Template-Type: ReDIF-Paper 1.0 Author-Name: Joseph J. Capuno Author-Name-First: Joseph Author-Name-Last: Capuno Author-Name: Stella A. Quimbo Author-Name-First: Stella Author-Name-Last: Quimbo Author-Name: Aleli D. Kraft Author-Name-First: Aleli Author-Name-Last: Kraft Author-Name: Carlos Antonio R. Tan, Jr. Author-Name-First: Carlos Antonio Author-Name-Last: Tan, Jr. Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: The effects of term limits and yardstick competition on local government provision of health insurance and other public services : The Philippine case Abstract: We investigate the effects of two accountability measures on the decisions of the local governments under decentralization. Using a panel of Philippine municipalities and cities in three election years, we find that term limits have negative but weak effects on the provision of health insurance coverage to poor families and on expenditures on local services. However, yardstick competition (i.e., more subsidized insurance coverage for the poor in neighboring local governments) induces them to cover more poor families, but also reduce other public expenditures. To respond to critiques of health decentralization, our results suggest that the objectives of local politicians can be aligned with those of the health sector. The key insight is the incumbent may extend health insurance coverage like a redistributive transfer to pursue reelection objectives. However, the resulting trade off between subsidized insurance coverage and other public services must be considered. Length: 43 pages Creation-Date: 2012-01 Publication-Status: Published as UPSE Discussion Paper No. DP 2012-01, January 2012 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/684 File-Format: Application/pdf Number: 201201 Classification-JEL: H72, I18, H4 Keywords: Local governments, term limits, yardstick competition, health insurance, poor, Philippines Handle: RePEc:phs:dpaper:201201 Template-Type: ReDIF-Paper 1.0 Author-Name: Carlos Antonio R. Tan, Jr. Author-Name-First: Carlos Antonio Author-Name-Last: Tan, Jr. Author-Name: Joseph J. Capuno Author-Name-First: Joseph Author-Name-Last: Capuno Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Household decisions and child health : Estimating the links between water treatment and the incidence of diarrhea using non-recursive two-equation causal models Abstract: The treatment of drinking water is advocated to reduce the incidence of child diarrhea. However, evaluating the impact of water treatment with only observational data leads to biased estimates since it could be the occurrence of child diarrhea that induced the household to treat their drinking water. To deal with the possible simultaneity between the treatment of drinking water and the incidence of child diarrhea, we specify non-recursive two-equation causal models and apply it on a sub-sample of households with children below five years old from the Philippine National Demographic and Health Surveys. In the treatment effects model, we find that the treatment of drinking water reduces by 5.2 percentage points the proportion of under-5 children afflicted with diarrhea. In the instrumental-variable probit model, we find that households have a higher propensity to sterilize their drinking water by 1.2 percentage points given a one percentage point increase in the proportion of under-5 children with diarrhea. Ignoring the simultaneity yields the misleading result that water treatment increases the incidence child diarrhea. These results underscore the need to insure the quality of drinking water at the point of use and not just at the point of source. Length: 21 pages Creation-Date: 2012-01 Publication-Status: Published as UPSE Discussion Paper No. 2012-02, January 2012 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/685 File-Format: Application/pdf Number: 201202 Classification-JEL: I12, I18, H51 Keywords: causal effects, household water treatment, child diarrhea Handle: RePEc:phs:dpaper:201202 Template-Type: ReDIF-Paper 1.0 Author-Name: John V.C. Nye Author-Name-First: John Author-Name-Last: Nye Author-Workplace-Name: Department of Economics, George Mason University and Laboratory for Institutional Analysis of Economic Reforms, Higher School of Economics, Moscow Author-Name: Grigory Androuschak Author-Name-First: Grigory Author-Name-Last: Androuschak Author-Workplace-Name: Laboratory for Institutional Analysis of Economic Reforms, Higher School of Economics, Moscow Author-Name: Desirée Desierto Author-Name-First: Desirée Author-Name-Last: