Farmers' behavior and the provision of public goods: towards an analytical framework

The new CAP reform aims to stimulate the role of agriculture as provider of public goods. An analytical framework is developed to model farmers’ decision making and to gain insight into farmers’ behavior in response to a number of policy instruments. The framework integrates characteristics of farm, farmer, market, as well as the policy instruments. Theoretical analysis suggests that attitudes, off-farm employment opportunities, non-pecuniary benefits and expectations of future developments can play important roles in farmer’s decision making regarding the provision of public goods. Empirical research is needed to test the hypothesis

Endowment Effects and Contribution Strategies in Public Good Experiments

We investigate behavior in a laboratory public good experiment with unique endowment schemes that allow a wider range of contribution strategies than in standard voluntary contribution mechanism (VCM) experiments. A baseline treatment follows a standard VCM design (subjects receive 10 tokens in each of 10 rounds that may be allocated between a private account and a group account). In a new carry-over treatment, any tokens not allocated to the group account in the current period are made available for contributions in future periods. Under full endowment, subjects receive 100 tokens in round one (rather than 10 tokens per round for each of 10 rounds). In the pledge treatment, subjects’ allocation decisions for an initial endowment of 100 tokens may be changed in any round and are binding only for the final round. We find that the size of the effective endowment and whether contributions are binding significantly impact subject decision making. Deviations from the free riding outcome are greater when subjects have a larger portion of their total endowment earlier in the experiment, and subjects contribute less when their contribution decisions are bindin

Does female empowerment promote economic development ?

Empirical evidence suggests that money in the hands of mothers (as opposed to their husbands) benefits children. Does this observation imply that targeting transfers to women is good economic policy? The authors develop a series of noncooperative family bargaining models to understand what kind of frictions can give rise to the observed empirical relationships. Then they assess the policy implications of these models. The authors find that targeting transfers to women can have unintended consequences and may fail to make children better off. Moreover, different forms of empowering women may lead to opposite results. More research is needed to distinguish between alternative theoretical models.Economic Theory&Research,Gender and Law,Debt Markets,Inequality,Public Sector Economics

From equilibrium models to mechanism design: On the place and the role of government in the public goods provision analysis in the second part of the twentieth century

Focussing on their analysis of the optimal public goods provision problem, this paper follows the parallel development of equilibrium models and mechanism design after the accommodation of Samuelson's definition of collective goods to the general equilibrium framework. Both paradigms lead to the negative conclusion of the impossibility of a fully decentralized optimal public goods provision through market or market-like institutions.General equilibrium, Lindahl-Foley equilibrium, Wicksell public competitive equilibrium, private provision equilibrium, mechanism design, free-rider problem, incentive compatibility.

Liquidity, moral hazard and bank crises

Bank crises, by interrupting liquidity provision, have been viewed as resulting in welfare losses. In a model of banking with moral hazard, we show that second best bank contracts that improve on autarky ex ante require costly crises to occur with positive probability at the interim stage. When bank payo§s are partially appropriable, either directly via imposition of Önes or indirectly by the use of bank equity as a collateral, we argue that an appropriately designed ex-ante regime of policy intervention involving conditional monitoring can prevent bank crises

Fiscal decentralization : a political economy perspective

This paper surveys recent contributions to the study of fiscal decentralization which adopt a political economy approach. It is argued that this approach can capture, in a variety of formal models, the plausible and influential ideas (increasingly, supported by empirical evidence) that fiscal decentralization can lead to improved preference-matching and accountability of government. In particular, recent work on centralized provision of public good provision via bargaining in a legislature shows how centralization reduces preference-matching, and recent work using "electoral agency" models formalizes the accountability argument. These models also provide insights into when decentralization may fail to deliver these benefits

Welfare Measurement and Public Goods in a Second Best Economy

This chapter concerns welfare measurement in economies, where the government raises revenue by means of distortionary taxation. A major issue is the treatment of (state-variable) public goods in the context of social accounting. Although the marginal value that the government attaches to a public good is model-specific (as it depends on the exact nature of the underlying decision-problem), the analysis explains how the direct resource cost of providing increments to the public good and the marginal cost of public funds can be used to measure this marginal value. The first part of the chapter is based on a representative-agent growth model with linear taxation, whereas the second part addresses a model with heterogeneous agents and nonlinear taxation. The latter model also provides a framework for analyzing redistribution in the context of social accounting, and enables me to compare the results with those that would follow in a first best resource allocation.Social accounting; second best; public goods

Welfare Theory: History and Modern Results

This paper contains a fairly brief, but self-contained, version of the history of welfare economics, as well as the more modern welfare results. We introduce public goods and asymmetric information, and we hint at some of the modern mechanism design results. The paper also contains a section on welfare measures in a dynamic economy.Welfare Theory;