Template-Type: ReDIF-Paper 1.0 Author-Name: Erick Rengifo Author-X-Name-First: Erick Author-X-Name-Last: Rengifo Author-Workplace-Name: Fordham University, Department of Economics Author-Name: Emanuela Trifan Author-X-Name-First: Emanuela Author-X-Name-Last: Trifan Author-Workplace-Name: J.W. Goethe University Frankfurt am Main, Department of Economics Title: How Investors Face Financial Risk Loss Aversion and Wealth Allocation Abstract: We study how the wealth-allocation decisions and the loss aversion of non-professional investors change subject to behavioral factors. The optimal wealth assignment between risky and risk-free assets results within a VaR portfolio model, where risk is individually assessed according to an extended prospect-theory framework. We show how the past performance and the portfolio evaluation frequency impact investor behavior. Myopic loss aversion holds at different evaluation frequencies. One year is the optimal frequency at which, under practical constraints, risky holdings are maximized. Previous research using standard VaR-significance levels may underestimate the loss aversion of individual investors. Creation-Date: 2008 File-URL: https://archive.fordham.edu/ECONOMICS_RESEARCH/PAPERS/dp2008_01_rengifo_trifan.pdf File-Format: Application/pdf Classification-JEL: G10, G11, D81, E27 Keywords: Prospect theory, myopic loss aversion, Value-at-Risk, portfolio evaluation, capital allocation Handle: RePEc:FRD:wpaper:DP2008-01 Template-Type: ReDIF-Paper 1.0 Author-Name: Baybars Karacaovali Author-X-Name-First: Baybars Author-X-Name-Last: Karacaovali Author-Workplace-Name: Fordham University, Department of Economics Author-Name: Nuno Limao Author-X-Name-First: Nuno Author-X-Name-Last: Limao Author-Workplace-Name: University of Maryland, Department of Economics; NBER; CEPR Title: The Clash of Liberalizations: Preferential versus Multilateral Trade Liberalization in the European Union Abstract: Preferential trade agreements (PTAs) are characterized by liberalization with respect to only a few partners and thus they can potentially clash with, and retard multilateral trade liberalization (MTL). Yet there is almost no systematic evidence on whether the numerous existing PTAs actually affect MTL. We provide a model showing that PTAs hinder MTL unless they entail accession to a customs union with internal transfers. Using product-level tariffs negotiated by the European Union (EU) in the last two multilateral trade rounds we find that several of its PTAs have clashed with its MTL. However, this effect is absent for EU accessions. Moreover, we provide new evidence on the political economy determinants of trade policy in the EU. Creation-Date: 2008 File-URL: https://archive.fordham.edu/ECONOMICS_RESEARCH/PAPERS/dp2008_02_karacaovali_limao.pdf File-Format: Application/pdf Classification-JEL: D78, F13, F14, F15 Keywords: Preferential trade agreements, customs unions, multilateral trade negotiations, MNF tariff concessions, reciprocity Handle: RePEc:FRD:wpaper:DP2008-02 Template-Type: ReDIF-Paper 1.0 Author-Name: Ronald Mendoza Author-X-Name-First: Ronald Author-X-Name-Last: Mendoza Author-Workplace-Name: United Nations Development Programme, Office of Development Studies Author-Name: Brandon Vick Author-X-Name-First: Brandon Author-X-Name-Last: Vick Author-Workplace-Name: Fordham University, Department of Economics Title: From Revolution to Evolution: Charting the Main Features of Microfinance 2.0 Abstract: The past thirty years or so has seen microfinance take off from small group-based lending experiments to several thousand financial service providers (FSPs) serving a growing portion of the developing world today. Nevertheless, the challenge to improve broadbased access to financial services—going beyond credit and into other products such as savings, insurance and money transfer services—remains. Where is the microfinance industry headed? This essay reviews the available evidence, and argues that both the public and private spheres are crucial to the continued dynamism and expansion of the microfinance industry—the private sector as a continued source of product and process innovations; and