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2009 Working Papers


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Title/Author(s) Abstract Number

Did Children’s Education Matter? Family Migration as a Mechanism of Human Capital Investment. Evidence From Nineteenth Century Bohemia

Alexander Klein

This paper analyzes the rural-urban migration of families in the Bohemian region of Pilsen in 1900. Using a new 1300-family dataset from the 1900 population census I examine the role of children‘s education in rural-urban migration. [read more] 923

A Nonparametric Analysis of the Cournot Model

Andres Carvajal and John K H Quah

An observer makes a number of observations of an industry producing a homogeneous good. Each observation consists of the market price, the output of individual rms and perhaps information on each rm's production cost. [read more] 922

Consumption Dynamics in General Equilibrium : A Characterisation when Markets are Incomplete

Pablo Beker and Subir Chattopadhyay

We introduce a methodology for analysing infinite horizon economies with two agents, one good, and incomplete markets. We provide an example in which an agent’s equilibrium consumption is zero eventually with probability one even if she has correct beliefs and is marginally more patient. [read more] 921

Nash Implementation with Partially Honest Individuals

Bhaskar Dutta and Arunava Sen

We investigate the problem of Nash implementation in the presence of "partially honest" individuals. A partially honest player is one who has a strict preference for revealing the true state over lying when truthtelling does not lead to a worse outcome (according to preferences in the true state) than that which obtains when lying. [read more] 920

Tear Down this Wall : On the Persistence of Borders in Trade

Volker Nitsch and Nikolaus Wolf

Why do borders still matter for economic activity? The reunification of Germany in 1990 provides a unique natural experiment for examining the effect of political borders on trade both in the cross-section and over time. [read more] 919

Counter-Terrorism in a Police State : The KGB and Codename Blaster, 1977

Mark Harrison

The paper provides a rare case study of terrorism and counter-terrorism within a closed society, carried out under a blanket of official secrecy. This case is unexpectedly revealing in what it tells us about terrorism, counterterrorism, and the relative strengths of open and closed societies. [read more] 918

An Economic Model of Strategic Electoral Rule Choice Under Uncertainty (updated March 2011)

Dimitrios Xefteris and Kostas Matakos

We study electoral rule choice in a multi-party model where parties are office-motivated and uncertainty over the electoral outcome is present. [read more] 917

Personal Income of U.S. States : Estimates for the Period 1880–1910

Alexander Klein

This paper constructs an estimate of the total personal income for every U.S state in 1880, 1890, 1900, and 1910. The series includes new figures for 1890 and 1910, and updated figures for 1880 and 1900, which were originally estimated by Richard Easterlin more than fifty years ago. [read more] 916

Unilateral measures and global emissions mitigation

Shurojit Chatterji, Sayantan Ghosal, Sean Walsh and John Whalley

In this paper we discuss global climate change mitigation that builds on existing unilateral actions to deliver ever deepening emission cuts over time. A wide array of unilateral environmental measures have been documented. [read more] 915

Reforming IMF and World Bank governance : in search of simplicity, transparency and democratic legitimacy in the voting rules

Dennis Leech and Robert Leech

We discuss the reform of the voting rules at the heart of the governance of the IMF and World Bank (the BWIs) in terms of three principles that we suggest ought to be fundamental: simplicity, transparency and democratic legitimacy. [read more] 914

Price transmission in the UK electricity market : was NETA beneficial?

Monica Giuletti, Luigi Grossi and Michael Waterson

This paper explores the relationship between domestic retail electricity prices in Great Britain and their determinants in the particular context of the New Electricity Trading Arrangements (NETA) introduced in 2001. [read more] 913

Topology of utility possibility frontiers of economies with Ramsey taxation (revised)

Sushama Murty

This paper establishes the generic size and structure of the second-best Pareto frontier and its various components in private ownership economies with Ramsey taxation. [read more] 912

Russia’s Real National Income: The Great War, Civil War, and Recovery, 1913 to 1928

Andrei Markevich and Mark Harrison

We are working towards filling the last remaining gap in the historical national accounts of Russia and the USSR in the twentieth century. [read more] 911

