A macroeconomic framework for quantifying growth and poverty reduction strategies in Niger

The authors apply the dynamic macroeconomic framework developed by Agénor, Bayraktar, and El Aynaoui (2004) to Niger. As in the original model, linkages between foreign aid, public investment (disaggregated into education, infrastructure, and health), and growth are explicitly captured. Although the nominal exchange rate is fixed, the relative price of domestic goods is endogenous, thereby allowing for potential Dutch disease effects associated with increases in aid. The authors assess the impact of policy shocks on poverty by using partial growth elasticities. They perform various policy experiments, including an increase in the level of foreign aid, a reallocation of public investment toward infrastructure, and neutral and non-neutral cuts in tariffs. The simulations show the dynamic tradeoffs that these policies entail with respect to growth and poverty reduction in Niger.Payment Systems&Infrastructure,Economic Theory&Research,Public Sector Economics&Finance,Environmental Economics&Policies,Banks&Banking Reform,Environmental Economics&Policies,Economic Theory&Research,Public Sector Economics&Finance,Banks&Banking Reform,Municipal Financial Management

Debt management in Brazil : evaluation of the Real Plan and challenges ahead

Brazil's domestic debt has posed two challenges to policymakers: it has grown very fast and, despite progress, remains extremely short in maturity. The authors analyze Brazil's experience with domestic public debt management, searching for policy prescriptions for the next few years. After briefly reviewing the recent history of the country's domestic debt, they decompose the large rise in federal bonded debt in 1995-98, searching for its macroeconomic causes. The main explanations: extremely high interest payments (caused by Brazil's weak fiscal stance and quasi-fixed exchange rate regime) and the accumulation of assets (especially obligations of Brazil's states). Simulations of the net debt path for the near future underscore the importance of a tighter fiscal stance to prevent the debt-to-GDP ratio from growing further. The authors'main policy advice is to foster and rely more on inflation-linked bonds--the least harmful way to lengthen debt maturity.Economic Theory&Research,Banks&Banking Reform,Public Sector Economics&Finance,Payment Systems&Infrastructure,Strategic Debt Management,Economic Theory&Research,Banks&Banking Reform,Strategic Debt Management,Public Sector Economics&Finance,Municipal Financial Management

Progress in Artificial Economics

Artificial economics aims to provide a generative approach to understanding problems in economics and social sciences. It is based on the consistent use of agent-based models and computational techniques. It encompasses a rich variety of techniques that generalize numerical analysis, mathematical programming, and micro-simulations. The peer-reviewed contributions in this volume address applications of artificial economics to markets and trading, auctions, networks, management, industry sectors, macroeconomics, and demographics and culture

Index based compensation for weather risk in the Italian agriculture. A feasibility study based on actual historic data

The paper explores the feasibility of the use of weather index based derivatives for farms' risk management in an Italian province. Based on a combination of detailed local weather data and of data on farms' yields, various possible weather indexes are found that are highly correlated with yields of the major crops in the area. Simulations show that hedging through such index based derivatives can be effective in protecting the stability of farms' incomes, at a cost that is likely to be much lower than that of the current system of subsidized crop insurance and ex-post compensation.Agricultural risk management, weather derivatives, index based yield insurance., Production Economics, Risk and Uncertainty,

FIREFIGHTS AND FUEL MANAGEMENT: A NESTED ROTATION MODEL FOR WILDFIRE RISK MITIGATION

Scientists and policymakers are increasingly aware that wildfire management efforts should be broadened beyond the century-long emphasis on suppression to include more effective efforts at fuel management. Because wildfire risks change over time as vegetation matures, fuel management can be viewed as a timing problem, much like timber harvest itself. We develop a nested rotation model to examine the fuel treatment timing issue in the context of a forest environment with both timber value and non-timber values at-risk. Simulations are performed for a ponderosa pine forest and discussed with a focus on three important aspects of wildfire management: 1) the economic tradeoffs between fuel treatments, suppression, and timber harvest 2) the effects of public wildfire suppression on private fuel management incentives, 3) externality problems when non-timber values-at-risk such as wildland- urban interface property is not accounted for in private fuel management decisions.wildfire, fuels management, fire suppression, optimal rotation, wildfire economics.

