Estimating Intertemporal Preferences for Natural Resource Allocation

In this article, we show how the degree of risk aversion, discounting, and preference for intertemporal substitution for a natural resource manager can be structurally estimated within a recursive utility framework. We focus on the management of a reservoir in California, and test the data for consistency with a recursive utility model specification versus standard time-additive separability. The results show that the data are consistent with a risk-averse manager with recursive preferences. The data also reject time-additive separability, with or without risk aversion, such as the standard constant relative risk aversion utility model. The improvement in model fit when recursive preferences are used is notable.     

Overseas Investment and Firm Exports

A firm can serve overseas customers by exporting or by producing in the foreign market. Thus, ceteris paribus , one might expect increases in overseas investment to displace exports. However, most empirical work has found a positive relation between the two variables. The authors use a panel dataset containing 25 years' of data on 932 Japanese manufacturing firms to investigate the effect direct investment abroad has on exports. For the full sample of firms, complementarity is found. The relationship, however, varies across firms. Those that are unlikely to ship intermediates to overseas production affiliates exhibit substitution.     

Rail Transit and Neighborhood Crime: The Case of Atlanta,Georgia

The construction of commuter rail stations is the centerpiece of many metropolitan areas' overall strategies for dealing with worsening air pollution, automobile congestion, and urban sprawl. Neighborhood groups have frequently opposed new stations on the grounds that stations increase crime. If fears of station-induced neighborhood crime are justified, building new stations may make the problems they are supposed to address even worse, because crime is a cause of employment and population decentralization. This paper first demonstrates theoretically that transit's impact on neighborhood crime can be either positive or negative. Some rare evidence is then provided on the link between transit and crime. Using a unique panel of neighborhood crime data for Atlanta, the results from estimating fixed effects and random effects models show that transit's impact on crime depends on certain characteristics of the neighborhood. The mix of these characteristics found within central city neighborhoods has resulted in transit increasing crime there, whereas in the suburbs crime has been reduced by transit.     

Stochastic efficiency analysis with risk aversion bounds: a simplified approach

A method of stochastic dominance analysis with respect to a function (SDRF) is described and illustrated. The method, called stochastic efficiency with respect to a function (SERF), orders a set of risky alternatives in terms of certainty equivalents for a specified range of attitudes to risk. It can be applied for conforming utility functions with risk attitudes defined by corresponding ranges of absolute, relative or partial risk aversion coefficients. Unlike conventional SDRF, SERF involves comparing each alternative with all the other alternatives simultaneously, not pairwise, and hence can produce a smaller efficient set than that found by simple pairwise SDRF over the same range of risk attitudes. Moreover, the method can be implemented in a simple spreadsheet with no special software needed.     

Distribution and development in a model of misgovernance

This paper presents an analysis of bureaucratic corruption, income inequality and economic development. The analysis is based on a dynamic general equilibrium model in which bureaucrats are appointed by the government to implement a redistributive programme of taxes and subsidies designed to benefit the poor. Corruption is reflected in bribery and tax evasion as bureaucrats conspire with the rich in providing false information to the government. In accordance with empirical evidence, the model predicts a positive relationship between corruption and inequality, and a negative relationship between corruption and development.     

The effect of land use regulation on housing and land prices

This paper investigates the effects of land use regulation restrictiveness on house and vacant land prices. In contrast to prior studies, the index of restrictiveness is treated as an endogenous variable and estimated effects are allowed to vary by market setting. Using data on more than 100 Florida cities, greater regulation restrictiveness is found to increase house price and decrease land price. Evidence is also provided showing that more restrictiveness increases the size of newly constructed homes.