the public sector taking on a strong market enabling and development role. Creation-Date: 2008 File-URL: https://archive.fordham.edu/ECONOMICS_RESEARCH/PAPERS/dp2008_03_mendoza_vick.pdf File-Format: Application/pdf Classification-JEL: D52, O31, Q13 Keywords: Microfinance, market failures, information, innovation Handle: RePEc:FRD:wpaper:DP2008-03 Template-Type: ReDIF-Paper 1.0 Author-Name: Duncan James Author-X-Name-First: Duncan Author-X-Name-Last: James Author-Workplace-Name: Fordham University, Department of Economics Author-Name: Derrick Reagle Author-X-Name-First: Derrick Author-X-Name-Last: Reagle Author-Workplace-Name: Fordham University, Department of Economics Title: Experience Weighted Attraction in the First Price Auction and Becker Degroot Marschak Abstract: In this paper we explore the performance of Experience Weighted Attraction (EWA) in two different auction institutions: First Price Sealed Bid, and Becker-DeGroot-Marschak. Our results suggest that learning has some promise as a possible explanation for previously documented cross- institutional choice anomalies usually attributed to risk aversion. Additionally, we present results on the likely econometric (ir)recoverability of EWA parameters in these institutions. Creation-Date: 2008 File-URL: https://archive.fordham.edu/ECONOMICS_RESEARCH/PAPERS/dp2008_04_james_reagle.pdf File-Format: Application/pdf Classification-JEL: Keywords: Auctions, Risk Aversion, Learning, Experience Weighted Attractions Handle: RePEc:FRD:wpaper:DP2008-04 Template-Type: ReDIF-Paper 1.0 Author-Name: Caitlin Ann Greatrex Author-X-Name-First: Caitlin Ann Author-X-Name-Last: Greatrex Author-Workplace-Name: Fordham University, Department of Economics Title: The Credit Default Swap Market's Determinants Abstract: This paper explores the ability of variables suggested by structural models to explain variation in CDS spread changes. Using monthly changes in CDS spreads for 333 firms from January, 2001 – March, 2006, I find that these variables are able to explain thirty percent of the variation in CDS spread changes. A rating-based CDS index that accounts for both credit risk and overall market conditions is the single best predictor of CDS spread changes. Leverage and volatility, however, are also key determinants, as these two variables can explain almost half of the explained variation in monthly CDS spread changes. Creation-Date: 2008 File-URL: https://archive.fordham.edu/ECONOMICS_RESEARCH/PAPERS/dp2008_05_greatrex.pdf File-Format: Application/pdf Classification-JEL: G12 Keywords: Credit default swap, credit risk, leverage, stock returns, equity volatility. Handle: RePEc:FRD:wpaper:DP2008-05 Template-Type: ReDIF-Paper 1.0 Author-Name: Caitlin Ann Greatrex Author-X-Name-First: Caitlin Ann Author-X-Name-Last: Greatrex Author-Workplace-Name: Fordham University, Department of Economics Title: The Credit Default Swap Market's Reaction to Earnings Announcements Abstract: This paper examines the efficiency of the CDS market by conducting a comparative event study in which both the CDS and the stock markets' responses to earnings announcements are considered. I find that both markets have statistically significant reactions to earnings announcements and both markets anticipate these informational events up to 90 trading days prior to announcement. I further find that neither markets' reaction to earnings announcements is entirely efficient as there is evidence of both over- and under-reaction to earnings news. However, results are sensitive to both the categorization of earnings and the model used to generate abnormal performance. Creation-Date: 2008 File-URL: https://archive.fordham.edu/ECONOMICS_RESEARCH/PAPERS/dp2008_06_greatrex.pdf File-Format: Application/pdf Classification-JEL: G14 Keywords: Credit default swap, market efficiency, earnings announcements, credit ratings. Handle: RePEc:FRD:wpaper:DP2008-06 Template-Type: ReDIF-Paper 1.0 Author-Name: H. D. Vinod Author-X-Name-First: H. D. Author-X-Name-Last: Vinod Author-Workplace-Name: Fordham University, Department of Economics Author-Name: D. F. Hsu Author-X-Name-First: D. F. Author-X-Name-Last: Hsu