recursive equilibria in dynamic economies with stochastic production in this paper we prove the existence of recursive equilibria in stochastic production economies with infinitely lived agents and incomplete financial markets we consider a general dynamic model with several commodities which encompasses heterogeneous agent versions of both the lucas asset pricing model and the stochastic neo classical growth model as special cases our main assumption is that there are atomless shocks to fundamentals that have a purely transitory component and a component that does not depend on last period s shocks directly

does household composition matter the impact of the grain for green program on rural livelihoods in china article i nfo this research introduces family composition into the sustainable livelihoods framework for policy analysis we apply this approach to a case study on the grain for green program in western china using recent survey data from zhouzhi county we show that the impact of the policy on rural livelihoods varies across household compositions the environmental program neither targets asset poor households nor does it necessarily shift the on farm labor to non farm sectors which would improve household incomes after controlling for the effect of assets households with children but without the elderly tend to have lower migration rates and lower incomes after participation in the program policy strategies should consider household heterogeneity particularly household composition in rural china

prices and investment with collateral and default abstract this paper uses the framework of an olg economy with three period lived agents in which a durable good serves as collateral for loans to study the effect of an unanticipated income shock when the economy is in a steady state equilibrium we focus on the consequence of default on loans when the value of the collateral falls below the value of the debt it secures we analyze the impulse response functions of the price and production of the durable good and show that there is an asymmetry between the response of the price and investment of the durable good to a positive and a negative income shock arising from default on the collateralized loans we show that this asymmetry can be seen in the data on housing prices and construction and is attributable to the default on mortgages in periods of decreasing prices which acts as a turbo mechanism magnifying the decline in investment

eco labeling in commercial office markets do leed and energy star offices obtain multiple premiums this paper investigates the effect of eco labeling on rental rates sale prices and occupancy rates the consensus emerging from previous studies appears to be that investors in and occupiers of eco labeled buildings obtain a bundle of benefits related to lower operating costs reputation benefits and productivity higher in this study a hedonic model is used to test whether the presence of an eco label has a significantly positive effect on rental rates sale prices and occupancy rates of commercial office buildings in the us the results suggest that office buildings with energy star or leed eco labels obtain rental premia of approximately 3 5 dual certification produces an additive effect with rental premia estimated at 9 respective sale price premia for energy star and leed labeled office buildings are 18 and 25 the sale price premium for dual certification is estimated at 28 29 an occupancy premium could not be confirmed for leed labeled office buildings and only a small positive occupancy premium was found for energy star

international financial integration and crisis contagion international financial integration helps to diversify risk but also may spread crises across countries we provide a quantitative analysis of this trade off in a two country general equilibrium model with collateral constrained borrowing using a global solution method borrowing constraints bind occasionally depending upon the state of the economy and levels of inherited debt we examine different degrees of international financial integration moving from financial autarky to bond and equity market integration financial integration leads to a significant increase in global leverage substantially escalates the probability of crises for any one country and dramatically increases the degree of contagion across countries outside of crises the impact of financial integration on macroeconomic aggregates is relatively small but the impact of a crisis with integrated international financial markets is much less severe than that under financial market autarky thus a trade off emerges between the probability of crises and the severity of crises using a large cross country database of financial crises in developing and developed economies over a forty year period we find evidence in support of the model

household labor supply and welfare participation in sweden using a sample of swedish households we estimate a household labor supply model assuming that preferences for consumption and leisure can be described by a direct translog utility function the labor supply and welfare participation decisions are treated as a discrete choice problem and we assume that these choices follow a simple conditional logit rule in addition we allow unobserved individual specific effects to be correlated across alternatives we assume that these unobserved effects are drawn from a discrete distribution and the correlation across alternatives is modeled using factor loading techniques classification error in hours is allowed for by using a multiplicative measurement error specification the estimates from the structural model yield inelastic labor supply among husbands and positive wage elasticity for wives further the cross elasticities are close to zero

is there an energy efficiency gap many analysts have argued that energy efficiency investments offer an enormous win win opportunity to both reduce negative externalities and save money this overview paper presents a simple model of investment in energy using capital stock with two types of market failures first uninternalized externalities from energy consumption and second forces such as imperfect information that cause consumers and firms not to exploit privately profitable energy efficiency investments the model clarifies that only if the second type of market failure cannot be addressed directly through mechanisms such as information provision energy efficiency subsidies and standards may be merited this chapter therefore reviews the empirical work on the magnitude of profitable unexploited energy efficiency investments a literature which frequently does not meet modern standards for credibly estimating the net present value of energy cost savings and often leaves other benefits and costs unmeasured these problems notwithstanding recent empirical work in a variety of contexts implies that on average the magnitude of profitable unexploited investment opportunities is much smaller than engineering accounting studies suggest finally there is tremendous opportunity and need for policy relevant research that utilizes randomized controlled trials and quasi experimental techniques to estimate the returns to energy efficiency investments and the welfare effects of energy efficiency programs

