commodity price shocks and civil conflict evidence from colombia how do income shocks aect armed con ict theory suggests two op posite eects if labor is used to appropriate resources violently higher wages may lower con ict by reducing labor supplied to appropriation this is the opportunity cost eect alternatively a rise in contestable income may increase violence by raising gains from appropriation this is the rapacity eect our paper exploits exogenous price shocks in inter national commodity markets and a rich dataset on civil war in colombia to assess how dierent income shocks aect con ict we examine changes in the price of agricultural goods which are labor intensive and natural resources which are capital intensive we focus on coee and oil the two largest exports we nd that a sharp fall in coee prices in the 1990s increased violence dierentially in regions growing more coee by lower ing wages and the opportunity cost of joining armed groups in contrast a rise in oil prices increased violence dierentially in the oil region by in creasing municipal revenue siphoned through rapacity this pattern holds in several other agricultural and natural resource sectors providing robust evidence that price shocks aect con ict in opposite directions depending on the factor intensity of the commodity

household survey data and pricing policies in developing countries in recent years household survey data from developing countries have increasingly become available and have been increasingly used to cast light on important questions of policy the reform of prices whether agricultural prices consumer taxes subsidies or tariffs has consequences for individual welfare and for government revenues and these can be investigated empirically with household survey data the gainers and losers from price changes can be identified and the magnitudes of their gains and losses measured nonparametric estimation techniques provide a straightforward and convenient way of displaying this information the procedure is illustrated for the effects of rice pricing in thailand using data from more than five thousand rural households estimates of the revenue effects of price reforms are harder to obtain because they require estimates of supply and demand elasticities estimates that are not easily obtained for many developing countries a procedure is presented for estimating price elasticities of demand from spatial price variation as recorded in household survey data the main innovations lie in the appropriate treatment of quality variations and measurement error applications of the procedure in cote d ivoire indonesia and morocco are reviewed

is protection for sale evidence on the grossman helpman theory of endogenous protection grossman and helpman 1994 present a theory of endogenous protection by explicitly modeling government industry interactions for which mere black box models previously existed they obtain a ramsey pricing type solution to the provision of protection which emphasizes the role of inverse import penetration ratios and import elasticities on the lobbying side the model makes predictions about lobbying competition and lobbying spending according to deadweight costs from protection the model not only makes for richer theory in terms of rigor and elegance but its predictions are directly testable whether the grossman helman model stands up to real world data is investigated in this paper predictions from both the protection side and lobbying side are tested using cross sectional u s nontariff barrier data we also compare the second generation grossman helpman model with a more traditional specification our results call for serious consideration of this model in the political economy literature

market access for sale abstract this paper focuses on the links between foreign lobbying and preferential market access granted by the united states government to exporters in the rest of the americas we first develop a simple framework based on grossman and helpman grossman g helpman e 1994 protection for sale american economic review 84 4 833 850 to explain how lobbying by foreign firms affects their preferential access to the united states market we then estimate the model using data on tariff preferences and lobby contributions for the 34 countries in the region empirical results suggest that foreign lobbying is an important force behind preferential market access to the united states the structural estimates indicate that the weight given to foreign lobby contributions in the united states government objective function is five times higher than the weight granted to tariff revenue forgone due to preferences thus our results indicate that market access is up for sale and foreign lobbies are buying it

detecting multiple factors in panel data an application on the growth of local regions in china abstractdue to unbalanced growth in china s local regions we construct a panel data model with multiple common factors to examine the differences among the growth factors in these areas this article shows the various impacts from the supply and demand sides on economic growth different from the demand side the supply side impacts have permanent influences this article focuses on these deep and profound impacts to explain the reasons behind china s fast economic growing by using data on 27 regions from 1958 to 2013 we summarize the main permanent influences along three lines the first comes from the coastal regions which have learned modern technology and systems from foreign companies such as in guangdong zhejiang fujian and liaoning the second comes from big cities such as beijing and shanghai in which a huge migration has given the companies opportunities to recruit excellent workers making the resource allocation specialized and more efficient the third is from the government s major p