Author-Workplace-Name: Fordham University, Department of Computer and Information Science Author-Name: Y. Tian Author-X-Name-First: Y. Author-X-Name-Last: Tian Author-Workplace-Name: Fordham University, Department of Computer and Information Science Title: Combining Multiple Criterion Systems for Improving Portfolio Performance Abstract: A central issue for managers or investors in portfolio management of assets is to select the assets to be included and to predict the value of the portfolio, given a variety of historical and concurrent information regarding each asset in the portfolio. There exist several criteria or models to predict asset returns, which in turn are sensitive to underlying probability distributions, their unknown parameters, whether it is a bull, bear or flat period subject to further uncertainty regarding switch times between bull and bear periods. It is possible to treat various portfolio-choice criteria as multiple criterion systems in the uncertain world of asset markets from historical market data. This paper develops the initial framework for the selection of assets using information fusion to combine these multiple criterion systems. These MCS' are combined, using the recently developed Combinatorial Fusion Analysis (CFA) to enhance the portfolio performance. We demonstrate with an example using US stock market data that combination of multiple criteria (or models) systems does indeed improve the portfolio performance. Creation-Date: 2008 File-URL: https://archive.fordham.edu/ECONOMICS_RESEARCH/PAPERS/dp2008_07_vinod_hsu_tian.pdf File-Format: Application/pdf Classification-JEL: G11, C14, D81 Keywords: Rank-score function, combinatorial fusion, stock performance, return of equity Handle: RePEc:FRD:wpaper:DP2008-07 Template-Type: ReDIF-Paper 1.0 Author-Name: Berna Demiralp Author-X-Name-First: Berna Author-X-Name-Last: Demiralp Author-Workplace-Name: Old Dominion University, Department of Economics Author-Name: Johanna Francis Author-X-Name-First: Johanna Author-X-Name-Last: Francis Author-Workplace-Name: Fordham University, Department of Economics Title: Wealth, Industry and the Transition to Entrepreneurship Abstract: Although the debate about the effect of wealth on entrepreneurship is now almost two decades old, there is little consensus among researchers about the significance of wealth as a determinant for self-employment. We re-visit the relationship between wealth and entrepreneurship using data from the National Longitudinal Survey of Youth. Like Hurst and Lusardi (2004), our results suggest the relationship between wealth and the probability of entering entrepreneurship is nonlinear. However, unlike Hurst and Lusardi, we find the probability of entrepreneurship increases at an increasing rate with wealth, starting at lower quantiles of the wealth distribution. We also observe that the aggregate relationship masks differences among entrepreneurs with respect to their industry. While high capital requirement industries and professional services display a convex relationship between wealth and the probability of self-employment, low capital requirement industries display a concave relationship. Since we find a positive relationship between wealth and the probability of entering entrepreneurship at lower quantiles of the wealth distribution, it is critical to check whether this relationship is caused by wealth endogeneity. In order to account for the possible endogeneity of wealth we instrument for wealth using changes in housing equity and the value of unexpected inheritances. The results of instrumental variable estimation reveal that there is no significant relationship between wealth and entering entrepreneurship for the full sample as well as for each of the three industries. Creation-Date: 2008 File-URL: https://archive.fordham.edu/ECONOMICS_RESEARCH/PAPERS/dp2008_09_demiralp_francis.pdf File-Format: Application/pdf Classification-JEL: E21, G11, J24 Keywords: Entrepreneur, wealth, industry, liquidity constraints Handle: RePEc:FRD:wpaper:DP2008-09 Template-Type: ReDIF-Paper 1.0 Author-Name: Johanna Francis Author-X-Name-First: Johanna Author-X-Name-Last: Francis Author-Workplace-Name: