Economics and Finance

The way jurisdiction over land is distributed among members of a community has a powerful influence over how efficiently land is used, the incidence of poverty, and the level of inequality in the community. Yet much land in less developed countries is underutilized and/or misused from a sustainability standpoint: lack of access to land or unfavorable terms of access remain a fundamental cause of poverty. In addition, unmet demands for land can be a source of political destabilization. At the same time, there presently exist unusual opportunities to reopen the issue of access to land. They include an increasing concern with the efficiency costs of inequality in land distribution, devolution of common property resource management to users, large scale redefinitions of property rights in the context of transition economies in Eastern and central Europe and the end of white rule in South Africa, liberalization of land markets, mounting pressure to deal with environmental issues, the proliferation of civil society organizations voicing the demands of the rural poor, and more democratic forms of governance. Much attention has been given to state-led redistributive land reforms. Other channels include inheritance and inter-vivos transfers, intrahousehold and intracommunity land allocations, community titling of open access resources, the distribution of common property resources and the individualization of rights, decollectivization, land markets and land market-assisted land reforms, and land rental contracts. This book analyzes each of these channels of access to land, and recommends ways of making them more effective.

Adam Smith's thought was indebted to the classical training prevailing in the educational system of his day. A careful reading of all his writings can prove the extent of this debt. Classical influences are obviously more numerous and easily discernible in the philosophical works, but are not absent from the economic masterpiece. They have been described by the author without having recourse to conjectures or implications, rather by analysing the topics whose classical origin can be ascertained. The book has been divided into chapters devoted to the traditional branches of knowledge treated by Adam Smith: natural philosophy, ethics, jurisprudence, economics, literature; plus a postscript.

Smith was not only influenced by classical doctrines but he also selected from them arguments

suited to support his own ideas.

Adam Smith's System is a study in classical economic thought and methodology. It portrays Adam Smith as a Stoic philosopher who wanted virtue to be relevant to this life rather than to the next. His central purpose was to define a set of laws, a jurisprudence in the widest possible sense, which would permit economic and political liberalism to proceed without triggering long‐run moral degeneration. Smith argued that the conflict between morals and wealth was only apparent, because it was possible to synthesize the seeming contraries with better laws and moral rules.

All of Smith's writings are analysed, including his writings on morals and methodology, art and rhetoric, and his political and economic writings. The relevance of Wealth of Nations is analysed, and Smith's theories of free trade and economic growth are put into context. It is shown that Smith was primarily concerned with the very broad intellectual endeavour to replace the Aristotelian world‐view, the bulwark and inspiration of medieval Christian thought, with an outlook that was more consistent with Newtonian science.

The increase in life expectancy is arguably the most remarkable by‐product of modern economic growth. In the last 30 years we have been gaining roughly 2.5 years of longevity every decade both in Europe and in the United States. This progress has outpaced the most optimistic scenarios and documented that demographic projections are no more reliable than economic forecasts. This book looks closely into those challenges, raising a few fundamental issues at both the macroeconomic and microeconomic levels. Among these: is it possible to turn the challenges faced by ageing and longevity into a long‐term productive opportunity? Can advanced economies engineer a healthy ageing scenario with long‐term spillovers in terms of enhanced technological progress and acceleration of long‐term growth? What is the microeconomic relationship between ageing and productivity, and how can specific policies postpone any age‐related decay in productivity at the firm and individual levels?

This book presents the report on the European economic system, which was submitted to the President of the European Commission in July 2003. The report is divided into three parts. The first contains an assessment of the economic performance in terms of growth, stability, and cohesion. The second explores the challenges facing the European Union. The third presents a series of policy recommendations for the future.