collateral avoids ponzi schemes in incomplete markets without introducing either debt constraints or transversality conditions to avoid the possibility of ponzi schemes we show the existence of equilibrium in an infinite horizon incomplete markets economy with a collateral structure

securitized markets international capital flows and global welfare we study the effect of collateralized lending and securitization on the global supply of securitized assets welfare and international net and gross capital flows in a two country general equilibrium model with idiosyncratic investment risk the financial sectors in the two countries home and foreign differ by the collateral requirement for investment loans with home requiring lower margins in autarky home endogenously supplies more assets and enables more risk sharing upon financial integration capital flows from foreign to home leading to lower interest rates and an increase in the global supply of assets foreign enjoys substantial welfare gains through better risk sharing and portfolio reallocation while the welfare experience for home is ambiguous gross capital flows arise when agents face aggregate shocks to the expected payoff to investment projects but can collapse when shocks concern the variance of returns

job exit behavior of older men a dynamic programming model of job exit behavior and retirement is constructed and estimated using the method of simulated moments the model and estimation method allow for both unobserved individual effects and unobserved job specific match effects the model is estimated using two different assumptions about individual discount factors first a static model with the discount factor equal to zero is estimated then a dynamic model with the discount factor equal to 95 is estimated in both models it is found that bad health age and lack of education increase the probability of retirement the dynamic model performs better than the static model and has different implications for retirement behavior the job specific effects are an important source of unobserved heterogeneity copyright 1991 by the econometric society

approximate versus exact equilibria in dynamic economies this paper develops theoretical foundations for an error analysis of approximate equilibria in dynamic stochastic general equilibrium models with heterogeneous agents and incomplete financial markets while there are several algorithms that compute prices and allocations for which agents first order conditions are approximately satisfied approximate equilibria there are few results on h interpret the errors in these candidate solutions and how to relate the computed allocations and prices to exact equilibrium allocations and prices we give a simple example to illustrate that approximate equilibria might be very far from exact equilibria we then interpret approximate equilibria as equilibria for close by economies that is for economies with close by individual endowments and preferences

assessing empirical approaches for analyzing taxes and labor supply recent surveys on the labor supply responses of men document a divergence in the estimates of substitution and income effects obtained using various estimation approaches generally studies accounting for nonlinear tax schedules in a static setting via a piecewise linear approach produce estimates that typically imply higher substitution and lower income responses than are suggested by empirical work applying other approaches this paper demonstrates that maximum likelihood estimation of a consumer choice problem with nonlinear budget sets implicitly relies on the satisfaction of inequality constraints that translate into behaviorally meaningful restrictions these constraints arise not as a consequence of economic theory but instead as a requirement to create a properly defined statistical model in the analysis of piecewise linear budget sets the implicit constraints required by maximum likelihood in estimation amount to imposition of slutsky conditions at all wage income combinations associated with kink points in the analysis of differentiable budget sets the tacit constraints invoked by maximum likelihood also involve inequality restrictions on slutsky terms the empirical work presented in this study supports the contention that these implicit constraints play a major role in explaining the discrepancies in estimates found in the literature on men s labor supply

financial intermediation house prices and the welfare effects of the u s great recession abstract this paper quantifies the welfare costs of the great recession in the united states and their distribution between borrowing and saving households we use a calibrated dynamic general equilibrium model with shocks to aggregate income and to the financial intermediation sector the model matches the boom bust cycle in house prices the dynamics of household leverage and the increase in inequality of wealth observed in the u s after 2007 we find large welfare costs for financially constrained households the borrowers savers instead benefited from a redistribution of housing wealth due to the de leveraging of borrowers caused by the plunge in house prices this redistribution mechanism was exacerbated by the financial intermediation shock we also show that the welfare costs for borrowers would have been lower if aggregate leverage had remained at pre 2001 levels