u s multinationals and preferential market access this paper examines the relationship between oshoring activity by u s multinational rms and the structure of u s trade preferences we combine rm level panel data on u s foreign aliate activity from the u s bureau of economic analysis bea with detailed measures of u s trade preferences from the u s international trade commission usitc to create a three way panel that spans 80 industries 184 countries and ten years 1997 2006 consistent with existing theory we nd that o shoring and preferential market access are positively and consistently correlated both in the pooled sample and within countries industries and years using both instru mental variables and simultaneous equations approaches to address the endogeneity of export oriented foreign investment we nd that a 10 increase in u s foreign aliate exports to the u s from a particular industry and country is associated with a 4 per centage point increase in the rate of preferential duty free access restricting attention to the generalized system of preferences gsp among potentially eligible develop ing countries we nd that the inuence of multinational aliate sales on preferential market access more than triples

protection versus free trade lobbying competition between domestic and foreign firms this article considers how political interaction between policymakers and domestic and foreign firms endogenously determines tariff rates we show that because of lobbying competition between foreign and domestic firms even a less competitive foreign firm can successfully elicit a tariff reduction under reasonable conditions moreover lobbying competition may also increase the level of aggregate domestic welfare when the market powers of the competing firms are sufficiently alike

on some computational aspects of equilibrium business cycle theory abstract this paper evaluates the accuracy of quadratic approximate methods in the context of a simple real business cycle model the level of accuracy is found to be very high on the face of the results reported here we are confident that the different computation methods proposed to date in this literature can be employed interchangeably

protection for sale in a developing country democracy vs dictatorship for a genuine small open economy that has experienced both dictatorship and democracy we find support for the predictions of the grossman helpman 1994 protection for sale model in contrast to previous studies we use various protection measures including tariffs the direct measure of the theoretical model and perform both single year and panel regressions using turkish industry level data the government s weight on welfare is estimated to be much larger than that on contributions more importantly we find that this weight is generally higher for the democratic regime than for dictatorship

aggregate stochastic implications of the life cycle hypothesis this paper sets forth some key aggregate stochastic implications of the modigliani brumberg 1980 life cycle hypothesis and explores the extent to which a properly aggregated life cycle model can help to explain the first and second moment properties of changes in per capita consumption the principal finding of the paper which to my knowledge is new is that smooth per capita consumption in the presence of permanent shocks to per capital labor income is exactly the outcome one should expect from a properly aggregated life cycle model in which saving for retirement as well as for consumption smoothing is a motive for asset accumulation

monetary union a welfare based approach abstract this article attempts to shed light on the consequences of the transition to emu for individual welfare following specific shocks to this end we develop a two country intertemporal general equilibrium model that extends the obstfeld and rogoff journal of political economy 103 3 1995 624 specification to nominal rigidities through price adjustment costs and pricing to market behavior we show that when facing a positive asymmetric permanent shock to either technology or government expenditures occurring in one country implementing a monetary union is beneficial to the households living in this economy conversely it is detrimental to foreigners further a sensitivity analysis shows that if the gains losses to implementing monetary union are qualitatively robust when facing changes in the degree of nominal rigidities and the elasticity of substitution between foreign and domestic goods they are quite sensitive to the degree of pricing to market in the economy

tax rate uncertainty and the sensitivity of consumption to income in an overlapping generations model abstract a well documented feature of u s data is that the aggregate consumption is a smoother process than income an overlapping generations model with a time nonseparable utility function is developed to characterize the effect of income tax uncertainty on the degree of consumption smoothness the model predicts that an increased tax uncertainty combined with tax financed production externality makes the aggregate consumption smoother for a plausible range of intertemporal substitution in consumption a calibration experiment indicates that the observed long term smoothness of aggregate consumption is consistent with the model s predicted consumption process

protection for sale an empirical investigation comment do contributions levels matter for endogenous protection or is the existence of a lobby sufficient are lobbies net benefits from protection identical to their contribution levels or does the level of protection simply reflect contribution levels of supporters and opponents we estimate the influence driven grossman and helpman 1994 and the tariff function findlay and wellisz 1982 models within a unified theoretical framework to examine the contrasting implications derived from these two prominent tariff formation models we find strong evidence that protection is indeed for sale the important new result is however that not only the existence of lobbies matters but also the relative size of the sectoral pro and anti protection contributions using j tests to compare the power of the models directly we cannot reject the null of correct specification of the influence driven model and find evidence of some misspecification in the tariff function model

