measure the same thing nor are they intended to do so there are many possible policy changes and thus many margins of interest each method captures one of these and so is of interest for some analyses and inappropriate for others empirically the precision of the methods differs substantially with those relying on differenced data or aggregations of

what makes carbon traders cluster their orders abstract the ability to trade large amounts of assets at low costs could be hindered when the size of the orders is concentrated at specific trade sizes this paper documents evidence of size clustering behavior in the european carbon futures market and analyzes the circumstances under which it happens our findings show that carbon trades are concentrated in sizes of one to five contracts and in multiples of five we have also demonstrated that more clustered prices have more clustered sizes suggesting that price and size resolution in the european carbon market are complementary and that carbon traders round both the price and the size of their orders finally the analysis of the key determinants of the size clustering reveals that traders use a reduced number of different trade sizes when uncertainty is high market liquidity is poor and the desire to open new positions and cancel old ones is very strong

technological uncertainty and the theory of the firm several recent articles 1 6 have generalized the theory of the firm to incorporate price uncertainty and risk aversion it is now well known that the risk averse entrepreneur will select that level of output at which the expected price equals the marginal cost plus the marginal risk premium leland 5 provides a similar generalization given demand uncertainty however in each case the assumption of a well specified technology is maintained this paper complements and generalizes the earlier work on the theory of the firm by investigating the effect which technological uncertainty has on the firm s optimal production decision like the earlier work on the theory of the firm we show that the firm selects the level of input at which the expected marginal productivity equals the factor price plus the marginal risk premium unlike the earlier work we show that the sign of the marginal risk premium is not always positive and that it depends on the structure of the firm s technology we show that the distinction between price and technological uncertainty is important because each can lead to different implications for firm behavior like its predecessors the model of the firm presented here assumes a single ownerentrepreneur who makes the production decision we modify the baron and sandmo models by assuming that the entrepreneur knows the cost of each production decision but not the output as a result the entrepreneur s decision yields a random variable denoting output and a linear transformation of it denoting profit the entrepreneur chooses the random variable denoting profit to maximize his expected utility there are at least three distinct ways in which our notion of technological uncertainty may be interpreted first the entrepreneur may not know the location of the production surface in this case each production decision yields a random output an increase in the

on measuring speculative and hedging activities in futures markets from volume and open interest data this article provides a critical assessment of the line of research that measures speculative and hedging activities in futures markets from volume and open interest data it makes several contributions first a detailed theoretical analysis of the measures proposed in the previous literature as proxies for speculative activity clarifies the circumstances in which they fail as well as the assumptions that have to be made when they are used as intended second we propose a new way of combining the volume and the open interest figures which provides additional information regarding the type of trading activity that takes place in the market on a given date finally we analyse empirically the basic statistical properties of all the ratios when they are applied to real data for some of the stock index futures contracts most actively traded in the world this empirical analysis shows the diverse behaviour of the ratios when they are applied to a common sample of real data which confirms our previous the

data watch the world bank s living standards measurement study household surveys since 1985 the world bank has been collecting household survey data in developing countries that provide a rich source of information for assessing household welfare understanding household behavior and evaluating the impact of government policies this article describes these household surveys known as living standards measurement study lsms surveys and explains how to obtain their data lsms surveys have been implemented in over twenty developing countries and have been used to analyze poverty labor markets health and education pricing policies determinants of school performance savings and consumption smoothing health and nutrition policies and gender and fertility issues

an exogeneity test for a simultaneous equation tobit model with an application to labor supply a test of weak exogeneity in the simultaneous equation tobit model is proposed and illustrated using a female labour supply model estimated using cross section data the test statistic can be simply output from any standard tobit maximum likelihood package and is asymptotically efficient the procedure provides consistent estimators for the simultaneous tobit model whose asymptotic covariance matrix is a simple extension of the usual tobit formula we also provide the lagrange multiplier test of weak exogeneity this abstract was borrowed from another version of this item

an analysis of trade size clustering and its relation to stealth trading abstract nyse and nasdaq trades increasingly cluster on multiples of 500 1 000 and 5 000 shares such clustering varies over time and across stocks and tends to increase with the level of trading activity furthermore rounded trades tend to have more persistence both in occurrence and in trade initiation finally medium sized rounded trades tend to have greater relative price impact than large rounded trades from these observations we surmise that trade size clustering is consistent at least in part with the actions of stealth traders who tend to use medium sized rounded transactions in an attempt to disguise their trades