Desierto Author-Workplace-Name: School of Economics, University of the Philippines Diliman Author-Name: Garett Jones Author-Name-First: Garett Author-Name-Last: Jones Author-Workplace-Name: Department of Economics, George Mason University Author-Name: Maria Yudkevich Author-Name-First: Maria Author-Name-Last: Yudkevich Author-Workplace-Name: Laboratory for Institutional Analysis of Economic Reforms, Higher School of Economics, Moscow Title: 2D : 4D Asymmetry and Gender Differences in Academic Performance : Evidence from Moscow and Manila Abstract: Exposure to prenatal androgens affects both future behavior and life choices. However, there is still relatively limited evidence on its effects on academic performance. Moreover, the predicted effect of exposure to prenatal testosterone (T) - which is inversely correlated with the relative length of the second to fourth finger lengths (2D:4D) - would seem to have ambiguous effects on academic achievement since traits like confidence, aggressiveness, or risk-taking are not uniformly positive for success in school. We provide the first evidence of a non-linear relationship between 2D:4D and academic achievement using samples from Moscow and Manila. We find that there is a quadratic relationship between high T exposure and markers of achievement such as grades or test scores and that the optimum digit ratio for women in our sample is lower (indicating higher prenatal T) than the average. The results for men are generally insignificant for Moscow but significant for Manila showing similar non-linear effects. Our work is thus unusual in that it draws from a large sample of nearly a thousand university students in Moscow and over a hundred from Manila for whom we also have extensive information on high school test scores, family background and other potential correlates of achievement. Our work is also the first to have a large cross country comparison that includes two groups with very different ethnic compositions. Length: 14 pages Creation-Date: 2012-01 Publication-Status: Published as UPSE Discussion Paper No. 2012-03, January 2012 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/686 File-Format: Application/pdf Number: 201203 Keywords: academic performance, female achievement, 2D4D ratio Handle: RePEc:phs:dpaper:201203 Template-Type: ReDIF-Paper 1.0 Author-Name: Desirée Desierto Author-Name-First: Desirée Author-Name-Last: Desierto Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Imitation Dynamics with Spatial Poisson-Distributed Review and Mutation Rates Abstract: Using spatial Poisson processes, we re-interpret the Imitation Dynamics and show how the spatial clustering of players affects both the selection of strategies and the speed by which they replicate. We find that the more clustered are the players, (a) the faster the evolution of strategies and (b) if some players have inherent preferences for a strategy, the greater the probability of mutation into, and selection of, that preferred strategy. Length: 12 pages Creation-Date: 2012-02 Publication-Status: Published as UPSE Discussion Paper No. 2012-04, February 2012 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/687 File-Format: Application/pdf Number: 201204 Classification-JEL: C78 Handle: RePEc:phs:dpaper:201204 Template-Type: ReDIF-Paper 1.0 Author-Name: Gilberto M. Llanto Author-Name-First: Gilberto Author-Name-Last: Llanto Author-Workplace-Name: Philippine Institute for Development Studies Author-Email: gllanto@pids.gov.ph Title: The Assignment of Functions and Intergovernmental Fiscal Relations in the Philippines Twenty Years after Decentralization Abstract: The 1991 Local Government Code devolved substantial spending, taxing, and borrowing powers to local government units. Moving governance closer to the people can generate a welfare gain but local governments must have adequate revenues to finance local development. The paper examines the current status of the tax-expenditure assignment and the intergovernmental fiscal relations, and identifies areas for reform. There is a need for a clearer and more accountable assignment of expenditure by eliminating particular sections of the Code, which serve as a route for national government agencies to be engaged in devolved activities, and for politicians to insert funding for pet projects, which distort local decision making and preferences. There is as well a need to review the tax assignment to improve local revenue generation. The allocation of intergovernmental fiscal transfers may be improved by introducing