Fordham University, Department of Economics Title: Wealth and the Capitalist Spirit Abstract: The wealth distribution in the U.S. is more unequal than either the income or earnings distribution, a fact current models of saving behavior have difficulty explaining. Using MaxWeber's (1905) idea that individuals may have a 'capitalist spirit', I construct and simulate a model where individuals accumulate wealth for its own sake rather than as deferred consumption. Including capitalist-spirit preferences in a simple life cycle model, with no other modifications, generates a skewness of wealth consistent with that observed in the U.S. economy. Furthermore, capitalist-spirit preferences provide a way to generate decreasing risk aversion with increases in wealth without resorting to idiosyncratic rates of time preference. Creation-Date: 2008 File-URL: https://archive.fordham.edu/ECONOMICS_RESEARCH/PAPERS/dp2008_10_francis.pdf File-Format: Application/pdf Classification-JEL: D31, E21, J23 Keywords: capitalist spirit, life cycle, wealth Handle: RePEc:FRD:wpaper:DP2008-10 Template-Type: ReDIF-Paper 1.0 Author-Name: Sophie Mitra Author-X-Name-First: Sophie Author-X-Name-Last: Mitra Author-Workplace-Name: Fordham University, Department of Economics Author-Name: Jean-Marc Boussard Author-X-Name-First: Jean-Marc Author-X-Name-Last: Boussard Author-Workplace-Name: Institut National de Recherche en Agronomie (INRA) Title: Storage and the Volatility of Agricultural Prices: A Model of Endogenous Fluctuations Abstract: Recent developments in world food markets stress the importance of identifying the sources of food price volatility. This paper develops a nonlinear Cobweb model with endogenous volatility which accounts for several characteristics of agricultural commodity markets (seasonality, storage) and leads to price series with positive skewness and autocorrelation, as in actual commodity prices. Practical consequences may imply a rethinking of the current methods of world food market regulation. Creation-Date: 2008 File-URL: https://archive.fordham.edu/ECONOMICS_RESEARCH/PAPERS/dp2008_11_mitra_boussard.pdf File-Format: Application/pdf Classification-JEL: Q11, E39, D84 Keywords: Agricultural prices, nonlinear Cobweb model, endogenous fluctuations, storage Handle: RePEc:FRD:wpaper:DP2008-11 Template-Type: ReDIF-Paper 1.0 Author-Name: Sophie Mitra Author-X-Name-First: Sophie Author-X-Name-Last: Mitra Author-Workplace-Name: Fordham University, Department of Economics Title: The Recent Decline in the Employment of Persons with Disabilities in South Africa, 1998-2006 Abstract: This paper shows that there has been a significant decline in the employment and labor force participation of persons with disabilities in South Africa over the 1998 through 2006 period. Disability is defined based on activity limitations. Data are from the October and the General Household Surveys. The paper also deals with the possible causes of the decline. While several causes can be invoked, preliminary evidence suggests that the rise of the Disability Grant program might be responsible for a part of the decline. Recommendations are made for future research and data collection on disability and employment. Creation-Date: 2008 File-URL: https://archive.fordham.edu/ECONOMICS_RESEARCH/PAPERS/dp2008_12_mitra.pdf File-Format: Application/pdf Classification-JEL: Keywords: Handle: RePEc:FRD:wpaper:DP2008-12 Template-Type: ReDIF-Paper 1.0 Author-Name: Hrishikesh D. Vinod Author-X-Name-First: Hrishikesh D. Author-X-Name-Last: Vinod Author-Workplace-Name: Fordham University, Department of Economics Title: Consumer Debt is 130% of Income: Avoiding Budget Constraint Orthodoxy Abstract: Consumer theory still maximizes utility subject to a budget constraint, when in fact 2008 data show that consumer debt is 130% of disposable income. Granger-causality tests confirm Consumption precedence over income. We discuss several features of newer US data, such as the ability to start /stop part-time /full time work /school, allowing families a greater control on the timing and level of income. Hence, our Wiener-Hopf-Whittle model uses 'target-seeking' optimization, while