Inflation and welfare in long-run equilibrium with firm dynamics

Alexandre Janiak and Paulo Santos Monteiro

We analyze the welfare cost of inflation in a model with cash-in-advance constraints and an endogenous distribution of establishments' productivities. Inflation distorts aggregate productivity through firm entry dynamics. [read more] 910

Forging Success : Soviet Managers and False Accounting, 1943 to 1962

Mark Harrison

Attempting to satisfy their political masters in a target-driven culture, Soviet managers had to optimize on many margins simultaneously. One of these was the margin of truthfulness. [read more] 909

Constraints on Income Distribution and Production Efficiency In Economies with Ramsey Taxation

Charles Blackorby and
Sushama Murty

We study the link between second-best production efficiency and the constraints on income distribution imposed by private ownership of firms in economies with Ramsey taxation. [read more]

908

Ability Bias, Skewness and the College Wage Premium

Robin A. Naylor and
Jeremy Smith

Changes in educational participation rates across cohorts are likely to imply changes in the ability-education relationship and thereby to impact on estimated returns to education. [read more] 907

Educational Returns, ability composition and cohort effects : theory and evidence for cohorts of early-career UK graduates

Norman Ireland, Robin A. Naylor, Jeremy Smith and Shqiponja Telhaj

An increase over time in the proportion of young people obtaining a degree is likely to impact on the relative ability compositions (i) of graduates and non-graduates and (ii) across graduates with different classes of degree award. In a signalling framework, we examine the implications of this on biases across cohorts in estimates of educational returns. [read more] 906

Emerging Floaters : Pass-Throughs and (Some) New Commodity Currencies

Emanuel Kohlscheen

In spite of early skepticism on the merits of floating exchange rate regimes in emerging markets, 8 of the 25 largest countries in this group have now had a floating exchange rate regime for more than a decade. [read more] 905

Domestic vs. External Sovereign Debt Servicing : An Empirical Analysis

Emanuel Kohlscheen

This paper analyzes the incidence of domestic and external debt crises for a sample of 53 emerging economies between 1980 and 2005. Even though there is substantial time variation in the default rates during the period, sovereign default rates for domestic debts are typically lower than those for external debts. [read more] 904

Hydrogen Transport and the Spatial Requirements of Renewable Energy

Andrew J. Oswald, James I. Oswald and Hezlin Ashraf-Ball

Unlike oil and coal, which are compressed forms of energy, renewable energy requires unusually large land areas. This article calculates the consequences of a switch to hydrogen-cell vehicles powered by electricity from wind turbines. [read more] 903

Implementation in Mixed Nash Equilibrium

Claudio Mezzetti and Ludovic Renou

A mechanism implements a social choice correspondence f in mixed Nash equilibrium if at any preference profile, the set of all pure and mixed Nash equilibrium outcomes coincides with the set of f-optimal alternatives at that preference profile. [read more] 902

Sovereign Debt Default : The Impact of Creditor Composition

Amrita Dhillon, Javier García-Fronti and Lei Zhang

The main motivation of this paper is to study the impact of the composition of creditors on the probability of default and the risk premium on sovereign bonds, when there is debtor moral hazard. [read more] 901

Non-Existence of Competitive Equilibria with Dynamically Inconsistent Preferences

Tommaso Gabrieli and Sayantan Ghosal

This paper shows the robust non existence of competitive equilibria even in a simple three period representative agent economy with dynamically inconsistent preferences. We distinguish between a sophisticated and naive representative agent. [read more] 900

Parametric inference for functional information mapping (revised 2010 - 938)

Dennis Leech, Robert Leech and Anna Simmonds

An increasing trend in functional MRI experiments involves discriminating between experimental conditions on the basis of fine-grained spatial patterns extending across many voxels. Typically, these approaches have used randomized resampling to derive inferences. 899

Power indices taking into account agents' preferences

Fuad Aleskerov

A set of new power indices is introduced extending Banzhaf power index and allowing to take into account agents’ preferences to coalesce. An axiomatic characterization of intensity functions representing a desire of agents to coalesce is given. [read more] 898