matching grants to improve equalization transfers to local governments, and performance-based grants to motivate greater local revenue mobilization. Without a clear funding source, unfunded mandates imposed on local governments defeats the purpose of the policy objectives set in those mandates. Local government alliances and cooperative undertaking may be a way to provide public goods with inter-jurisdictional spillover benefits. Consolidation, better coordination of local government activities, and resource pooling for better local service delivery are pathways indicated by successful experiences of LGU collaboration. Length: 50 pages Creation-Date: 2012-05 Publication-Status: Published as UPSE Discussion Paper No. 2012-05, February 2012 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/688 File-Format: Application/pdf Number: 201205 Keywords: fiscal decentralization, tax-expenditure assignment, intergovernmental fiscal relations, performance-based grants, decentralization theorem Handle: RePEc:phs:dpaper:201205 Template-Type: ReDIF-Paper 1.0 Author-Name: Joseph J. Capuno Author-Name-First: Joseph Author-Name-Last: Capuno Author-Email: jjcapuno@gmail.com Author-Workplace-Name: School of Economics, University of the Philippines Diliman Author-Name: Xylee Javier Author-Name-First: Xylee Author-Name-Last: Javier Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Whose child is it anyway? Differential parental investments in education and children under kinship care in the Philippines Abstract: While education is universally held to enhance a child human development, policies must still contend with parental biases. Here, we investigate if school attendance of young household members aged 6-12 years old varies with their kinship ties to the household heads in the Philippines. Applying probit regression techniques on a dataset culled from the five rounds of the Annual Poverty Indicators Survey, we find that the probability of attending school of the head’s own child is about 2.9-percentage points greater that that other relatives in the same age group, controlling for income and other factors. However, there are no differences in the likelihood of school attendance between the head’s own grandchildren and other relatives. Thus, policies should target children under kinship care since household heads are unlikely to treat them like their own, even if they can afford to send these children to school. Length: 13 pages Creation-Date: 2012-03 Publication-Status: Published as UPSE Discussion Paper No. 2012-06, March 2012 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/689 File-Format: Application/pdf Number: 201206 Handle: RePEc:phs:dpaper:201206 Template-Type: ReDIF-Paper 1.0 Author-Name: Katsumi Nozawa Author-Name-First: Katsumi Author-Name-Last: Nozawa Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Banana Production and Cooperatives in the Philippines Abstract: The socio-economic situation of small banana growers generated a lot of issues among researchers. However, the situation drastically changed because land distribution became possible through the Collective Certificate of Land Ownership (CLOA) issuance under the CARP. CLOA is issued to cooperatives composed of agrarian reform beneficiaries (ARBs). The contract growing scheme was simultaneously introduced as one of the schemes in the Agribusiness Venture Arrangement (AVA) to support CARP’s implementation. Under this framework, the Individual Farming System (IFS) is introduced wherein the grower owns all bananas he produced in his assigned lot giving him high incentives in his lot’s production. Thus, the IFS is the initial step in generating self-reliant growers. The paper concludes that strengthening the cooperative’s governability is essential in attaining the sustainability of the IFS. Length: 49 pages Creation-Date: 2012-03 Publication-Status: Published as UPSE Discussion Paper No. 2012-07, March 2012 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/690 File-Format: Application/pdf Number: 201207 Keywords: agrarian reform beneficiaries, Agribusiness Venture Arrangement, banana production, Collective Certificate of Land Ownership Award, contract growing, cooperative, Individual Farming System Handle: RePEc:phs:dpaper:201207 Template-Type: ReDIF-Paper 1.0 Author-Name: Joseph J. Capuno Author-Name-First: Joseph Author-Name-Last: Capuno Author-Workplace-Name: School of Economics, University of the Philippines Diliman Author-Name: Stella A. Quimbo Author-Name-First: Stella Author-Name-Last: Quimbo Author-Workplace-Name: School of Economics, University of the Philippines Diliman Author-Name: Aleli D. Kraft Author-Name-First: Aleli Author-Name-Last: Kraft Author-Workplace-Name: School of Economics, University of the Philippines Diliman Author-Name: Carlos Antonio R. Tan, Jr. Author-Name-First: Carlos Antonio Author-Name-Last: Tan, Jr. Author-Workplace-Name: School of Economics, University of the Philippines Diliman Author-Name: Vigile Marie B. Fabella Author-Name-First: Vigile Marie Author-Name-Last: Fabella Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Perks and public provisions : Effects of yardstick competition on local government fiscal behavior in the Philippines Abstract: Using a panel dataset from cities and municipalities in the Philippines in 2001, 2004 and 2007, we investigate whether yardstick competition -- measured here as the average spending and revenues of surrounding jurisdictions in the same province -- influence local government fiscal decisions. For local governments with incumbents facing effective term limits, the effects of the yardstick variables are generally nil. For those with incumbents who are eligible for another term, the average total expenditures of surrounding jurisdictions seem to influence the LGU to re-allocate its budget for social and economic services that directly benefit the constituents towards overhead outlays that benefit more the office holders. Local revenue mobilization is stimulated by greater revenue mobilization and dampened by higher average spending in other localities. Central fiscal transfers increase outlays for overheads and for social and economic services These suggests that while the particular yardstick variables used here may have induced reactions from local governments, the resulting changes in fiscal decisions may not have necessarily improved the constituents' welfare. What seems necessary is comparison on those public provisions that promote welfare rather than just total expenditures or revenues per se. Length: 34 pages Creation-Date: 2012-05 Publication-Status: Published as UPSE Discussion Paper No. 2012-08, May 2012 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/691 File-Format: Application/pdf Number: 201208 Classification-JEL: H72, I18, H4 Keywords: Local government spending, yardstick competition, Philippines Handle: RePEc:phs:dpaper:201208 Template-Type: ReDIF-Paper 1.0 Author-Name: Joseph J. Capuno Author-Name-First: Joseph Author-Name-Last: Capuno Author-Workplace-Name: School of Economics, University of the Philippines Diliman Author-Name: Carlos Antonio R. Tan, Jr. Author-Name-First: Carlos Antonio Author-Name-Last: Tan, Jr. Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Are improved water supply and sanitation always safe for children? Implications for attaining the MDGs in the Philippines Abstract: In 2010, the Philippines appeared to be on track to attain by 2015 its target for Millennium Development Goals 4 (Reduce child mortality), but less so for Goal 7 (Ensure environmental sustainability). In pursuit of the latter, the government expands its provision of water and services to more households. Applying propensity score matching technique on the data from the four rounds of a nationwide survey, such interventions are found to reduce the incidence of child diarrhea, a persistent top cause of child mortality, though not always. The impact of improved sources of drinking water is 1.3% to 2.6% in 1993 and 2.9% to 4.6% in 2003, but none is found in 1998 and 2008. The impact of improved sanitation is 1.2% to 2.1% in 1993 and 3.1% to 4.7% in 2008; but none is found in 1998 and 2003. In addition to health interventions, the regular monitoring of the quality of water and sanitation at the household level is suggested to achieve Goal 4. Length: 37 pages Creation-Date: 2012-05 Publication-Status: Published as UPSE Discussion Paper No. 2012-09, May 2012 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/692 File-Format: Application/pdf Number: 201209 Classification-JEL: I12, I18, O53 Keywords: Water and sanitation, child health, MDGs, Philippines Handle: RePEc:phs:dpaper:201209 Template-Type: ReDIF-Paper 1.0 Author-Name: Dante B. Canlas Author-Name-First: Dante Author-Name-Last: Canlas Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Business Fluctuations and Monetary Policy Rules in the Philippines: with Lessons from the 1984-1985 Contraction Abstract: The paper reviews recent research on macroeconomic theory of business fluctuations and its influence on monetary policy rules. It focuses on triggers