our two-equation system makes both consumption and income endogenous, similar to quantities and prices in a demand system. The new model provides estimates of shadow prices of income level and adjustment costs, and is shown to help resolve five old 'puzzles' from the consumer theory literature. Creation-Date: 2008 File-URL: https://archive.fordham.edu/ECONOMICS_RESEARCH/PAPERS/dp2008_13_vinod.pdf File-Format: Application/pdf Classification-JEL: E21, E63 Keywords: Stochastic dynamic optimum, Target seeking, VAR, Wiener-Hopf-Whittle, Causality testing Handle: RePEc:FRD:wpaper:DP2008-13 Template-Type: ReDIF-Paper 1.0 Author-Name: Baybars Karacaovali Author-X-Name-First: Baybars Author-X-Name-Last: Karacaovali Author-Workplace-Name: Fordham University, Department of Economics Title: Productivity Matters for Trade Policy: Theory and Evidence Abstract: There is a growing literature where authors investigate the effect of trade liberalization on productivity. Nearly all such studies assume that trade policy is determined independently of productivity, hence it is exogenous. I show, both theoretically and empirically, that this assumption is not valid in general and that researchers may be underestimating the positive effect of liberalization on productivity when they do not account for the endogeneity bias. More productive sectors receive more protection and the sectors with a higher productivity gain are liberalized less even in the presence of a large unilateral liberalization shock that affects all sectors. Creation-Date: 2008 File-URL: https://archive.fordham.edu/ECONOMICS_RESEARCH/PAPERS/dp2008_14_karacaovali.pdf File-Format: Application/pdf Classification-JEL: D24, F13, F14 Keywords: Productivity, trade liberalization, endogeneity, political economy of trade policy, learning-by-doing Handle: RePEc:FRD:wpaper:DP2008-14 Template-Type: ReDIF-Paper 1.0 Author-Name: Hrishikesh D. Vinod Author-X-Name-First: Hrishikesh D. Author-X-Name-Last: Vinod Author-Workplace-Name: Fordham University, Department of Economics Title: Heteroscedasticity and Autocorrelation Efficient (HAE) Estimation and Pivots for Jointly Evolving Series Abstract: A new two-way map between time domain and numerical magnitudes or values domain (v-dom) provides a new solution to heteroscedasticity. Since sorted logs of squared fitted residuals are monotonic in the v-dom, we obtain a parsimonious fit there. Two theorems prove consistency, asymptotic normality, efficiency and specification-robustness, supplemented by a simulation. Since Dufour's (1997) impossibility theorems show how confidence intervals from Wald-type tests can have zero coverage, I suggest Godambe pivot functions (GPF) with good finite sample coverage and distribution-free robustness. I use the Frisch-Waugh theorem and the scalar GPF to construct new confidence intervals for regression parameters and apply Vinod's (2004, 2006) maximum entropy bootstrap. I use Irving Fisher's model for interest rates and Keynesian consumption function for illustration. Creation-Date: 2008 File-URL: https://archive.fordham.edu/ECONOMICS_RESEARCH/PAPERS/dp2008_15_vinod.pdf File-Format: Application/pdf Classification-JEL: Keywords: Handle: RePEc:FRD:wpaper:DP2008-15 Template-Type: ReDIF-Paper 1.0 Author-Name: Emre Ozsoz Author-X-Name-First: Emre Author-X-Name-Last: Ozsoz Author-Workplace-Name: Fordham University, Department of Economics Author-Name: Erick W. Rengifo Author-X-Name-First: Erick Author-X-Name-Last: Rengifo Author-Workplace-Name: Fordham University, Department of Economics Author-Name: Dominick Salvatore Author-X-Name-First: Dominick Author-X-Name-Last: Salvatore Author-Workplace-Name: Fordham University, Department of Economics Title: Dollarization as an Investment Signal in Developing Countries: The Case of Croatia, Czech Republic, Peru, Slovak Republic and Turkey Abstract: In dollarized financial systems, there exists a currency mismatch risk that could lead to financial crises. Central Banks in such economies have to adjust their foreign currency policies accordingly. This paper estimates the probability of Central Bankers' intervention in the foreign currency markets