A Note on Inflation Persistence

Macroeconomists have for some time been aware that the New Keynesian Phillips curve, though highly popular in the literature, cannot explain the persistence observed in actual inflation. We argue that two of the more prominent alternative formulations, the Fuhrer and Moore (1995) relative contracting model and the Blanchard and Katz (1999) reservation wage conjecture, are highly problematic. Fuhrer and Moore (1995)'s formulation generates inflation persistence, but this is a consequence of their assuming that workers care about the past real wages of other workers. Making the more reasonable assumption that workers care about the current real wages of other workers, one obtains the standard formulation with no inflation persistence. The Blanchard and Katz conjecture turns out to imply that inflation depends negatively on itself lagged, i.e. the opposite of the empirical regularity.

Coordination, Fair Treatment and Inflation Persistence

Most wage-contracting models with rational expectations fail to replicate the persistence in inflation observed in the data. We argue that coordination problems and multiple equilibria are the keys to explaining inflation persistence. We develop a wage-contracting model in which workers are concerned about being treated fairly. This model generates a continuum of equilibria (consistent with a range for the rate of unemployment), where workers want to match the wage set by other workers. If workers' expectations are based on the past behavior of wage growth, these beliefs will be self-fulfilling and thus rational. Based on quarterly U.S. data over the period 1955-2000, we find evidence that inflation is more persistent between unemployment rates of 4.7 and 6.5 percent, than outside these bounds, as predicted by our model.

Policy analysis for sustainable land management and food security in Ethiopia: a bioeconomic model with market imperfections

"Policy Analysis for Sustainable Land Management and Food Security in Ethiopia presents a bioeconomic model of this less- favored area in the Ethiopian highlands. The main reason for selecting this case study area is the unique availability of both biophysical and socioeconomic data covering a period of 15 to 20 years.The data provides a valuable opportunity to analyze the relationships between population pressure, poverty, and land degradation and to test policies for reducing vulnerability and improving sustainable management of the resource base.... Our analysis of the Andit Tid watershed community should be useful to policymakers and others seeking to reduce poverty and improve land management in Ethiopia and other countries where such problems are severe. Beyond this, the bioeconomic modeling approach used in this study can be usefully adapted and applied in many other settings." from TextBioeconomic modeling, Poverty alleviation,

Valuing Culture in the Global City

Culture encompasses three highly inter-related spheres of publicly funded culture, commercial culture and home-made culture. Cultural policy-making therefore needs to address many issues beyond traditional concerns.La cultura presenta tres formes estretament interrelacionades: la cultura amb finançament públic, la cultura comercial i la cultura casolana. Per tant, les polítiques culturals han de tractar molts aspectes a banda dels tradicionals.La cultura engloba tres ámbitos estrechamente interrelacionados: la cultura con financiación pública, la cultura comercial y la cultura hecha en casa. Por lo tanto, las políticas culturales deben tratar muchos aspectos más allá de los tradicionales

Market imperfections and land productivity in the Ethiopian Highlands:

This study analyzes how market imperfections affect land productivity in a degraded low-potential cereal- livestock economy in the Ethiopian highlands. A wide array of variables is used to control for land quality in the analysis. Results of three different selection models were compared with least squares models using the HC3 heteroskedasticity-consistent covariance matrix estimator. Market imperfections in labor and land markets were found to affect land productivity. Land productivity was positively correlated with household male and female labor force per unit of land. Female-headed households achieved much lower land productivity than male- headed households. Old age of household heads was also correlated with lower land productivity. Imperfections in the rental market for oxen appeared to cause overstocking of oxen by some households. Conservation technologies had no significant positive short-run effect on land productivity. The main results were consistent across the different econometric models. .Livestock productivity Ethiopia., Cereal crops., Labor productivity., Markets.,