regulating collateral requirements when markets are incomplete in this paper we examine the eects of default and collateral on risk sharing we assume that there is a large set of assets which all promise a risk less payo but which distinguish themselves by their collateral requirements in equilibrium agents default the assets have dierent payos and there are as many linearly independent assets available for trade as there are states of the world we derive necessary and sucient conditions for equilibria to be pareto ecient in the presence of uncertainty we explore some examples for which the collateral equilibrium allocation is identical to the arrow debreu allocation either when agents have a high preference for the durable good or when the endowment distribution of the durable good is relatively homogeneous we examine a series of examples to understand which collateral levels prevail in equilibrium and under which conditions there is scope for regulating margin requirements that is restricting the sets of tradable assets through government intervention in these examples equilibrium is always sub optimal but regulation never leads to a pareto improvement while the competitive equilibria are constrained ecient there do exist regulations which make large

energy efficiency and rebound effects an econometric analysis of energy demand in the commercial building sector it is widely recognized that the adoption of energy saving innovations can induce an increase in the usage of the corresponding technologies and thus can possibly increase energy consumption among other concerns is that uncertainties regarding the magnitude of this rebound effect can deter policy makers from promoting energy efficiency this paper analyzes the rebound effects of the adoption of energy efficient technologies in commercial buildings based upon a structural model of technology adoption and subsequent energy demand at the building level the empirical results are that energy efficiency can reduce electricity use by about 35 and natural gas consumption by about 50

a two period model with portfolio choice understanding results from different solution methods using a stylized two period model we compare portfolio solutions from two local solution approaches the approach of judd and guu 2001 and the approach of devereux and sutherland 2010 2011 with the true nonlinear portfolio solution

the method of endogenous gridpoints with occasionally binding constraints among endogenous variables we show how the method of endogenous gridpoints can be extended to solve models with occasionally binding constraints among endogenous variables very efficiently we present the method for a consumer problem with occasionally binding collateral constraints and non separable utility in durable and non durable consumption this problem allows for a joint analysis of durable and non durable consumption in models with uninsurable income risk which is important to understand patterns of consumption saving and collateralized debt we illustrate the algorithm and its efficiency by calibrating the model to us data

policy options for the split incentive increasing energy efficiency for low income renters the split incentive problem concerns the lack of appropriate incentives to implement energy efficiency measures in particular low income tenants face a phenomenon of energy poverty in which they allocate significantly more of their household income to energy expenditures than other renters this problem is substantial affecting 1 89 of all united states energy use if effectively addressed it would create a range of savings between 4 and 11 billion dollars per year for many of the nation s poorest residents we argue that a carefully designed program of incentives for participants including landlords in conjunction with a unique type of utility managed on bill financing mechanism has significant potential to solve many of the complications we focus on three kinds of split incentives five concerns inherent to addressing split incentive problems scale endurance incentives savings political disfavor and provide a detailed policy proposal designed to surpass those problems with a particular focus on low income tenants in a u s context

optimal gasoline tax in developing oil producing countries the case of mexico this paper uses the methodology of parry and small 2005 to estimate the optimal gasoline tax for a less developed oil producing country the relevance of the estimation relies on the differences between less developed countries ldcs and industrial countries we argue that lawless roads general subsidies on gasoline poor mass transportation systems older vehicle fleets and unregulated city growth make the tax rates in ldcs differ substantially from the rates in the developed world we find that the optimal gasoline tax is 1 90 per gallon at 2011 prices and show that the estimate differences are in line with the factors hypothesized in contrast to the existing literature on industrial countries we show that the relative gasoline tax incidence may be progressive in mexico and more generally in ldcs

work costs and nonconvex preferences in the estimation of labor supply models abstract works costs have not been adequately handled in labor supply estimation likely due to their complexity we show that if work costs are not accounted for in the budget and time constraints in a structural labor supply model they will be subsumed into the data generating preferences even if underlying preferences over consumption and leisure are convex the presence of unobservable work costs can make these preferences appear nonconvex however we show that under plausible conditions policy relevant calculations such as estimates of the effect of tax changes on labor supply and deadweight loss measures are not affected by the fact that estimated preferences incorporate work costs

wealth dynamics in a bond economy with heterogeneous beliefs two types of agents have diverse beliefs about the law of motion for an exogenous endowment one knows the true process and the other learns about it via bayes theorem financial market structure affects the dynamics of the wealth distribution when markets are complete the learning agent loses wealth as in blume and easley 2006 the absence of markets for some arrow securities alters the direction in which wealth is transferred when the only traded asset is a risk free bond the learning agent accumulates wealth both agents survive and the more knowledgeable agent is driven to his debt limit

