The value of inside and outside money: expanded version

We study dynamic economies in which agents may have incentives to hold both privately-issued (a.k.a. inside) and publicly-issued (a.k.a. outside) circulating liabilities as part of an equilibrium. Our analysis emphasizes spatial separation and limited communication as frictions that motivate monetary exchange. We isolate conditions under which a combination of inside and outside money does and does not allow the economy to achieve a first-best allocation of resources. We also study the extent to which the use of private circulating liabilities alone, or the use of public circulating liabilities alone, can address the frictions that lead to monetary exchange. We identify conditions under which both types of liabilities are essential to efficiency. However, even when these conditions are satisfied, we show that political economy considerations may lead to a prohibition against private circulating liabilities. Finally, we analyze the consequences of such a prohibition for the determinacy of equilibrium, and for endogenously arising volatility.Money ; Money theory

Intermediaries and payments instruments

We study an economy in which intermediaries have incentives to issue circulating liabilities as part of an equilibrium. We show that, with arbitrarily small transactions costs, only the liabilities of intermediaries will circulate, and not those of other private sector agents. Therefore, our model connects intermediation activity with the issuance of payments media, a connection that has not been made in earlier literature. We also describe conditions under which equilibrium outcomes may be volatile when private liabilities circulate. Finally, we use our model to suggest a resolution of the "banknote underissue puzzle" of Cagan (1993).Monetary policy ; Bank notes ; Payment systems

The value of inside and outside money

We study dynamic economies in which agents may have incentives to hold both privately-issued (a.k.a. inside) and publicly-issued (a.k.a. outside) circulating liabilities as part of an equilibrium. Our analysis emphasizes spatial separation and limited communication as frictions that motivate monetary exchange. We isolate conditions under which a combination of inside and outside money does and does not allow the economy to achieve a first-best allocation of resources. We also study the extent to which the use of private circulating liabilities alone, or the use of public circulating liabilities alone, can address the frictions that lead to monetary exchange. We identify conditions under which both types of liabilities are essential to efficiency. However, even when these conditions are satisfied, we show that political economy considerations may lead to a prohibition against private circulating liabilities. Finally, we analyze the consequences of such a prohibition for the determinacy of equilibrium, and for endogenously arising volatility.Money ; Money theory

The Effects of Welfare and Tax Reform: The Material Well-Being of Single Mothers in the 1980s and 1990s

The tax and welfare programs that provide income and in-kind benefits to single mothers have changed dramatically in recent years. These changes began as far back as the mid-1980s and culminated with the 1996 welfare law that 'ended welfare as we knew it.' These tax and welfare changes have sharply increased the employment of single mothers and cut welfare rolls. However, little is know about the effects of these policy changes on the living conditions of single mothers and their children. Studies of those leaving welfare have found that a substantial percentage have problems paying rent, purchasing enough food, and paying utility bills. Other studies have found a decline in income among the worst-off single mothers. The goal of this paper is to examine the material well-being of single mothers and their families before and soon after welfare reform. Using data from two nationally representative household surveys we examine the consumption patterns of single mothers and their families. We find that the material conditions of single mothers did not decline in recent years, either in absolute terms or relative to single childless women or married mothers. In most cases, our evidence suggests that the material conditions of single mothers have improved slightly, even for highly disadvantaged single mothers.

Further Results on Measuring the Well-Being of the Poor Using Income and Consumption

In the U.S., analyses of poverty rates and the effects of anti-poverty programs rely almost exclusively on income data. In earlier work (Meyer and Sullivan, 2003) we emphasized that conceptual arguments generally favor using consumption data to measure the well-being of the poor, and, on balance, data quality issues favor consumption in the case of single mothers. Our earlier work did not show that income and consumption differ in practice. Here we further examine data quality issues and show that important conclusions about recent trends depend on whether one uses consumption or income. Changes in the distribution of resources for single mothers differ sharply in recent years depending on whether measured by income or consumption. Measures of overall and sub-group poverty also sharply differ. In addition to examining broader populations and a longer time period, we also consider new dimensions of data quality such as survey and item nonresponse, imputation, and precision. Finally, we demonstrate the flaws in a recent paper that compares income and consumption data.