Evaluating Yield Models for Crop Insurance Rating

Generated crop insurance rates depend critically on the distributional assumptions of the underlying crop yield loss model. Using farm level corn yield data from 1972-2008, we revisit the problem of examining in-sample goodness-of-fit measures across a set of flexible parametric, semi-parametric, and non-parametric distributions. Simulations are also conducted to investigate the out-of-sample efficiency properties of several competing distributions. The results indicate that more parameterized distributional forms fit the data better in-sample due to the fact that they have more parameters, but are generally less efficient out-of-sample–and in some cases more biased–than more parsimonious forms which also fit the data adequately, such as the Weibull. The results highlight the relative advantages of alternative distributions in terms of the bias-efficiency tradeoff in both in- and out-of-sample frameworks.Yield distributions, Crop Insurance, Weibull Distribution, Beta Distribution, Mixture Distribution, Out-of-Sample Efficiency, Goodness-of-Fit, Insurance Rating Efficiency, Farm Management, Financial Economics, Land Economics/Use,

An empirical macroeconomic model for policy design : the case of Chile

The authors construct, estimate, and simulate a macroeconomic model for Chile. This model allows aggregate supply and demand factors to interact in determining such key economic variables as inflation, the real wage, the real exchange rate, real output and employment, and the current account balance. The model ensures the consistency of different aggregates by imposing the relevant budget constraints on the fiscal sector, the central bank, and the balance of payments. To this consistent framework, the model adds behavioral equations with sound analytical foundations. The authors use model simulations to explore the effects of domestic policies and external shocks (like a balanced-budget fiscal expansion, a policy of increased growth in minimum wages, a fall in world copper prices, and an oil price shock). These simulations help illustrate the effects of economic policies and external factors that shape current policy discussions in Chile.Economic Theory&Research,Environmental Economics&Policies,Economic Stabilization,Macroeconomic Management,Inequality

Water pricing options for the Middle Drâa River Basin in Morocco

This paper discusses the possible effects of various ways of charging for water in an integrated modeling framework adapted to the Drâa River Basin in southeastern Morocco. Declining surface water availability in the basin has led to an increase in groundwater use for irrigation in recent decades, even though groundwater extraction is more costly than using surface water. The trade-off between the pricing of ground and surface water is discussed based on recursive-dynamic simulations over a ten-year period. The results identify groundwater pricing as an economically and environmentally favorable option, assuming that revenues from water charges are redistributed to farmers.River basin model, Water pricing, Water management, Conjunctive water use, Morocco, Resource /Energy Economics and Policy,

Managing pollution control in Brazil : the potential use of taxes and fines by federal and state governments

The authors make a case for federal monitoring of state environmental agencies'(SEPAs') performance because of the tradeoff for the states between the need to raise revenue from taxes on local output and the need to limit pollution. They also show that fines and taxes assigned respectively to the federal and state governments can improve firms'compliance and SEPA's performance, and hence environmental quality, without damaging state revenue, and perhaps even improving it. For their analysis, the authors rely on numerical policy simulations based on an analytical framework designed as a multilevel Stackelberg game. This framework reproduces the hierarchical structure of pollution control policies in Brazil, where the federal environmental protection agency relies on SEPAs to ensure that federally defined minimum ambient standards are met locally. The numerical simulations are based on a case study of the food, and the printing and publishing industries.Urban Services to the Poor,Environmental Economics&Policies,Water and Industry,Pollution Management&Control,Health Monitoring&Evaluation

Facilitating Distinctive and Meaningful Change Within U.S. Law Schools (Part 2): Pursuing Successful Plan Implementation Through Better Resource Management

In Part 1 of this series, one of the current authors used institutional theory, behavioral economics, and psychology to explain why U.S. law schools have had difficulty evolving faster and better. The author then used institutional entrepreneurship to propose a seven-step, faculty-led, operational change process designed to overcome institutional isomorphism and to enable each law school to formulate a distinctive, meaningful, strategic plan. In Part 2, the current article addresses the typical implementation challenges to be expected within the context of existing law school governance. The article begins by discussing the Resource Based View of the firm and the role of resource management in achieving competitive advantages. These considerations lay the foundation for the critical role of faculty engagement and law school leadership in successful strategic plan implementation. Next, within this context, the article discusses four questions whose answers may foreshadow implementation problems. Lastly, the article discusses the results of several Monte Carlo Simulations. The simulations provide insight into the likely performance problems caused by faculty misaligned with, or disengaged from, their law school’s strategic goals. The results suggest that even minimal faculty misalignment can have a significant deleterious effect on the ability of a given law school to achieve any distinctive position. All told, the article concludes that U.S. law schools can successfully implement distinctive and meaningful strategic plans within existing shared governance structures. However, success will be difficult to achieve. It requires the full engagement and leadership by both the faculty and the Dean, sustained operational support for strategic change, and the active management of law school resources