the pre programme earnings dip and the determinants of participation in a social programme implications for simple programme evaluation strategies the key to estimating the impact of a programme is constructing the counterfactual outcome representing what would have happened in its absence this problem becomes more complicated when agents such as individuals firms or local governments self select into the programme rather than being exogenously assigned to it this paper uses data from a major social experiment to identify what would have happened to the earnings of self selected participants in a job training programme had they not participated in it we investigate the implications of these earnings patterns for the validity of widely used before after and difference in differences estimators

trade transboundary pollution and foreign lobbying in this paper we explore the use of trade policy in addressing transboundary stock pollution problems such as acid rain and water pollution we show that a tariff determined by the current level of accumulated pollution can induce the time path of emissions optimal for the downstream polluted country but if the upstream polluting country can lobby the downstream government to impose lower tariffs distortions brought by corruption and foreign lobbying lead to a rise in the upstream country s social welfare and to a decrease in social welfare in the downstream country thus the usefulness of trade policy as a tool for encouraging cooperation and internalizing transboundary externalities depends critically on the degree of governments susceptibility to foreign political influence

sources of growth and the spectral properties of the labor market search model abstract this paper studies the dynamic properties of the labor market search model using three alternative sources of growth deterministic and stochastic exogenous growth specifications are compared with an endogenous growth specification which is based on an external learning by doing mechanism we apply watson s j political economy 101 6 1993 1011 test to assess the models performances over different frequency ranges it is shown that the endogenous growth specification can bring the labor market search model into closer conformity with the data than its exogenous counterparts

quinoa quandary cultural tastes and nutrition in peru abstract using a model of household food demand that incorporates regional preferences tastes for culturally appropriate food i investigate whether tastes for quinoa in the puno region of peru reduced household nutrition intakes when quinoa prices dramatically increased between 2004 and 2012 adapting a model from atkin 2013 and utilizing data from a national peruvian household survey enaho i am able to deconstruct regional changes in household nutrition over time into several general equilibrium effects in particular i isolate the effect of regional tastes for quinoa on nutrition outcomes this effect is identified by an exogenous spike in quinoa prices driven by international demand for quinoa while i find evidence that regional tastes for quinoa do exist in the puno region these tastes do not have a statistically significant impact on nutrition outcomes my results lend support to the conjecture that tastes for culturally appropriate food do not meaningfully affect household nutrition if the food in question is a sufficiently small component of a household s overall diet

indivisible labor lotteries and equilibrium abstract this paper considers an economy where labor is indivisible and agents are identical although the discontinuity in labor supply at the individual level disappears as a result of aggregation it is shown that indivisible labor has strong consequences for the aggregate bahavior of the economy it is also shown that optimal allocations involve lotteries over employment and consumption

stochastic trends and economic fluctuations are business cycles mainly the result of permanent shocks to productivity this paper uses a long run restriction implied by a large class of real business cycle models identifying permanent productivity shocks as shocks to the common stochastic trend in output consumption and investment to provide new evidence on this question econometric tests indicate that this common stochastic trend cointegration implication is consistent with postwar u s data however in systems with nominal variables the estimates of this common stochastic trend indicate that permanent productivity shocks typically explain less than half of the business cycle variability in output consumption and investment copyright 1991 by american economic association

a comparison of optimal tariffs and welfare under no lobbying domestic lobbying and domestic foreign lobbying whether and what type of the lobbying induced trade policies can improve the domestic welfare we show that as compared to the case of no lobbying and the case of domestic lobbying the domestic foreign lobbying may achieve the lowest tariff and may also realise the highest welfare for the domestic country our finding provides a theoretical explanation to the prevalent lobbying competition between asian firms and us firms in usa recently we argue that the domestic foreign lobbying may contribute to a freer trade in the domestic country and lobbying competition may be one of the strongest forces pushing for trade liberalisation

the role of importers and exporters in the determination of the u s tariff preferences granted to latin america abstract this paper investigates the role played by domestic importers and foreign exporters in improving preferential access to the domestic market to this end the framework used in this paper extends the protection for sale analysis to explicitly model the role of domestic importers and foreign exporters in the determination of preferential trade treatment the predictions of the model are tested using data on preferential trade between the united states and latin american countries the results suggest that latin american exporters and us importers lobbying efforts have a significant and important role in determining the extent of preferential access granted by the united states more interestingly these findings also show that u s importers capture a very substantial share of the rents generated by tariff preferences these results therefore shed a pessimistic view on preferential trade schemes as a reliable source of gains for developing countries