collateral requirements and asset prices many assets derive their value not only from future cash flows but also from their ability to serve as collateral in this article we investigate this collateral premium and its impact on asset returns in an infinite horizon general equilibrium model with heterogeneous agents we document that borrowing against collateral substantially increases the return volatility of long lived assets moreover otherwise identical assets with different degrees of collateralizability exhibit substantially different return dynamics because their prices contain a sizable collateral premium that varies over time this premium can be positive even for assets that never pay dividends

implied discount rate and payback threshold of energy efficiency investment in the industrial sector the industrial sector is responsible for about a third of the energy usage in the united states and there is significant energy saving potential from the industrial sector however the phenomenon of energy efficiency gap the scenario in which cost effective energy efficient technologies enjoy only limited market success appears frequently in the industrial sector this article tries to explain this efficiency gap in the industrial sector by empirically estimating the implied discount rates and payback thresholds industrial firms use to evaluate their energy efficiency investments using the industrial assessment centers iac database from 2002 to 2011 with more than 30 000 energy efficiency recommendations this article builds structural models of firms evaluation of an energy efficiency project the model results show that the implied discount rates of medium to small industrial firms range from 40 to 45 and the average payback threshold is about 9 months

international portfolios a comparison of solution methods we compare the performance of the perturbation based local portfolio solution method of devereux sutherland 2010a 2011 with a global solution method as a test suite we use model specifications that broadly capture features of international financial trade between advanced economies and between advanced and emerging economies we consider both symmetric country setups and asymmetric setups that capture important empirical facts such as differences in macroeconomic volatility differences in portfolio composition and high equity premia we find that the local method performs well at business cycle frequencies both in the symmetric and asymmetric settings while significant differences arise at long horizons in asymmetric settings

international capital flows portfolio composition and the stability of external imbalances abstract this paper develops a simple and tractable model of net capital flows in which time varying gross country portfolios are an essential element in current account imbalances the main constituents of country portfolios in the model are general derivatives which could be interpreted as nominal bond assets and liabilities in particular under very weak conditions the world wealth distribution is stationary stationarity is generated by movements in derivative i e bond risk premia such that the return on a debtor country s gross liabilities is less than the return on its gross assets this is well known feature of the us international investment position we also provide suggestive evidence that a similar property holds more widely for a sample of advanced and emerging market countries

endogenous leverage and asset pricing in double auctions abstract we propose a double auction mechanism for the exchange of leveraged assets and bonds in an agent based model in this framework we validate recent results in general equilibrium theory about endogenous leverage and its consequences for asset pricing we find that the institutional details of exchange are critical for a good match between the theoretical equilibrium state and the final state of the double auction specifically the outcome of the double auction is sensitive to the details of how markets for debt and collateral are coordinated and how collateral is cleared when trade is restricted to neighbours in a network final prices and allocations are significantly different from unrestricted equilibrium

labor market segmentation and the determination of wages in the public private formal and informal sectors in san jose costa rica a striking feature of many cities in less developed countries ldcs is the coexistence of large well organized high technology firms with the small street vendors who own little but a wooden box to sit on this apparent dualism in the urban economy has been a concern of students of economic development for many years several international agencies notably the international labour organisation ilo and the world bank have focused attention on this phenomenon the ilo popularized the terms formal sector and informal sector to describe this dichotomy to many economists one consequence of this dualism is labor market segmentation labor market segmentation plays a crucial role in explanations provided for some important issues such as rural urban migration urban poverty unemployment underemployment and growth 2 in this article i examine the hypothesis that labor market segmentation exists in san jos6 costa rica between the public and private formal sectors and between the privateformal and informal sectors defined in the appendix i define labor market segmentation as a situation where because of institutional barriers to occupational mobility between sectors a worker in the lower sector has less than full access to a job in the upper sector held by an observationally identical worker 3 if there were no barriers workers in the low wage sector would enter the high wage sector and force the wages in that sector down until wages across sectors were equalized that is labor market segmentation implies differences in wages for observationally identical workers relying on this inference most of the empirical literature on labor market segmen

dynamic competitive economies with complete markets and collateral constraints in this article we examine the competitive equilibria of a dynamic stochastic economy with complete markets and collateral constraints we show that provided the sets of asset pay offs and of collateral levels are sufficiently rich the equilibrium allocations with sequential trades and collateral constraints are equivalent to those obtained in arrow debreu markets subject to a series of limited pledgeability constraints we provide both necessary and sufficient conditions for equilibria to be pareto efficient and show that when collateral is scarce equilibria are not only pareto inefficient but also often constrained inefficient in the sense that imposing tighter borrowing restrictions can make everybody in the economy better off we derive sufficient conditions for the existence of markov equilibria and for the case of two agents for the existence of equilibria that have finite support these equilibria can be computed with arbitrary accuracy and the model is very tractable

