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Much has been written on the determinants of input and technology adoption in agriculture, with issues such as input availability, knowledge and education, risk preferences, profitability, and credit constraints receiving much attention. This paper focuses on a factor that has been less well documented-the differential ability of households to take on risky production technologies for fear of the welfare consequences if shocks result in poor harvests. Building on an explicit model, this is explored in panel data for Ethiopia. Historical rainfall distributions are used to identify the counterfactual consumption risk. Controlling for unobserved household and time-varying village characteristics, it emerges that not just ex-ante credit constraints, but also the possibly low consumption outcomes when harvests fail, discourage the application of fertilizer. The lack of insurance causes inefficiency in production choices.

Agriculture --- Assets --- Consumption --- Currencies and Exchange Rates --- Decision making --- Economic Theory and Research --- Finance and Financial Sector Development --- Financial Intermediation --- Income --- Inefficiency --- Labor Policies --- Macroeconomics and Economic Growth --- Product markets --- Profitability --- Social Protections and Labor --- Sunk costs --- Transactions costs --- Wealth

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Much has been written on the determinants of input and technology adoption in agriculture, with issues such as input availability, knowledge and education, risk preferences, profitability, and credit constraints receiving much attention. This paper focuses on a factor that has been less well documented-the differential ability of households to take on risky production technologies for fear of the welfare consequences if shocks result in poor harvests. Building on an explicit model, this is explored in panel data for Ethiopia. Historical rainfall distributions are used to identify the counterfactual consumption risk. Controlling for unobserved household and time-varying village characteristics, it emerges that not just ex-ante credit constraints, but also the possibly low consumption outcomes when harvests fail, discourage the application of fertilizer. The lack of insurance causes inefficiency in production choices.

Agriculture --- Assets --- Consumption --- Currencies and Exchange Rates --- Decision making --- Economic Theory and Research --- Finance and Financial Sector Development --- Financial Intermediation --- Income --- Inefficiency --- Labor Policies --- Macroeconomics and Economic Growth --- Product markets --- Profitability --- Social Protections and Labor --- Sunk costs --- Transactions costs --- Wealth

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In several recent articles, the Barro-Grossman model of general equilibrium under shortage has been modified to incorporate money demand and alternative retail sales mechanisms. This paper extends this work to allow for spillovers in deficit goods markets (modeled as feedback of black market prices on the real value of nominal money balances). Comparative statics analysis confirms the conventional view, recently challenged in the literature, that government expenditure in a shortage economy tends to reduce output. The conventional view associating shortage with higher savings is, however, substantially qualified. The model appears to be more consistent than previous models with the available empirical evidence, and offers insights into the consequences of price and monetary reform in shortage economies.

Aggregate Factor Income Distribution --- Consumption --- Economic sectors --- Economics of specific sectors --- Economics --- Economics: General --- Income economics --- Income --- Incomplete Markets --- Industry Studies --- Informal Economy --- Informal economy --- Informal sector --- Labor economics --- Labor Economics: General --- Labor --- Labour --- Macroeconomics --- Macroeconomics: Consumption --- National accounts --- Population --- Saving --- Socialist Systems and Transitional Economies: Factor and Product Markets --- Underground Econom --- Wages --- Wages, Compensation, and Labor Costs: General --- Wealth --- Albania

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This paper explores how developmental and regulatory impediments to resource reallocation limit the ability of developing countries to adopt new technologies. An efficient economy innovates quickly; but when the economy is unable to redeploy resources away from inefficient uses, technological adoption becomes sluggish and growth is reduced. The authors build a model of heterogeneous firms and idiosyncratic shocks, where aggregate long-run growth occurs through the adoption of new technologies, which in turn requires firm destruction and rebirth. After calibrating the model to leading and developing economies, the authors analyze its dynamics in order to clarify the mechanism based on firm renewal. The analysis uses the steady-state characteristics of the model to provide an explanation for long-run output gaps between the United States and a large sample of developing countries. For the median less-developed country in the sample, the model accounts for more than 50 percent of the income gap with respect to the United States, with 60 percent of the simulated gap being explained by developmental and regulatory barriers taken individually, and 40 percent by their interaction. Thus, the benefits from market reforms are largely diminished if developmental and regulatory distortions to firm dynamics are not jointly addressed.

Bankruptcy --- Constant returns to scale --- E-Business --- Economic Theory & Research --- Emerging Markets --- Equilibrium --- GDP --- Human capital --- Income --- Income levels --- Industry --- International trade --- Macroeconomics --- Macroeconomics and Economic Growth --- Monopoly --- Political Economy --- Private Sector Development --- Product markets --- Production function --- Production goods --- Production inputs --- Productivity --- Productivity growth --- Random walk --- Regression analysis --- Technology Industry --- Telecommunications --- Total factor productivity

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Mainstream economics views demographic changes in the structure of households as of little relevance for the behavior of firms or the functioning of markets. The present paper dispels this view by arguing that changes in the number of non-workers could affect the intensity with which consumers search for best prices and therefore the level of competition. The author also analyzes the relationship between income and competition, which some studies suggest is negative. The author argues that the negative relationship is most likely due to the demographic factors discussed.

Economic Theory and Research --- Education --- Emerging Markets --- Knowledge for Development --- Labor market --- Labor Policies --- Macroeconomics and Economic Growth --- Market competition --- Markets and Market Access --- Price setting --- Private Sector Development --- Product markets --- Retail --- Retail stores --- Retailing --- Social Protections and Labor --- Spread --- Suppliers --- Tying