indivisible labor and the business cycle abstract a growth model with shocks to technology is studied labor is indivisible so all variability in hours worked is due to fluctuations in the number employed we find that unlike previous equilibrium models of the business cycle this economy displays large fluctuations in hours worked and relatively small fluctuations in productivity this finding is independent of individuals willingness to substitute leisure across time this and other findings are the result of studying and comparing summary statistics describing this economy an economy with divisible labor and post war u s time series

the long run labor market consequences of civil war evidence from the shining path in peru abstractthis study exploits district level variation in the timing and intensity of civil war violence to investigate whether early life exposure to civil wars affects labor market outcomes later in life in particular we examine the impacts of armed conflict in peru a country that experienced the actions of a tenacious brutally effective war machine the shining path between 1980 and 1995 this study finds that the most sensitive period to early life exposure to civil war violence is the first 36 months of life a 1 standard deviation increase in civil war exposure leads to a 5 fall in adult monthly earnings 3 5 reduction in the probability of working in formal jobs and 6 reduction in the probability of working in large firms substantial heterogeneity in the earnings impacts emerges when considering variation in the type of civil war violence overall forced disappearances emerge as the most hurtful measure of violence in the long run sexual violations disproportionately affected the wages of

international risk sharing and european monetary unification abstract we explore income and consumption smoothing patterns among european community ec countries and among oecd countries during the period 1966 90 we find that for oecd as well as for ec countries about 40 percent of shocks to gdp are smoothed at the one year frequency with about half the smoothing achieved through national government budget deficits and half by corporate saving at the three year differencing frequency only 25 percent of shocks to gdp are smoothed mainly via government lending and borrowing in the absence of alternative income and consumption smoothing mechanisms the restrictions on budget deficits imposed by the maastricht treaty should be relaxed to allow governments to run large temporary deficits in response to output shocks

employment and hours over the business cycle abstract approximately one quarter of the adjustment in total hours of employment over the business cycle represents adjustments in hours while the remainder is explained by changes in employment real business cycle models characterize agents as either continuously adjusting their hours or making only labor force participation decisions about jobs with indivisible hours in this paper we extend the representative agent framework to allow for decisions on both participation and hours we calibrate and simulate a dynamic version of the model and show that it is better able to mimic some features of the aggregate data

poverty traps and nonlinear income dynamics with measurement error and individual heterogeneity theories of poverty traps stand in sharp contrast to the view that anybody can make it through hard work and thrift however empirical detection of poverty traps is complicated by the lack of long panels measurement error and attrition this paper shows how dynamic pseudo panel methods can overcome these difficulties allowing estimation of non linear income dynamics and testing for the presence of poverty traps the paper explicitly allows for individual heterogeneity in income dynamics to account for the possibility that particular groups of individuals may face traps even if the average individual does not these methods are used to examine the evidence for a poverty trap in labor earnings income and expenditure in mexico and are compared to panel data estimates from a short rotating panel the results do find evidence of nonlinearities in household income dynamics and demonstrate large bias in the panel data estimates nevertheless even after allowing for heterogeneity and accounting for measurement error the paper finds no evidence of the existence of a poverty trap for any group in the sample

can poor countries lobby for more us bilateral aid summary this article explores if countries can lobby the us government for the allocation of us bilateral foreign aid we consider an informational lobby model where lobbying has two effects first a direct effect by informing us policymakers about their countries needs second an indirect effect on policymakers by informing them about common interests in economic or geopolitical terms the lobbyist thus influences the decisions about the allocation of aid resources we estimate the effect of the recipient country s lobbying agents in obtaining foreign aid the econometric results show that lobbying positively affects the amount of bilateral aid received

straight time and overtime in equilibrium abstract we formulate an equilibrium model of straight time and overtime wages by imposing restrictions on agents consumption sets and using a commodity space that includes employment lotteries we extract some time series implications from a linear quadratic approximation to our model evaluated at particular parameter values we use our model informally to interpret some features of observed time series for wages and employment

foreign informational lobbying can enhance tourism evidence from the caribbean there exist legal channels for informational lobbying of u s policymakers by foreign principals foreign governments and private sector principals frequently and intensively use this institutional channel to lobby on trade and tourism issues this paper empirically studies whether such lobbying effectively achieves its goal of trade promotion in the context of caribbean tourism and suggests the potential for using foreign lobbying as a vehicle for development panel data are used to explore and quantify the association between foreign lobbying by caribbean principals and u s tourist arrivals to caribbean destinations a variety of sensitivity analyses support the finding of a strong association the policy implications are obvious and potentially important for developing countries