in dollarized economies as explained by the volatility measures of the local exchange rate. By employing data from five countries, we show that in controlled inflation environments, not only Central Banks' interventions but also the direction of the interventions can be predicted to a good degree while under high inflation our model fails to provide healthy results. Creation-Date: 2008 File-URL: https://archive.fordham.edu/ECONOMICS_RESEARCH/PAPERS/dp2008_16_ozsoz_rengifo_salvatore.pdf File-Format: Application/pdf Classification-JEL: F31, E58, G15 Keywords: Central Bank Intervention, Foreign Exchange Rates, Dollarization, Ordered Probit Handle: RePEc:FRD:wpaper:DP2008-16 Template-Type: ReDIF-Paper 1.0 Author-Name: Sang-Wook Stanley Cho Author-X-Name-First: Sang-Wook Stanley Author-X-Name-Last: Cho Author-Workplace-Name: University of New South Wales, School of Economics Author-Name: Johanna Francis Author-X-Name-First: Johanna Author-X-Name-Last: Francis Author-Workplace-Name: Fordham University, Department of Economics Title: Tax Treatment of Owner Occupied Housing and Wealth Inequality Abstract: In the U.S., mortgage interest deductibility provides a financial incentive for home ownership over renting as well as an incentive to "over-consume" housing since houses are not fungible. Home-ownership is also often promoted as a safe means of wealth creation. We construct and calibrate a quantitative general equilibrium lifecycle model with homeownership and mortgage decisions to investigate the degree to which the wealth inequality in the United States is driven by the home mortgage interest deduction and the untaxed nature of imputed rents from owner-occupied housing. As the tax treatment of housing will disproportionately create tax savings for the top deciles of the income distribution, we quantify how the tax deductibility contributes to the heavily skewed distribution of wealth in the United States using data from the Survey of Consumer Finances. Although the tax treatment of owner occupied housing alone is unlikely to produce the extreme wealth concentration at the far right tail of the distribution, we argue that it is re-enforced by a bequest motive. We find that removing mortgage interest deductibility and taxing imputed rents reduces the Gini coefficient by 0.04 points, caused by a re-allocation of wealth from the top 10 percentiles to the bottom 50 percentiles of the wealth distribution. Creation-Date: 2008 File-URL: https://archive.fordham.edu/ECONOMICS_RESEARCH/PAPERS/dp2008_17_cho_francis.pdf File-Format: Application/pdf Classification-JEL: E21 Keywords: Mortgage interest deductibility, housing, wealth, inequality Handle: RePEc:FRD:wpaper:DP2008-17 Template-Type: ReDIF-Paper 1.0 Author-Name: Sophie Mitra Author-X-Name-First: Sophie Author-X-Name-Last: Mitra Author-Workplace-Name: Fordham University, Department of Economics Author-Name: Patricia A. Findley Author-X-Name-First: Patricia Author-X-Name-Last: Findley Author-Workplace-Name: Rutgers University, School of Social Work Author-Name: Usha Sambamoorthi Author-X-Name-First: Usha Author-X-Name-Last: Usha Sambamoorthi Author-Workplace-Name: UMASS Medical School, Worcester, Department of Psychiatry, and Morehouse School of Medicine, Department of Community Health and Preventive Medicine Title: Healthcare Expenditures of Living with a Disability: Total Expenditures, Out of Pocket Expenses and Burden, 1996-2004 Abstract: Objective--This paper estimates the healthcare expenditures associated with a disability at the individual level and their recent trends. Design--Retrospective analysis of survey data. Participants--Data from multiple years (1996 through 2004) of the Medical Expenditure Panel Survey (MEPS) for a nationally representative sample of civilian, non-institutionalized US population. Interventions--Not applicable. Main Outcome Measures--Healthcare expenditures consisted of: total healthcare expenditures, total out-of-pocket spending (OOP), and burden (the ratio of OOP to individual income). All the analyses accounted for the complex survey design of the MEPS. Results--Between 1996 and 2004, 6% to 9% of individuals in the working age