to business fluctuations and the mechanisms that propagate the fluctuations once started. The Philippines is used as empirical setting. The theory’s predictions are examined using time-series data on aggregate output performance, money growth, and budget deficits of government. The paper casts a spotlight on the output contraction of 1984-1985, the longest downturn in the postwar economic history of the Philippines. The role of monetary policy and fiscal policy shocks in triggering that downturn is studied, followed by the role of subsequent macroeconomic policy adjustments that propagated the downturn. The paper points out that monetary policy rules evolved in the aftermath of the 1984-1985 downturn, culminating in the inflation-targeting rule that the monetary authority currently uses. The adoption of inflation targeting hinged on the introduction of legislation that enabled the creation of a central bank with policy and instrument independence from the fiscal authority. Length: 20 pages Creation-Date: 2012-06 Publication-Status: Published as UPSE Discussion Paper No. 2012-10, June 2012 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/693 File-Format: Application/pdf Number: 201210 Handle: RePEc:phs:dpaper:201210 Template-Type: ReDIF-Paper 1.0 Author-Name: Edita A. Tan Author-Name-First: Edita Author-Name-Last: Tan Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: The Financial Crisis, Oil Price Hike, the Arab Spring and Foreign Demand for Filipino Workers Abstract: The paper inquires into the impact of contemporary major world events – the recession in the United States and Western Europe, the oil price hike, and the Arab Spring – on the flow of overseas Filipino workers or OFWs and their remittances. The paper finds that the recession in the West has not spread worldwide for its share in world trade has declined significantly since the 1980s. The oil exporting countries gained from the oil price hike and there are now many more economies that have achieved appreciable growth which they have been able to sustain up to the present, e.g. the Asian tigers, BRICs, Botswana. On the other hand, Tunisia, Egypt, Libya and Syria are minor employers of Filipino workers. Expectedly, the varied economic performance of the world economies has had differential impact on demand for migrant workers. The OFWs have found employment in varied occupations in varied destinations with the large majority in the Middle East and East Asia which have not been negatively affected by the Western recession. Many are also in service occupations that did not suffer as much decline in demand as in other occupations. The paper provides some empirical support to these findings. Length: 21 pages Creation-Date: 2012-08 Publication-Status: Published as UPSE Discussion Paper No. 2012-11, August 2012 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/694 File-Format: Application/pdf Number: 201211 Handle: RePEc:phs:dpaper:201211 Template-Type: ReDIF-Paper 1.0 Author-Name: Niceto S. Poblador Author-Name-First: Niceto Author-Name-Last: Poblador Author-Workplace-Name: University of the Philippines Mindanao Title: The Promise of the Science Commons and the Tragedy of Intellectual Property Rights : The University’s IPR Policy in Perspective Abstract: The title of this essay is a play of words on “The Tragedy of the Commons,” the title of the landmark paper by Garrett Hardin which appeared in Science in 1968. After a long period of dormancy, the concept was resuscitated by Elinor Ostrom in 1990 in a book which gained her the Nobel Prize in Economics in 2011. Science Commons is one of an increasing number of academic and scientific advocacy groups that seek to promote open access to published works and data for the purpose of capturing the enormous potential value from the vast numbers of researches being turned out by individuals, businesses, universities and research institutions all over the world (http://sciencecommons.org/projects/publishing/ ). By commons, Hardin and Ostrom meant communally owned and used resources such as grazing lands, forest resources, mineral resources and so on the unmitigated use of which lead to their eventual exhaustion or destruction. By contrast, the ‘commons’ in science commons refers to knowledge and information, resources that follow a totally different economic logic from those that apply to physical resources. Property rights and other governance mechanisms that apply to one do not necessarily apply to the other. Length: 7 pages Creation-Date: 2012-08 Publication-Status: Published as UPSE Discussion Paper No. 2012-12, August 2012 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/695 File-Format: Application/pdf Number: 201212 Handle: RePEc:phs:dpaper:201212 Template-Type: ReDIF-Paper 1.0 Author-Name: Raul V. Fabella Author-Name-First: Raul Author-Name-Last: Fabella Author-Workplace-Name: University of the Philippines School of Economics Title: Signaling and Contract Cost Under Weak Governance : Water Service Privatization in Metro-Manila, Philippines Abstract: Many supply contracts between the state and private agents in a developing country are cost-re-imbursement variety and are rolled out under weak and unreliable governance. The latter has to be provided for through higher supply cost. The state in turn can lower the contract cost by providing verifiable credible commitments of its intentions. We show using a modified the Laffont-Tirole cost-reimbursement contract model that the more reliable is the state in respect to the delivery of its contractual obligations, the lower the cost of contracts to the state and society. We argue that the various actions taken by the Philippine government before the privatization of the water service in Metro Manila in 1997, viz., the substantial increase in the tariff, the reduction in the labor complement by 30% and the outsourcing of the dispute resolution mechanism to an international appeals panel, induced entry and aggressive bidding by the contenders that dramatically reduced the cost to the public of the water services concession contract in Metro Manila, Philippines. Length: 19 pages Creation-Date: 2012-10 Publication-Status: Published as UPSE Discussion Paper No. 2012-13, October 2012 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/696 File-Format: Application/pdf Number: 201213 Classification-JEL: L33, I30, H57 Keywords: signaling, credible commitment, procurement contracts, weak governance Handle: RePEc:phs:dpaper:201213 Template-Type: ReDIF-Paper 1.0 Author-Name: Raul V. Fabella Author-Name-First: Raul Author-Name-Last: Fabella Author-Workplace-Name: University of the Philippines School of Economics Title: Wipeout : Sangley Mercantile Dominance and Persistence in the Spanish Colonial Period in the Philippines Abstract: Documentary evidence of the emergence and the eventual complete dominance of the Chinese mercantile traders (Sangleys) during the Spanish colonial period in the Philippines is first presented. We identify the critical traits in the Sangley mercantile genome and the new contractual and organizational technologies which led to the wipeout of non-Sangley merchants from the market. A Malthusian replicator dynamics is proposed to explain the wipeout process. We explain the persistence of the mercantile dominance of Sangleys via the forces serving to curve abuse of market power and non-assimilation of winning Sangley traits by non-Chinese following the Akerlof-Kranton identity economics. Length: 19 pages Creation-Date: 2012-10 Publication-Status: Published as UPSE Discussion Paper No. 2012-14, October 2012 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/697 File-Format: Application/pdf Number: 201214 Classification-JEL: N0, L10 Keywords: Market dominance, Sangley traits, Emergence, Ethnicity Handle: RePEc:phs:dpaper:201214 Template-Type: ReDIF-Paper 1.0 Author-Name: Gerardo P. Sicat Author-Name-First: Gerardo Author-Name-Last: Sicat Author-Workplace-Name: University of the Philippines School of Economics Title: The Peso Appreciation and Monetary-Fiscal Coordination Abstract: Documentary evidence of the emergence and the eventual complete dominance of the Chinese mercantile traders (Sangleys) during the Spanish colonial period in the Philippines is first presented. We identify the critical traits in the Sangley mercantile genome and the new contractual and organizational technologies which led to the wipeout of non-Sangley merchants from the market. A Malthusian replicator dynamics is proposed to explain the wipeout process. We explain the persistence of the mercantile dominance of Sangleys via the forces serving to curve abuse of market power and non-assimilation of winning Sangley traits by non-Chinese following the Akerlof-Kranton identity economics. Length: 23 pages Creation-Date: 2012-10 Publication-Status: Published as UPSE Discussion Paper No. 2012-15, October 2012 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/698 File-Format: Application/pdf Number: 201215 Classification-JEL: N0, L10 Keywords: Philippine peso exchange rate, exchange rate appreciation, monetary