real business cycle models and the forecastable movements in output hours and consumption the authors study the movements in output consumption and hours that are forecastable from a vector autoregression and analyze how they differ from those predicted by standard real business cycle models they show that actual forecastable movements in output have a variance about one hundred times larger than those predicted by the model the authors also find that forecastable changes in the three series are strongly positively correlated with each other on the other hand for parameters whose implications are plausible in other respects the model implies that output consumption and hours should not all be expected to move in the same direction copyright 1996 by american economic association

protection for sale or surge protection this paper asks whether the results obtained from using the standard approach to testing the influential grossman and helpman protection for sale pfs model of political economy might arise from a simpler setting a model of imports and quotas with protection occuring in response to import surges but only for organized industries is simulated and shown to provide parameter estimates consistent with the protection for sale framework this suggests that the standard approach may be less of a test than previously thought

rice prices and income distribution in thailand a non parametric analysis rice is a staple crop in thailand significantly entering both household production and consumption this paper examines the effect of rice prices on the distribution of real income across households taking into account household characteristics and geographical location the data set is a large scale survey of 11 893 households simple nonparametric techniques for regression and density estimation are used these methods depend on few assumptions and generate flexible graphical results that are directly informative about the problem at hand the main results are that higher rice prices should benefit all rural households but the largest benefits accrue to rural households in the middle of the income distribution copyright 1989 by royal economic society

farmers welfare and changing food prices nonparametric evidence from rice in madagascar this paper uses nonparametric density estimation and kernel smoothing techniques to examine the instantaneous distributional implications of rice price changes in madagascar while many farmers do not participate in product markets as either buyers or sellers and net sales or marketable surplus are fairly small for many others the roughly one third of rice farmers who fall below the poverty line face significant negative first order welfare effects from increases in the mean or variance of rice prices conversely the first order gains from rice price increases are highly concentrated among the largest rice farmers and particular regions in madagascar

the econometrics of panel data handbook of theory and applications preface 1 formulation and estimation of econometric models for panel data m nerlove p balestra part i linear models 2 introduction to linear models for panel data p balestra 3 fixed effect models and fixed coefficient models p balestra 4 error components models l matyas 5 random coefficients models cheng hsiao 6 linear dynamic models p sevestre a trognon 7 simultaneous equations j krishnakumar 8 panel data with measurement error e biorn 9 specification issues b h baltagi appendix matrix algebra for linear models part ii nonlinear models 10 introduction to nonlinear models c gourieroux 11 logit and probit models cheng hsiao 13 incomplete panels and selection bias m verbeek t nijman 14 pseudo panel data m verbeek 15 point processes j p florens d fougere part iii selected applications introduction to the applications z griliches 16 dynamic labour demand models g bresson f kramarz p sevestre 17 econometric models of company investment r blundell s bond c meghir 18 consumption dynamics and panel data a survey j m robin 19 estimation of labour supply functions using panel data a survey f laisney w pohlmeier m staat 20 individual labour market transitions d fougere t kamionka 21 modelling companies divident policy using account panel data j f malecot 22 software review p blanchard index

foods and fads the welfare impacts of rising quinoa prices in peru abstract riding on a wave of interest in superfoods in rich countries quinoa went in less than a decade from being largely unknown outside of south america to being an upper class staple in the united states the united kingdom and elsewhere as a result concerned commentators suggested that the rising international demand for quinoa which tripled prices might have substantially harmed peruvian quinoa consumers we study the impacts of rising quinoa prices on the welfare of peruvian households our analysis suggests these fears are unwarranted a descriptive analysis shows that quinoa is a small part

endogenous lobby formation and endogenous protection a long run model of trade policy determination this paper provides a theory of lobby formation within a framework in which trade policy is determined through political contributions under certain conditions free trade turns out to be an equilibrium outcome either when the government has a high affinity for political contributions or when it cares a great deal about social welfare moreover greater inequality in asset distribution results in a greater number of lobbies and in most cases more protection for each of these lobbies furthermore industries with higher levels of capital stock fewer capitalists more inelastic demand and smaller geographical dispersion are the ones that get organized