the effect of household structure on women s economic activity and fertility evidence from recent mothers in urban mexico this study examines the effect of the presence of a mother substitute in the household on urban womens participation in the labor force and fertility in mexico in 1982 data were obtained from the 1982 mexican national demographic survey on reproductive history educational status employment status and household structure for a subsample of 2746 urban women who were married 90 or in a consensual union 10 and had had a child within the prior 5 years theoretically women with higher value of market time lower household income and lower value of nonmarket time will more likely be working women women had 3 4 surviving children 83 used contraceptives and 15 were employed analysis involved use of reduced form equations to model the joint determination of labor force participation and fertility justification of this method is given husbands education was a proxy for income level cost of child rearing is figured as the mothers number of children 5 years and household structure mother substitute was an additional unemployed female aged 13 years an imputed wage for all women in the sample is used to measure the value of time in the labor force probit regression estimation methods revealed that mothers were more likely to be working when their wage offers were higher those with a caretaker in the household and with a less well educated husband are also more likely to work those more likely to be employed also had few children 6 12 years and more children 13 years in the fully reduced form of the equation determinants of the wage offer education age region were substituted for the instrumental variable the results were consistent an additional woman in the household was significantly positively related to the likelihood of women working in the reduced form fertility equation women who were younger better educated with more children and with better educated partners were less likely to have more than 1 child born within the last 5 years the implication from the negative coefficient of the household structure variable is that women with additional caretakers are less likely to have more than 1 young child the causes are explained mother substitutes increase the likelihood of working women and do not increase the likelihood of having more children particularly among nonemployed mothers which differs from us results future research should refine the measure of mother substitute and account for her presence in the household

doing well by doing good green office buildings this paper provides the first credible evidence on the economic value of the certification of green buildings in the commercial sector value derived from impersonal market transactions rather than engineering estimates we match publicly available information on the addresses of energy star and leed rated office buildings to a commercial data source detailing the characteristics of u s office buildings and their rental rates we analyze the micro data on 694 certified green buildings and on 7489 other office buildings located within a quarter mile of the certified buildings we find systematic evidence that rents for green offices are about two percent higher than rents for comparable buildings located nearby effective rents i e rents adjusted for the occupancy levels in office buildings are about six percent higher in green buildings than in comparable office buildings nearby at prevailing capitalization rates conversion of the average non green building to an equivalent green building would add more than 5 million in market value these results are robust to the statistical models employed

a case for incomplete markets we propose a new welfare criterion that allows us to rank alternative financial market structures in the presence of belief heterogeneity we analyze economies with complete and incomplete financial markets and or restricted trading possibilities in the form of borrowing limits or transaction costs we describe circumstances under which various restrictions on financial markets are desirable according to our welfare criterion

family labor supply with taxes over the period 1960 1983 the proportion of federal tax revenue raised by taxation of labor supply has risen from 57 77 percent in this paper we specify and estimate a model of family labor supply which treats both federal and state taxation husbands and wives labor supply are treated jointly rather than in aseparate manner as in previous research a method to calculate the virtual wage for nonworking spouses is used within a utility maximizing framework to treat correctly the joint family labor supply decision joint family efforts are found to be important the efficiency cost deadweight loss of labor taxation is estimated to be 29 6 of tax revenue raised the effect of the new 10 deduction to ease the marriage tax for working spouses leads to a prediction of 3 8 increase in wives labor supply and a 9 decrease in husbands labor supply overall taxes paid are predicted to decrease by 3 4 this abstract was borrowed from another version of this item

portfolio and welfare consequences of debt market dominance the ability to issue debt that pays in units of the domestic good leads a country to accumulate a large and negative net foreign asset position while maintaining a positive position in equity this debt market advantage also helps to explain the weak relationship between the real exchange rate and relative consumption our stylized model matches the key facts about the u s international portfolio the u s real exchange rate and explains nearly 50 of the observed variation in the valuation effects we find that taxing bond market transactions increases the volatility of the exchange rate capital flows and allocations in contrast taxing equity positions stabilizes the exchange rate and capital flows while having little impact on the allocation lastly the paper describes a global solution method for portfolio problems under incomplete markets

