General Measures to Assist Workers and Firms in Adjusting to Injury from Freer Trade: Issues Raised by Various European Approaches and Some ad hoc Industry Measures Adopted elsewhere

A bstract . Various European measures to alleviate hardships following structural changes. including those resulting from changes in international trade. particularly imports. are summarized. It is noted that sectional political pressures tend to generate industry-specific schemes, especially in the textile, clothing and footwear fields. In some cases, the individual schemes facilitate change. But, in many others, they simply frustrate and hinder inevitable adjustment. Instances of both types are cited. The characteristics of an 'ideal' scheme are itemized along with some of the difficulties in maintaining them. Finally, suggestions are made to de-politicize the tariff-maknig process in the interest of freer trade.     

On the measurement of risk aversion from experimental data

Attitudes towards risk are measured for households in Northern Zambia using an experimental gambling approach with real payoffs that at maximum were equal to 30% of average total annual income per capita. The results of the experiment show decreasing absolute risk aversion and increasing partial risk aversion. Determinants of risk aversion are investigated using random effects interval regression model exploiting the panel data structure of the repeated experiments. Wealth indicator variables are found to be significant, and partial relative risk aversion decreases as wealth increases. Females are found to be more risk averse than males.     

Livestock and land share contracts in a Hindu society

This article examines factors related to a livestock rental market in western Nepal and assesses whether this market is associated with caste differentiation and land rental market participation. Theoretical models for asset‐rich (i.e., high‐caste) households, rich in land and livestock, and asset‐poor (i.e., low‐caste families) households are presented to provide logical explanations for the existence of a livestock rental market and the synergy between livestock and land rental markets participation. A combination of double hurdle models and bivariate‐ordered probit models were used to test the implications of the models. Consistent with the theoretical models, land‐ and livestock‐rich high‐caste households were more likely to rent out land and/or livestock, whereas land‐ and livestock‐poor and credit constrained low‐caste households were more likely to rent livestock and land from others. Participation in the two markets was positively correlated, indicating a synergistic relationship that may be due to production and transaction costs reducing benefits. Policies that can enhance the allocative efficiency of livestock and land rental markets can improve equity as well as efficiency of land use in Nepal. Provision of livestock credit to land‐poor low‐caste households is also crucially dependent on their access to more long‐term contracts for land.     

Predators in the market: implications of market interaction on optimal resource management

A two-species bioeconomic model is analyzed, but in contrast to most similar models, there is no biological interaction between the species, only economic. The interaction takes place in the market where the quantity of either species may affect the price of the other. The effects of cross-price elasticities on the optimal steady state and on the optimal paths in the sole-owner case are investigated both analytically (steady states) and numerically (optimal paths). First, it is shown that if the harvest of one species has impact on the price of another species, then this has a positive effect on its steady-state stock. The effect increases with the stock-elasticity in the cost function. Further, in the case of linear demand functions, the steady state outcome depends solely on the sum of the cross-price parameters and not their individual values. Secondly, in the investigation of optimal paths, it is shown that if the harvest of one species has impact on the price of the other, optimal trajectories reach steady state faster for itself and slower for the other species. Further, when cross-price elasticities are sufficiently high, the paths go from being monotonic to feature over- or undershooting.     

A Unified Theory of Underreaction, Momentum Trading, and Overreaction in Asset Markets

We model a market populated by two groups of boundedly rational agents: "newswatchers" and "momentum traders." Each newswatcher observes some private information, but fails to extract other newswatchers' information from prices. If information diffuses gradually across the population, prices underreact in the short run. The underreaction means that the momentum traders can profit by trend-chasing. However, if they can only implement simple (i.e., univariate) strategies, their attempts at arbitrage must inevitably lead to overreaction at long horizons. In addition to providing a unified account of under- and overreactions, the model generates several other distinctive implications.     

Greenspan's Retrospective of Financial Crisis and Stochastic Optimal Control

Alan Greenspan argues that the crisis was unpredictable and inevitable, given the ‘excessive’ leverage of the financial intermediaries. I focus upon the housing sector, which has been at the origin of the financial crisis because the value of the financial derivatives ultimately depended upon the ability of the mortgagors to repay their debts. The uncertainty concerns the capital gains – housing price appreciation – and the rate of interest. I explain why the application of stochastic optimal control (SOC) is an effective approach to determine the optimal degree of leverage, the optimum and excessive risk and the probability of a debt crisis. I show that the theoretically derived early warning signal of a crisis is the excess debt ratio, equal to the difference between the actual and optimal ratio. The excess debt of households starting from 2004‐05 indicated that a housing crisis was most likely.     

Traditions,Land Rights,and Local Welfare Creation: Studies from Eastern Indonesia

This research focuses on the impacts of traditional systems of land distribution among households, clans, and the government in two of Indonesia’s poorest provinces: East Nusa Tenggara and Maluku. Our main goal is to discuss and propose alternative ways of dividing and governing productive land to meet new needs in the management of agriculture and forestry. We apply a mixed research methodology that includes in-depth discussions with more than 50 key informants and survey interviews with 640 randomly selected respondents. We find that the number of land conflicts is rising, that land privatisation is becoming increasingly relevant, and that communal land ownership tends to lead to land under-utilisation rather than to natural resource overuse and environmental degradation. We argue that economic gains can be made by changing land-use patterns and land user rights. Our policy recommendations include introducing formalised and taxable clan land ownership with specified and registered family user rights.