let s take a break trends and cycles in us real gdp abstract trend cycle decompositions for us real gdp such as the unobserved components models the beveridge nelson decomposition the hodrick prescott filter and others yield very different cycles which bear little resemblance to the nber chronology ascribes much movements to the trend leaving little to the cycle and some imply a negative correlation between the noise to the cycle and the trend we argue that these features are artifacts created by the neglect of a change in the slope of the trend function once this is accounted for all methods yield the same cycle with a trend that is non stochastic except for a few periods around 1973 the cycle is more important in magnitude than previously reported and it accords well with the nber chronology our results are corroborated using an alternative trend cycle decomposition based on a generalized unobserved components models with errors having a mixture of normals distribution for both the slope of the trend function and the cyclical component

to ban or not to ban foreign lobbying and cross national externalities this paper studies the costs and benefits of foreign lobbying we show how and when foreign lobbying can help internalize cross national externalities we argue that this is an often overlooked benefit of foreign lobbying we also study under what conditions a constitutional rule banning foreign lobbying is in the national interest of a country a key factor in this calculus is whether the interests of foreign lobby groups and domestic unorganized groups coincide or not we illustrate the logic with examples from trade policy and environmental regulation bannir ou ne pas bannir lobbying etranger et effets externes transnationaux ce texte etudie les couts et avantages du lobbying etranger on montre quand et comment que le lobbying etranger peut aider a internaliser des effets externes transnationaux on suggere que c est souvent un avantage qu on est porte a negliger du lobbying etranger on etudie sous quelles conditions une regle constitutionnelle bannissant le lobbying etranger peut etre dans l interet national d un pays un facteur cle dans ce calcul est le fait que les interets des groupes etrangers coincident ou non avec ceux des groupes nationaux non organises on illustre la logique sous jacente a l aide d exemples portant sur la politique commerciale et la reglementation environnementale

using asset prices to measure the persistence of the marginal utility of wealth we derive a lower bound for the volatility of the permanent component of investors marginal utility of wealth or more generally asset pricing kernels the bound is based on return properties of long term zero coupon bonds risk free bonds and other risky securities we find the permanent component of the pricing kernel to be very volatile its volatility is about at least as large as the volatility of the stochastic discount factor a related measure for the transitory component suggest it to be considerably less important we also show that for many cases where the pricing kernel is a function of consumption innovations to consumption need to have permanent effects

technology shocks and the business cycle on empirical investigation abstract this paper uses maximum likelihood to estimate a prototypical real business cycle model under several different assumptions regarding the stochastic process governing technological change the estimation approach permits the use of formal statistical hypothesis tests to help discriminate between competing specifications the approach also allows each specification to be evaluated based on its ability to generate accurate out of sample forecasts overall the results indicate that the data prefer a version of the model in which technology shocks are extremely persistent but still trend stationary

time series implications of friedman s permanent income hypothesis abstract the ability of the permanent income hypothesis pih to explain aggregate time series data has been seriously challenged over the last ten years based upon the implications of a version of the pih developed by hall 1978 and flavin 1981 there are however inconsistencies between the hall flavin version of the pih and pure time series representations of the pih based upon friedman s original formulation this paper considers the force of the recent challenges to the pih when the implications of the pih are drawn from a friedman muth version of the pih rather than the hall flavin version

implications of higher global food prices for poverty in low income countries in many poor countries the recent increases in prices of staple foods raise the real incomes of those selling food many of whom are relatively poor while hurting net food consumers many of whom are also relatively poor the impacts on poverty will certainly be very diverse but the average impact on poverty depends upon the balance between these two effects and can only be determined by looking at real world data results using household data for ten observations on nine low income countries show that the short run impacts of higher staple food prices on poverty differ considerably by commodity and by country but that poverty increases are much more frequent and larger than poverty reductions the recent large increases in food prices appear likely to raise overall poverty in low income countries substantially

trade diversion and declining tariffs evidence from mercosur abstract this paper empirically examines the alternative posed by richardson j intern econ 34 1993 39 to the traditional view that trade integration may exacerbate inefficiencies richardson s hypothesis boldly predicts that trade diversion and trade creation may actually cause tariffs to decline the hypothesis is fundamentally attributable to the presence of a political component in the governments objective functions a cross sectionally rich data set on trade and tariffs from the mercosur pact countries primarily argentina is used the evidence yields surprising conclusions about the validity of endogenous tariff determination in models of trade integration