the econometrics of piecewise linear budget constraints a survey and exposition of the maximum likelihood method in this article maximum likelihood techniques for estimating consumer demand functions when budget constraints are piecewise linear are exposited and surveyed consumer demand functions are formally derived under such constraints and it is shown that the functions are themselves nonlinear as a result the econometric problems in estimating such functions are exposited and the importance of the stochastic specification is stressed in particular the specification of both unobserved heterogeneity of preferences and measurement error econometric issues in estimation and testing are discussed and the results of the studies that have been conducted to date are surveyed

explaining the contract terms of energy performance contracting in china the importance of effective financing abstract energy service company esco uses energy performance contracting epc to provide energy saving services to its clients under an epc both esco and the client invest in the energy efficiency measures according to a negotiated share of investment within the length of the contract the esco and its client divide up the saved energy bill according to a negotiated share once the contract expires the client claims all of the saved energy bills if the energy efficiency measures still last different epc projects have different contract terms including total investment share of investment and length of contract these contract terms directly determine the resulted energy savings thus it is essential and important to look at how these contract terms are formed and what are the major influencing factors this paper first builds a theoretical bargain model between esco and its client to find out the structural relationship among these contract terms then using the information of about 140 epc contracts in china in 2010 and 2011 the paper empirically estimates the impacts of various factors on the contract terms and the resulted energy savings we find that cost of capitals for escos and the clients especially for escos is a major factor influencing contract terms and the resulted energy savings thus providing effective financing is critical for the development of epc in china

financial integration and growth in a risky world abstract we revisit the debate on the benefits of financial integration in a two country neoclassical growth model with aggregate uncertainty the framework accounts simultaneously for gains from a more efficient capital allocation and gains from risk sharing together with their interaction global numerical methods allow for meaningful welfare comparisons gains from integration are quantitatively small even for riskier and capital scarce emerging economies these countries import capital for efficiency reasons before exporting it for self insurance leading to capital flows and growth reversals along the transition this opens the door to richer empirical implications than previously considered in the literature

structural models of family labor supply a discrete choice approach a static neoclassical structural model is presented explaining labor supply of both spouses in two adult households in the netherlands family preferences are described with a direct translog utility function with the husbands leisure the wifes leisure and family income as its arguments we assume that the choice set of each family is finite account is taken of the dutch tax and benefits system we allow for hours restrictions and random preferences and account for unobserved wages of nonworkers the models are estimated using smooth simulated maximum likelihood results based upon dutch cross section data from 1987 are illustrated by confidence intervals for elasticities and by several policy simulations excerpt

the sensitivity of an empirical model of married women s hours of work to economic and statistical assumptions this study undertakes a systematic analysis of several theoretic and statistical assumption s used in many empirical models of female labor supply using a singl e data set psid 1975 labor supply data the author is able to replic ate most of the range of estimated income and substitution effects fo und in previous studies in this field he undertakes extensive specif ication tests and finds that most of this range should be rejected du e to statistical and model misspecifications the two most important assumptions appear to be the tobit assumption used to control for sel f selection into the labor force and exogeneity assumptions on the wi fe s wage rate and her labor market experience copyright 1987 by the econometric society

segmented or competitive labour markets a normal roy model with four sectors is developed it allows to derive tests of several assumptions on the working of the labor market strongly or weakly competitive or segmented it shows that more important a feature of labor markets than segmentation is the presence of comparative advantages for individuals between the various economic sectors the model is applied to data on women s labor force participation in the main towns of colombia in 1980 it uses multivariate probit and tobit techniques copyright 1991 by the econometric society

household labor supply in urban areas of bolivia we analyze labor supply behavior and the choice between formal and informal sector work of the two spouses in families in urban areas of a developing country using cross section data from bolivia drawn in 1989 the model generalizes the neoclassical family labor supply model nonmonetary returns of formal sector employment capture the fact that the choice between sectors is not exclusively based on wage differentials wage equations nonmonetary returns equations and labor supply equations are estimated jointly by smooth simulated maximum likelihood we find substantial cross wage elasticities of working hours of both partners and large substitution elasticities between the two sectors

phasing out the gses we develop a new model of the mortgage market where both borrowers and lenders can default risk tolerant savers act as intermediaries between risk averse depositors and impatient borrowers the government plays a crucial role by providing both mortgage guarantees and deposit insurance underpriced government mortgage guarantees lead to more and riskier mortgage originations as well as to high financial sector leverage mortgage crises occasionally turn into financial crises and government bailouts due to the fragility of the intermediaries balance sheets increasing the price of the mortgage guarantee crowds in the private sector reduces financial fragility leads to fewer but safer mortgages lowers house prices and raises mortgage and risk free interest rates due to a more robust financial sector consumption smoothing improves and aggregate welfare increases while borrowers are nearly indifferent to a world with or without mortgage guarantees savers are substantially better off while aggregate welfare increases so does wealth inequality jel g12 g15 f31