group (21-61 years) were identified as having a disability. Persons with disabilities consistently had higher total health expenditures, OOP and burden compared to their counterparts without disabilities. In 2004, the average total expenditures were estimated at $10,508 for persons with disabilities and at $2,256 for those without disabilities. In a multiple regression framework, persons with disabilities were consistently found to have higher expenditures and OOP between 1996 and 2004. Although expenditures, OOP and burden increased over time, after controlling for demographic, socio-economic, and health status, these three healthcare costs were not found to increase disproportionately for individuals with disability. Conclusions--Over the 1996-2004 period, persons with disabilities are consistently found to have significantly higher health expenditures and OOP compared to their counterparts without disabilities, which may adversely affect their health and standard of living. Creation-Date: 2008 File-URL: https://archive.fordham.edu/ECONOMICS_RESEARCH/PAPERS/dp2008_18_mitra_findley_sambamoorthi.pdf File-Format: Application/pdf Classification-JEL: Keywords: Disability, Health Expenditures, Out of Pocket Expenditures, Burden Handle: RePEc:FRD:wpaper:DP2008-18 Template-Type: ReDIF-Paper 1.0 Author-Name: Subha Mani Author-X-Name-First: Subha Author-X-Name-Last: Mani Author-Workplace-Name: Fordham University, Department of Economics Title: Is there Complete, Partial, or No Recovery from Childhood Malnutrition? Empirical Evidence from Indonesia Abstract: In Indonesia, more than 30% of children under the age of 5 years suffer from chronic malnourishment. The long-term consequences of childhood malnutrition are well established in the literature. Yet, little is known about the extent to which these children are able to recover from some of the long-term deficits in health outcomes caused by childhood undernourishment. To capture the association between nutritional deficiency at young ages and subsequent health status, a panel data is constructed using observations on children between the age of 3 and 59 months in 1993 who are followed through the 1997 and 2000 waves of the Indonesian Family Life Survey. A dynamic conditional health demand function is estimated, where the coefficient on the one-period lagged health status captures the extent of recovery, if any, from childhood malnutrition. This coefficient is also known as the 'catch-up' term. Variants of the IV/GMM estimation strategy are used here to obtain an unbiased and consistent coefficient estimate on the lagged dependent variable. While the OLS coefficient estimate on the one-period lagged health status is 0.53, it is only 0.23 in a first-difference GMM framework, indicating an upward bias in the OLS parameter estimate. A coefficient of 0.23 on the one-period lagged health status indicates that poor nutrition at young ages will cause some, but not severe, retardation in the growth of future height indicating partial catch-up effects. In the absence of any catch-up, by adolescence, a malnourished child will grow to be 4.15 cm shorter than a well-nourished child. However, a coefficient of 0.23 as estimated here indicates that by adolescence, a malnourished child will grow to be only 0.95 cm shorter than a well-nourished child. The first-difference GMM estimation strategy used here is especially attractive as it relies on much weaker stochastic assumptions than earlier papers and addresses both omitted variables bias and measurement error bias in data. Creation-Date: 2008 File-URL: https://archive.fordham.edu/ECONOMICS_RESEARCH/PAPERS/dp2008_19_mani.pdf File-Format: Application/pdf Classification-JEL: I10, R20, D10 Keywords: Child health, Lagged dependent variable, First-difference, Indonesia Handle: RePEc:FRD:wpaper:DP2008-19 Template-Type: ReDIF-Paper 1.0 Author-Name: Scott E. Page Author-X-Name-First: Scott Author-X-Name-Last: Page Author-Workplace-Name: University of Michigan, Ann Arbor, Departments of Political Science and Economics and Centers for the Study of Complex Systems and Policy Studies Author-Name: Troy Tassier Author-X-Name-First: Troy