This book examines the HIV/AIDS epidemic in the social and economic context of poverty and economic crisis in developing and transition countries. It challenges the assumption — implicit in AIDS policy — that differences in sexual behavior are adequate to explain differences in HIV prevalence between populations. Using an epidemiological approach, the book shows how people who are malnourished, burdened with parasites and infectious diseases, and who lack access to medical care are more vulnerable to all diseases. It explains the specific mechanisms by which undernutrition, micronutrient deficiency, malaria, soil-transmitted helminths, schistosomiasis, and other parasitic illnesses increase the risk of HIV transmission and epidemic spread of HIV/AIDS in poor populations. A theme throughout the book is that the sexual transmission of HIV diverts attention from the social and economic context of profound poverty. The distraction of sex is compounded by Western stereotypes of African sexuality, perpetuated through reliance on anecdotal evidence and the construction of a notion of fundamental dissimilarity among peoples of different world regions. The book evaluates current methods in epidemiology and health economics, which do not take account of the interactions among diseases that increase risk of transmission of HIV in poor populations. It criticizes HIV-prevention policies as narrow, shortsighted, and dead-end because they fail to address the economic and social context in which risky behaviors occur. Finally, the book offers pragmatic solutions to social, economic, and biological factors that promote disease transmission, including the spread of HIV.

Important results in the applied welfare literature are used to extend a conventional Harberger cost-benefit analysis. A conventional welfare equation is obtained for marginal policy changes in a general equilibrium economy with tax distortions. It is extended to accommodate internationally traded goods, time, income taxes, and non-tax distortions, including externalities, non-competitive behaviour, public goods, and price-quantity controls. The welfare analysis is developed in stages, and where possible is explained using diagrams, to make it more amenable to the different institutional arrangements encountered in applied work. Computable welfare expressions are solved using demand-supply elasticities. In a conventional cost-benefit analysis, lump sum transfers are used to separate the welfare effects of individual policy variables. This is important because it allows policy evaluation to be divided across specialist agencies. These transfers are carefully examined to identify the important role played by the marginal social cost of public funds (MCF) in policy evaluation when governments balance their budgets with distorting taxes. This book separates income effects for marginal policy changes in the shadow value of government revenue. As a scaling coefficient that converts efficiency effects into dollar changes in private surplus, it makes income effects irrelevant in single (aggregated) consumer economies, and conveniently isolates distributional effects in heterogeneous consumer economies. This decomposition is used to test for Pareto improvements, and to examine the separate, but related roles of the shadow value of government revenue and the MCF in applied work.

This book presents an introduction to arbitrage theory and its applications to problems for financial derivatives. This second edition includes more advanced materials; appendices on measure theory, probability theory, and martingale theory; and a new chapter on the martingale approach to arbitrage theory. The chapters cover the binomial model, a general one period model, stochastic integrals, differential equations, portfolio dynamics, arbitrage pricing, completeness and hedging, parity relations and delta hedging, the martingale approach, incomplete markets, dividends, currency derivatives, barrier options, stochastic optimal control, bonds and interest rates, short rate models, forward rate models, and LIBOR and swap market models.

This book gives a comprehensive introduction to arbitrage theory for the pricing of contingent claims, such as options, futures, and other financial derivatives. The arbitrage theory for the term structure of interest rates is given particular consideration. Also included is a self‐contained exposition of stochastic optimal control, with applications to portfolio optimisation. The mathematical development is precise but avoids the explicit use of measure theory.

The year 2008 marks Amartya Sen's 75th birthday. Amartya has made deep and lasting contributions to the academic disciplines of economics, philosophy, and more broadly the social sciences. He has engaged in policy dialogue and public debate, advancing the cause of a human development focused policy agenda, and a tolerant and democratic polity. This argumentative Indian has made the case for the poorest of the poor, and for plurality in cultural perspective. It is not surprising that he has won the highest awards, ranging from the Nobel Prize in Economics to the Bharat Ratna, India's highest civilian honor. This public recognition has gone hand in hand with the affection and admiration that Amartya's colleagues and students hold for him. This is the first book in a two-volume Festschrift for Amartya Sen. The chapters, from across a range of social science disciplines, are written by some of the world's leading thinkers. This first book covers the topics of ethics, normative economics, and welfare; agency, aggregation, and social choice; poverty, capabilities, and measurement; and identity, collective action, and public economics. It is a fitting tribute to Sen's own contributions to the discourse on ethics, welfare and measurement.