family composition and off farm participation decisions in israeli farm households this article studies the relationship between the off farm participation behavior of farm operators and their spouses and the demographic composition of the household we focus on farm families without parents siblings or partners and examine the effects of the existence of elderly children of the farm couple we find that both the father and the mother tend to reduce their participation in off farm work as the number of elderly children rises this result holds even after controlling for observed characteristics we also find that the effect of elderly children stems from considerations related to both farm production and household production

the econometrics of nonlinear budget sets traditional empirical analysis of consumer demand has usually made the assumption of linear budget sets that is the consumer is assumed to purchase any desired quantity at a constant price subject to a budget constraint the major exception to this framework is the analysis of demand when some goods are rationed 2 in the rationed case the price is constant up to a quantity limit in contrast to the rationed case here i consider the situation where the price varies with the amount of the good purchased empirical situations with nonconstant prices come readily to mind and of course they have received much recent attention from theorists since mirrlees 44 paper on optimal nonlinear taxation the following examples are meant to give a partial listing of cases when nonlinear budget sets occur i electricity prices many electric utilities engage in declining block pricing that is the marginal price of successive kwh s of electricity decrease at a given number of points determined by total demand thus the budget set is piecewise linear houthakker 36 was the first to propose an approach to this problem taylor 51 analyzes the problem at length and hausman kinnucin and mcfadden 31 use an instrumental variables estimator to provide consistent estimates of the demand function

statistical arbitrage with default and collateral abstract this paper studies the implications of the absence of statistical arbitrage opportunities in a two period incomplete market economy where default is allowed but there are collateral requirements modified versions of the fundamental theorem of asset pricing are obtained

collateral constraints and asset prices abstract we study the effects of collateral constraints in an economy populated by investors with nonpledgeable labor incomes and heterogeneous preferences and beliefs we show that these constraints inflate stock prices and generate spikes and crashes in price dividend ratios and volatilities clustering of volatilities and leverage cycles they also lead to substantial decreases in interest rates and increases in sharpe ratios when investors are anxious about hitting constraints due to production crises in the economy furthermore stock prices have large collateral premiums over nonpledgeable incomes we derive asset prices and stationary distributions of the investors consumption shares in closed form

changes in the returns to education in costa rica abstract i document patterns in the returns to education in costa rica from 1976 to 1992 the most important change during this period was that from the late 1970s to the mid 1980s the return to education fell by about one fourth i construct demand and supply indices within a fixed manpower requirements framework to estimate demand and supply shifts i find a significantly positive relationship between measures of demand for education and a significantly negative relationship between measures of supply for education these findings suggest that calculations based on the returns to education such as the returns to social investments in education must take into account future changes in the returns to education as supply and demand conditions develop

willingness to pay for energy saving measures in residential buildings this paper uses a choice experiment to evaluate the consumers willingness to pay for energy saving measures in switzerland s residential buildings these measures include air renewal ventilation systems and insulation of windows and facades two groups of respondents consisting respectively of 163 apartment tenants and 142 house owners were asked to choose between their housing status quo and each one of the several hypothetical situations with different attributes and prices the estimation method is based on a fixed effects logit model the results suggest that the benefits of the energy saving attributes are significantly valued by the consumers these benefits include both individual energy savings and environmental benefits as well as comfort benefits namely thermal comfort air quality and noise protection

the economics of green building we analyze the economics of green building finding that recent increases in the supply of green buildings and the volatility in prop erty markets have not affected the returns to green buildings we then analyze a large cross section of office buildings demonstrating that eco nomic returns to energy efficient buildings are substantial finally we relate the economic premiums for green buildings to their relative effi ciency in energy use the attributes rated for thermal efficiency as well as sustainability contribute to premiums in rents and asset values among green buildings increased energy efficiency is fully capitalized into rents and asset values

intra family distribution of paid work time this article analyses the intra family distribution of paid work time in five european countries france germany italy spain and the uk to that end we formulate a collective model which allows us to characterize the efficient labour supply decisions of each spouse this two equation model is then simultaneously estimated by using national panel data drawn from the european community household panel echp 1994 2001 empirical results clearly show that in all sample countries the labour supply of wives is affected by own wages household and own nonlabour incomes and the number of children whereas evidence for husbands differs across countries