Author-X-Name-Last: Tassier Author-Workplace-Name: Fordham University, Department of Economics Title: On the Existence and Stability of Inefficient Boundary Equilibria in the Groves Ledyard Mechanism Abstract: In this paper, we characterize all interior and boundary equilibria of the Groves- Ledyard mechanism for a large class of economies and demonstrate their stability or lack thereof. We prove that the mechanism implements large numbers of inefficient and stable boundary equilibria, one for each of the efficient, asymmetric, interior equilibria found by Bergstrom, Simon, and Titus (BST). We show that the symmetric equilibrium is stable, and that its stability rests on two unstable dynamics that combine to create stability. The boundary equilibria, but not the asymmetric interior equilibria, are also stable. We further show that both sets of asymmetric equilibria can fail to exist in the presence of a large punishment parameter or a constraint on messages. Creation-Date: 2008 File-URL: https://archive.fordham.edu/ECONOMICS_RESEARCH/PAPERS/dp2008_20_page_tassier.pdf File-Format: Application/pdf Classification-JEL: Keywords: Handle: RePEc:FRD:wpaper:DP2008-20 Template-Type: ReDIF-Paper 1.0 Author-Name: Jason Barr Author-X-Name-First: Jason Author-X-Name-Last: Barr Author-Workplace-Name: Rutgers University, Newark, Department of Economics Author-Name: Troy Tassier Author-X-Name-First: Troy Author-X-Name-Last: Tassier Author-Workplace-Name: Fordham University, Department of Economics Title: Endogenous Neighborhood Selection and the Attainment of Cooperation in a Spatial Prisoner's Dilemma Game Abstract: There is a large literature in economics and elsewhere on the emergence and evolution of cooperation in the repeated Prisoner's Dilemma. Recently this literature has expanded to include cooperation in spatial prisoner dilemma games where agents play only with local neighbors in a specified geography. In this paper we explore how the ability of agents to move and choose new locations and new neighbors influences the emergence of cooperation. First, we explore the dynamics of cooperation by investigating agent strategies that yield Markov transition probabilities. We show how different agent strategies yield different Markov chains which generate different asymptotic behaviors in regard to the attainment of cooperation. Second, we investigate how agent movement affects the attainment of cooperation in various spatial networks using agent based simulations. Creation-Date: 2008 File-URL: https://archive.fordham.edu/ECONOMICS_RESEARCH/PAPERS/dp2008_21_barr_tassier.pdf File-Format: Application/pdf Classification-JEL: C63, C72, C73, D8 Keywords: repeated prisoner's dilemma, cooperation, agent-based economics, endogenous networks, Markov chains Handle: RePEc:FRD:wpaper:DP2008-21 Template-Type: ReDIF-Paper 1.0 Author-Name: Ralf Hepp Author-X-Name-First: Ralf Author-X-Name-Last: Hepp Author-Workplace-Name: Fordham University, Department of Economics Title: Can Debt Relief Buy Growth? Abstract: In this paper, I investigate whether the numerous debt relief initiatives during the 1990s have had a significant effect on economic growth rates in developing countries. The major initiatives during that time period were negotiated as bilateral agreements under the guidance of the Paris Club of Creditors. These agreements were followed up by the Heavily Indebted Poor Countries (HIPC) debt relief initiative in 1996 and its "enhanced" version in 1999 under the guidance of the World Bank and the International Monetary Fund. I find that, on average, debt relief had no effect on growth rates of developing countries. However, the effect on growth rates differed for different subsets of developing countries. I find that countries that are not classified as HIPC have benefited significantly from debt relief, whereas the growth rates of HIPC countries remained unaffected. Creation-Date: 2008 File-URL: https://archive.fordham.edu/ECONOMICS_RESEARCH/PAPERS/dp2008_22_hepp.pdf File-Format: Application/pdf Classification-JEL: F42, F43, O19 Keywords: HIPC debt initiative, debt relief, foreign aid, growth Handle: RePEc:FRD:wpaper:DP2008-22