policy, fiscal policy, Philippine economic development Handle: RePEc:phs:dpaper:201215 Template-Type: ReDIF-Paper 1.0 Author-Name: Raul V. Fabella Author-Name-First: Raul Author-Name-Last: Fabella Author-Workplace-Name: University of the Philippines School of Economics Author-Name: Vigile Marie B. Fabella Author-Name-First: Vigile Marie Author-Name-Last: Fabella Author-Workplace-Name: Universitët Konstanz, Germany Title: The Robust Nash Equilibrium and Equilibrium Selection in 2x2 Coordination Games Abstract: We propose an equilibrium concept, the Robust Nash equilibrium (RNE), that combines the best-reply rationality and the "first mover invariance" condition. The single-stage 2x2 symmetric information game G is transformed into sequential two-stage games with two sub-trees: STA has the row player starting and STB has the column player starting. A profile in G is robust if it is the strict SPNE of the two branches; it is ephemeral if it is not the SPNE of any branch. We show that every strict dominant strategy equilibrium of G is robust but not every strict Nash equilibrium of G is. We show further that every robust profile of G is always a strict Nash equilibrium of G. A Robust Nash equilibrium (RNE) of G is any robust profile of G. The RNE of G is unique. We show in particular that the payoff dominant strict Nash equilibrium of a coordination game G is RNE while the strictly payoff-dominated Nash equilibrium of G is ephemeral. The original Harsanyi-Selten preference for payoff dominance over risk dominance is supported by robustness without invoking collective rationality. Length: 14 pages Creation-Date: 2012-10 Publication-Status: Published as UPSE Discussion Paper No. 2012-16, October 2012 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/699 File-Format: Application/pdf Number: 201216 Classification-JEL: C02, C72 Keywords: Nash Equilibrium Handle: RePEc:phs:dpaper:201216 Template-Type: ReDIF-Paper 1.0 Author-Name: Edita A. Tan Author-Name-First: Edita Author-Name-Last: Tan Author-Workplace-Name: University of the Philippines School of Economics Author-Name: Katrina Dinglasan Author-Name-First: Katrina Author-Name-Last: Dinglasan Title: Why the Poor Have Many Children Abstract: This is a follow up note on the UP School of Economics Faculty paper on the population issue. The poor who belong to the lowest two deciles of the income distribution have much higher actual and desired number of children, respectively 5.2 and 3.5. In contrast, the upper middle and higher income groups have less than 3 children which equal their desired number. It is argued that the poor who suffer serious deprivation in basic needs and see little opportunity for their children’s education and other opportunities feel little interest in controlling their family size. For them it would not matter how many children they may bear since the intensity of their poverty as measured by average income to poverty ratio and food consumption to subsistence ratio marginally improve as the number of children falls. It is suggested that for a family planning program to succeed, it must be part of an anti poverty strategy. Length: 23 pages Creation-Date: 2012-11 Publication-Status: Published as UPSE Discussion Paper No. 2012-17, November 2012 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/700 File-Format: Application/pdf Number: 201217 Handle: RePEc:phs:dpaper:201217 Template-Type: ReDIF-Paper 1.0 Author-Name: Desiree A. Desierto Author-Name-First: Desiree Author-Name-Last: Desierto Author-Workplace-Name: University of the Philippines School of Economics Title: Reforming Institutions and Building Trust To Achieve Sustained Economic Development Abstract: The Philippines now appears well poised for an economic take off and sustained long-­run growth. It recently posted an impressive 6.4% growth in the first quarter of 2012, up from 4.9% in the same period last year, has experienced a surge in merchandise exports, and is on the brink of an investment boom, especially in infrastructure projects and in the services sector. It has also weathered the recent global economic crisis, with rising overseas remittances continuously fueling strong consumer demand. Most importantly, the current Administration has demonstrated its strong commitment towards institutional reform through its anti-­corruption strategies. The Philippines may thus finally be on the cusp of what Acemoglu and Robinson call a ‘critical juncture’ that can push its trajectory towards the development of more ‘inclusive’ institutions, enabling continued