robert m solow s neoclassical growth model an influential contribution to economics in 1956 robert solow s paper a contribution to the theory of economic growth 21 appeared in the quarterly jqurnal of economics the model this paper describes is a simple one it has a constant returns to scale aggregate production function with substitution between two inputs capital and labor the model is completed by assuming that a constant fraction of output is invested the discrete time version of the model is

is consumption insufficiently sensitive to innovations in income deaton 1986 has noted that if income is a first order autoregressive process in first differences then a simple version of friedman s permanent income hypothesis spih implies that measured u s consumption is insufficiently sensitive to innovations in income this paper argues that this implication of the spih is a consequence of the fact that it ignores the role of the substitution effect in the consumption decision using a parametric version of the standard model of economic growth the paper shows that very small movements in interest rates are sufficient to induce an empirically plausible amount of consumption smoothing since an overall evaluation of the model s explanation for the observed smoothness of consumption requires examining its implications for other aspects of the data the paper also explores some of these

technical progress and aggregate fluctuations abstract we compare the cyclical fluctuations exhibited by a stochastic growth model under various stochastic processes governing technical change all of which are highly autocorrelated the results obtained are quite sensitive to the precise form of this stochastic process in particular the results depend on whether growth is deterministic or stochastic and in each case are quite sensitive to the persistence of an innovation the model does a relatively poor job of accounting for features of observed business cycles when technical change is difference stationary and does a better job when technical change is trend stationary but highly autocorrelated

real business cycles in this paper we demonstrate how certain very ordinary economic principles lead maximizing individuals to choose consumption production plans that display many of the characteristics commonly associated with business cycles our explanation is entirely consistent with i rational expectations ii complete current information iii stable preferences iv no technological change v no long lived commodities vi no frictions or adjustment costs vii no government viii no money and ix no serial dependence in the stochastic elements of the environment we also provide a completely worked out example of the type of artificial economy we have in mind the time series properties of the example exhibit some major features of observed business cycles although this type of model may not be capable of explaining all of the regularities in actual business cycles we believe that it provides a useful well defined benchmark for assessing the relative importance of factors e g monetary disturbances

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

commodity price shocks and child outcomes the 1990 cocoa crisis in cote d ivoire abstract we look at the drastic cut of the administered cocoa producer price in 1990 cote d ivoire and study to which extent cocoa producers children suffered from this severe aggregate shock in terms of school enrollment labor height stature and morbidity using precrisis 1985 88 and postcrisis 1993 data we propose a difference in difference strategy to identify the causal effect of the cocoa shock on child outcomes whereby we compare children of cocoa producing households and children of other farmers living in the same district or the same village this causal effect is shown to be rather strong for the four child outcomes we examine hence human capital investments are definitely procyclical in this context we also provide evidence of gender bias against young girls with respect to education and health care we finally argue that the difference in difference variations can be interpreted as private income effects likely to derive from tight liquidity constraints

earnings mobility and measurement error a pseudo panel approach the degree of mobility in incomes is often seen as an important measure of the equality of opportunity in a society and of the flexibility and freedom of its labor market but estimation of mobility using panel data is biased by the presence of measurement error and non random attrition from the panel this paper shows that dynamic pseudo panel methods can be used to consistently estimate measures of absolute and conditional mobility in the presence of non classical measurement errors these methods are applied to data on earnings from a mexican quarterly rotating panel absolute mobility in earnings is found to be very low in mexico suggesting that the high level of inequality found in the cross section will persist over time however the paper finds conditional mobility to be high so that households are able to recover quickly from earnings shocks these findings suggest a role for policies which address underlying inequalities in earnings opportunities

the protectionist bias of duty drawbacks evidence from mercosur in a political economy setting where tariffs and duty drawbacks are endogenously chosen through industry lobbying it is shown that full duty drawbacks are granted to exporters who use imported intermediates in their production this in turn decreases their incentives to counter lobby against high tariffs on their inputs in equilibrium higher tariffs will be observed on these goods the creation of a regional block will change the political equilibrium duty drawbacks will be eliminated on intra regional exports which in turn will lead to lower tariffs for goods used as inputs by intra regional exporters evidence from mercosur suggests that the elimination of duty drawbacks for intra regional exports led to increased counter lobbying by users of intermediate products in its absence the common external tariff would have been on average 3 5 percentage points 25 percent higher