Modelling Stochastic Volatility with Leverage and Jumps: A Simulated Maximum Likelihood Approach via Particle Filtering

Sheheryar Malik and Michael K Pitt

In this paper we provide a unified methodology in order to conduct likelihood-based inference on the unknown parameters of a general class of discrete-time stochastic volatility models, characterized by both a leverage effect and jumps in returns. [read more] 897

The U-Shape without Controls

David G. Blanchflower and Andrew J. Oswald

This paper is a continuation of results in Blanchflower and Oswald (2008). It provides new evidence that well-being follows a curve through life. We use data on half a million randomly sampled individuals across eight major European nations. [read more] 896

Does strengthening Collective Action Clauses (CACs) help?

Sayantan Ghosal and KannikaThampanishvong

In a model with both issues of sovereign debtor moral hazard and creditor coordination under incomplete information, we show that the resulting conflict between ex ante and interim efficiency limits the welfare impact of strengthening CACs. [read more] 895

Inflation Targeting as a Means of Achieving Disinflation

Christian Saborowski

In this paper, we take an analytical approach to examine possible adverse effects of the use of inflation targeting as a disinflation regime. The idea is that a strict interpretation of an inflation target may preserve inflationary distortions after price stability is attained. [read more] 894

The estimation of pensioner equivalence scales using subjective data

Mark B Stewart

This paper uses panel data on pensioners’ subjective evaluations of their financial positions to construct equivalence scales for pensioners. A pensioner couple is estimated to require an income 44% higher than a comparable single pensioner to reach the same standard of living. [read more] 893

Rien Ne Va Plus - The 2007/2008 Credit Crunch and What Gambling Bankers Had to Do With It

Anett Hofmann

The paper argues that the incidence of moral hazard played a significant role in the 2007/2008 credit crunch. In particular, bank traders subjected to asymmetric compensation structures have an incentive to take excessive risks even when the bank's shareholders would prefer prudent investment. [read more] 892

Corporate Control and Multiple Large Shareholders

Amrita Dhillon and Silvia Rossetto

Many firms have more than one blockholder, but finance theory suggests that one blockholder should be sufficient to bestow all benefits on a firm that arise from concentrated ownership. [read more] 891

Whistleblower or Troublemaker? How One Man Took on the Soviet Mafia

Mark Harrison

The paper tells the story of a pensioner’s fight against a local mafia of Soviet party and government officials and farm managers in a remote rural locality in the 1950s. To Moscow, he was a whistleblower. [read more] 890

Minimum Cost Arborescences

Bhaskar Dutta and Debasis Mishra

In this paper, we analyze the cost allocation problem when a group of agents or nodes have to be connected to a source, and where the cost matrix describing the cost of connecting each pair of agents is not necessarily symmetric, thus extending the well-studied problem of minimum cost spanning tree games, where the costs are assumed to be symmetric. [read more] 889

Child Labor and Household Wealth: Theory and Empirical Evidence of an Inverted U

Kaushik Basu, Sanghamitra Das and Bhaskar Dutta

Some studies on child labor have shown that, at the level of the household, greater land wealth leads to higher child labor, thereby casting doubt on the hypothesis that child labor is caused by poverty. [read more] 888

World-Leading Research and its Measurement

Andrew J. Oswald

Journalists and others have asked me whether the favourable RAE 2008 results for UK economics are believable. This is a fair question. It also opens up a broader and more important one: how can we design a bibliometric method to assess the quality (rather than merely quantity) of a nation’s science? [read more] 887

Leader Reputation and Default in Sovereign Debt

Amrita Dhillon and Tomas Sjostrom

This paper compares default incentives in competitive sovereign debt markets when leaders can be either democratically elected or dictators. When leaders can be replaced as in democracies, the incentives for repayment are mainly the ego rents from office and the possibility of getting a corrupt leader from replacement. [read more] 886

First Announcements and Real Economic Activity

Michael P. Clements and Ana Beatriz Galvão

The recent literature suggests that first announcements of real output growth in the US have predictive power for the future course of the economy. We show that this need not point to a behavioural relationship, whereby agents respond to the announcement, but may instead simply be a by-product of the data revision process. [read more] 885