increases in productivity and sustaining economic growth. However, focusing solely on anti-corruption for its sake may also undermine lasting institutional reform if property rights, credibility and stability are weakened in the course of enforcing against anomalous transactions. What may be a optimal strategy is to treat anti-corruption as part of a larger overall framework of building trust in society. Length: 25 pages Creation-Date: 2012-11 Publication-Status: Published as UPSE Discussion Paper No. 2012-18, November 2012 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/701 File-Format: Application/pdf Number: 201218 Handle: RePEc:phs:dpaper:201218 Template-Type: ReDIF-Paper 1.0 Author-Name: John V.C. Nye Author-Name-First: John Author-Name-Last: Nye Author-Workplace-Name: Department of Economics, George Mason University and Laboratory for Institutional Analysis of Economic Reforms, Higher School of Economics, Moscow Author-Name: Grigory Androuschak Author-Name-First: Grigory Author-Name-Last: Androuschak Author-Workplace-Name: Laboratory for Institutional Analysis of Economic Reforms, Higher School of Economics, Moscow Author-Name: Desirée Desierto Author-Name-First: Desirée Author-Name-Last: Desierto Author-Workplace-Name: School of Economics, University of the Philippines Diliman Author-Name: Garett Jones Author-Name-First: Garett Author-Name-Last: Jones Author-Workplace-Name: Department of Economics, George Mason University Author-Name: Maria Yudkevich Author-Name-First: Maria Author-Name-Last: Yudkevich Author-Workplace-Name: Laboratory for Institutional Analysis of Economic Reforms, Higher School of Economics, Moscow Title: What Determines Trust? Human Capital vs. Social Institutions : Evidence from Manila and Moscow Abstract: It is now well established that highly developed countries tend to score well on measures of social capital and have higher levels of generalized trust. In turn, the willingness to trust has been shown to be correlated with various social and environmental factors (e.g. institutions, culture) on one hand, and accumulated human capital on the other. To what extent is an individual’s trust driven by contemporaneous institutions and environmental conditions and to what extent is it determined by the individual’s human capital? We collect data from students in Moscow and Manila and use the variation in their height and gender to instrument for measures of their human capital to identify the causal effect of the latter on trust. We find that human capital positively affects the propensity to trust, and its contribution appears larger than the combined effect of other omitted variables including, plausibly, social and environmental factors. Length: 29 pages Creation-Date: 2012-11 Publication-Status: Published as UPSE Discussion Paper No. 2012-19, November 2012 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/702 File-Format: Application/pdf Number: 201219 Handle: RePEc:phs:dpaper:201219 Template-Type: ReDIF-Paper 1.0 Author-Name: J.M. Ian Salas Author-Name-First: J.M. Ian Author-Name-Last: Salas Author-Workplace-Name: Department of Economics, University of California, Irvine Title: Consequences of withdrawal : Free condoms and birth rates in the Philippines Abstract: This paper presents new evidence on the role of subsidized contraceptives in influencing fertility behavior. It draws on two types of disruptions that affected the public supply of free contraceptives in the Philippines : a sharp reduction induced by the phase out of contraceptive donations to the country from an external donor coupled with a government policy that shirked public funding to fill the supply shortfall, and substantial fluctuations in the shipment of free contraceptives to the country’s provinces that was brought about by supply chain issues. It finds that birth rates were responsive to both broad and transitory changes in public contraceptive supply : provinces which experienced big declines in the supply of free contraceptives also had big increases (or small decreases) in birth rates, while temporary supply drops (increases) were followed by rising (falling) birth rates. It also identifies poor, less educated, and rural women as the groups which were least able to cope with short-term gaps in public contraceptive supply. Length: 46 pages Creation-Date: 2012-12 Publication-Status: Published as UPSE Discussion Paper No. 2012-20, November 2012 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/703 File-Format: Application/pdf Number: 201220 Handle: RePEc:phs:dpaper:201220