collateral once again abstract this paper shows how collateral is used to prove the second part of the fundamental theorem of asset pricing in a collateral default setting which connects the concept of an arbitrage free price with the solution of the individual utility maximization problem

asset shortages liquidity and speculative bubbles abstract we study the effect of asset shortages on liquidity in economies with limited enforcement of debt contracts we establish that under a suitable assumption in terms of gains from trade liquidity does not dry up and trading volumes do not disappear as credit conditions worsen the equilibrium outcome becomes arbitrarily close to a purely speculative equilibrium and bubbles occur in the limit the result applies to incomplete markets and more generally to equilibria where collateral constraints interfere with the additivity of the payoff pricing functional

factors influencing commercial buildings to obtain green certificates abstractidentifying the key factors that influence commercial buildings decision to obtain voluntary green certificates is essential to building sustainability enhancement using commercial buildings in the state of new york multinomial logit and nested logit models demonstrate that there is a significant correlation between the characteristics of commercial buildings such as square footage lot size and years built and green certification more interestingly if a commercial building is occupied by its owner likelihood of green certification is actually smaller this finding not only confirms that ongoing energy savings are heavily discounted when deciding whether to incur the upfront cost of green certification but also suggests that the rental premium enjoyed by green buildings is likely greater in terms of present value than the expected operating cost savings another explanation could be that investor owners must operate in a competitive market for tenants while owner occupiers do not operate

the impact of household structure on female autonomy in developing countries abstractjoint household structures in which several generations co reside in a single house are common across developing countries such households may confer benefits on all the family members through household public goods with the patriarch exercising greater control over resources therefore the household structure may affect the bargaining power of its members this paper estimates the effect of joint versus nuclear household structure in india on the autonomy of women and their labour force participation and the heterogeneity in the effects by income caste and region i use an instrumental variable approach and find that women living in nuclear households have greater decision making power

family structure and female labour supply in mexico city this paper investigates labour supply of the wives of the heads of households in mexico city with a focus on the impact of family structure a static neoclassical structural model is used we assume that each woman chooses her labour supply and corresponding income so that her utility is maximized conditional upon her husband s labour supply and earnings we use a direct translog specification and include family composition variables as taste shifters also taken into account are fixed costs of working nonlinear taxes unobserved preference variation prediction errors in wages of nonworkers and potential endogeneity of wages the models are estimated by smooth simulated maximum likelihood using data from mexico s urban employment survey drawn in 1992 we find income elasticities of labour supply of about 0 35 and wage elasticities of about 0 5 the latter is substantially overestimated if wage rate endogeneity is not taken into account the results are robust with respect to other specification choices we find that the impact of family structure variables on participation is different from that on hours worked so that their total effect is ambiguous

estimating labor supply responses and welfare participation using a natural experiment to validate a structural labor supply model in this paper we formulate and estimate an economic model of labor supply and welfare participation the model is estimated on data on single men from quebec drawn from the 1986 canadian census budget sets for each work welfare combination accounting for income taxes tax credits and welfare benefit rules are derived using a microsimulation model we validate our model by comparing reactions to a welfare reform that implied a dramatic increase in welfare benefits predicted by our model to those obtained by using a regression discontinuity approach the results show that our model is capable of recovering actual changes in labor supply and welfare participation we also show the advantage of having estimated a structural model by illustrating how labor supply and welfare participation change when benefit levels change

stationary equilibria in asset pricing models with incomplete markets and collateral we consider an infinite horizon exchange economy with incomplete markets and collateral constraints as in the two period model of geanakoplos and zame 2002 households can default on their liabilities at any time and financial securities are only traded if the promises associated with these securities are backed by collateral we examine an economy with a single perishable consumption good where the only collateral available consists of productive assets in this model competitive equilibria always exist and we show that under the assumption that all exogenous variables follow a markov chain there also exist stationary equilibria these equilibria can be characterized by a mapping from the exogenous shock and the current distribution of financial wealth to prices and portfolio choices we develop an algorithm to approximate this mapping numerically and discuss ways to implement the algorithm in practice a computational example demonstrates the performance of the algorithm and shows some quantitative features of equilibria in a model with collateral and default

margin regulation and volatility an infinite horizon asset pricing model with heterogeneous agents and collateral constraints can explain why adjustments in stock market margins under us regulation t had an economically insignificant impact on market volatility in the model raising the margin requirement for one asset class may barely affect its volatility if investors have access to another unregulated class of collateralizable assets through spillovers however the volatility of the other asset class may substantially decrease a very strong dampening effect on all assets return volatilities can be achieved by a countercyclical regulation of all markets