Stochastic Weighted Graphs: Flexible Model Specification and Simulation

In most domains of network analysis researchers consider networks that arise in nature with weighted edges. Such networks are routinely dichotomized in the interest of using available methods for statistical inference with networks. The generalized exponential random graph model (GERGM) is a recently proposed method used to simulate and model the edges of a weighted graph. The GERGM specifies a joint distribution for an exponential family of graphs with continuous-valued edge weights. However, current estimation algorithms for the GERGM only allow inference on a restricted family of model specifications. To address this issue, we develop a Metropolis--Hastings method that can be used to estimate any GERGM specification, thereby significantly extending the family of weighted graphs that can be modeled with the GERGM. We show that new flexible model specifications are capable of avoiding likelihood degeneracy and efficiently capturing network structure in applications where such models were not previously available. We demonstrate the utility of this new class of GERGMs through application to two real network data sets, and we further assess the effectiveness of our proposed methodology by simulating non-degenerate model specifications from the well-studied two-stars model. A working R version of the GERGM code is available in the supplement and will be incorporated in the gergm CRAN package.Comment: 33 pages, 6 figures. To appear in Social Network

Patterns of past and recent conversion of indigenous grasslands in the South Island, New Zealand

We used recent satellite imagery to quantify the extent, type, and rate of conversion of remaining indigenous grasslands in the inland eastern South Island of New Zealand in recent years. We describe the pattern of conversion in relation to national classifications of land use capability and land environments, and ecological and administrative districts and regions. We show that although large areas of indigenous grasslands remain, grassland loss has been ongoing. Indigenous grassland was reduced in the study area by 3% (70 200 ha) between 1990 and 2008. Almost two-thirds of post-1990 conversion occurred in threatened environments with less than 30% of indigenous cover remaining, primarily in the Waitaki, Mackenzie and Central Otago administrative districts. This conversion occurred primarily on non-arable land. In the Mackenzie and Waitaki districts the rate of conversion in 2001-2008 was approximately twice that in 1990-2001. Opportunities to protect more of the full range of indigenous grasslands lie with the continuing tenure review process in these districts

Development and testing of a unique carousel wind tunnel to experimentally determine the effect of gravity and the interparticle force on the physics of wind-blown particles

In the study of planetary aeolian processes the effect of gravity is not readily modeled. Gravity appears in the equations of particle motion along with the interparticle forces but the two are not separable. A wind tunnel that perimits multiphase flow experiments with wind blown particles at variable gravity was built and experiments were conducted at reduced gravity. The equations of particle motion initiation (saltation threshold) with variable gravity were experimentally verified and the interparticle force was separated. A uniquely design Carousel Wind Tunnel (CWT) allows for the long flow distance in a small sized tunnel since the test section if a continuous loop and develops the required turbulent boundary layer. A prototype model of the tunnel where only the inner drum rotates was built and tested in the KC-135 Weightless Wonder 4 zero-g aircraft. Future work includes further experiments with walnut shell in the KC-135 which sharply graded particles of widely varying median sizes including very small particles to see how interparticle force varies with particle size, and also experiments with other aeolian material

Aeolian processes aboard a Space Station: Saltation and particle trajectory analysis

The Carousel Wind Tunnel (CWT) proposed to study aeolian processes aboard a Space Station consists of two concentric rotating drums. The space between the two drums comprises the wind tunnel section. Differential rates of rotation of the two drums would provide a wind velocity with respect to either drum surface. Preliminary results of measured velocity profiles made in a CWT prototype indicate that the wall bounded boundary layer profiles are suitable to simuate flat plate turbulent boundary layer flow. The two dimensional flate plate Cartesian coordinate equations of motion of a particle moving through the air are explained. In order to assess the suitability of CWT in the analysis of the trajectories of windblown particles, a series of calculations were conducted comparing cases for gravity with those of zero gravity. Results from the calculations demonstrate that a wind tunnel of the carousel design could be fabricated to operate in a space station environment and that experiments could be conducted which would yield significant results contributing to the understanding of the physics of particle dynamics