recall in consumer search abstract this paper experimentally examines individual decision making in a sequential search environment when consumers sequentially search for the lowest price from a known distribution of prices theory suggests that decisions will be based on a comparison of the marginal cost of an additional search and the expected return from that search additionally in a finite time horizon model it is possible that individuals may choose to return to a price previously rejected exercise recall the data are used to determine if individuals do exercise recall the extent to which that option is chosen and to determine if the use of recall is dependent on the cost of search

technical change external economies and the porter hypothesis abstract michael porter introduces the idea that environmental regulations may benefit affected firms this paper derives results consistent with porter s hypothesis by employing a general equilibrium framework with a large number of agents external economies of scale in production and discrete changes in technology the model shows that endogenous technical change makes porter s hypothesis feasible however a policy that produces results consistent with porter s hypothesis is not necessarily optimal

testing for the long run relationship between nominal interest rates and inflation using cointegration techniques 1989 testing for the long run relationship between nominal interest rates and inflation using cointegration techniques applied economics vol 21 no 4 pp 439 447

the flow approach to labor markets the flow approach to labor markets builds up from the flows of workers and of jobs it is based on three essential components a specification of labor demand in terms of flows of job creation destruction a process of matching between workers and firms and a process of wage determination where wages depend on the labor market prospects of employed workers and firms we think that this approach gives the right basic picture of unemployment and unemployment dynamics and of the relation between wage movements and the state of the labor market the additional richness it naturally delivers also captures important implications of labor market mechanisms for macroeconomics finally its structure is realistic enough to allow for a productive interaction with and use of micro work and micro evidence in both labor and product markets this paper shows the structure of the approach and some of its implications the first section develops a barebone model the second adds the flesh this abstract was borrowed from another version of this item

rational and adaptive expectations in the present value model of hyperinflation the authors apply gregory c chow s 1989 technique to the present value model of hyperinflation under rational and adaptive expectation hypotheses they use the monthly data on price and money supply of germany 1921 5 1923 8 hungary 1921 10 1924 2 and poland 1922 1 1924 1 the authors test results show that the german data are consistent with the adaptive expectations hypothesis and the hungarian data are consistent with the rational expectations hypothesis the polish data however do not support either of the two hypotheses copyright 1993 by mit press

direct tests of the reservation wage property this paper provides the first direct experimental tests of the reservation wages predicted by finite horizon job search models previous indirect tests were based on search duration and search income the authors show that such indirect tests are weak by demonstrating that a naive rule performs essentially as well as the risk neutral model in predicting search duration in contrast direct tests of predicted reservation wages imply rejections of both the naive rule and the risk neutral model the general concave model survives direct tests with reservation wage data as does a specific logistic concave model copyright 1992 by royal economic society

experiments on unemployment benefit sanctions and job search behavior this paper presents the results of an experimental study on unemployment benefit sanctions the experimental set up allows us to distinguish between the effect of benefit sanctions once they are imposed the ex post effect and the threat of getting a benefit sanction imposed the ex ante effect we find that both effects matter moreover the ex ante effect turns out to be substantial and bigger than the ex post effect benefits sanctions stimulate the outflow from unemployment

competitive search equilibrium in this paper i construct an equilibrium for markets with frictions which is competitive in the sense that all agents are price takers and maximize utility subject to a set of market parameters i show that the equilibrium allocation is socially optimal i also show how the competitive search equilibrium can be achieved if employers with vacancies can advertise publicly the wages they pay

can a carbon permit system reduce spanish unemployment this paper analyses the impact of carbon policy on unemployment in spain and whether recycling the public revenues earned from permit auctions can alleviate this problem while spain s deviation from the european union s intermediate emission goals is more serious than most other member countries unemployment in spain is also well above average for the european union we use a computable general equilibrium model that includes unemployment in the markets for unskilled and skilled labour we find that introducing carbon permits does not aggravate spanish unemployment in fact if supplied with revenue recycling schemes unemployment rates may actually fall contrary to other european studies we find that the best option is to reduce payroll taxes on relatively skilled types of labour this reform is successful in both increasing labour demand and dampening the supply response to rising wages however while all of the recycling schemes generate dividends in terms of aggregate welfare none entirely offsets the abatement costs

on interest rates inflationary expectations and tax rates abstract this paper provides new evidence on the relationship between inflation and the rate of interest for the united states during the 1953 1984 period the results indicate that contrary to most previous studies the fisher hypothesis is inverted which means that it is the real rate of interest rather than the nominal rate that moves inversely to the rate of inflation however this is the case only during periods of relatively stable inflation rates and moderate regulatory change over longer periods when factors are more volatile the inverted fisher hypothesis is rejected

dynamic decisions in a laboratory setting many economic models involve a trade off between current and future rewards for example in neoclassical one sector growth models there is a trade off between immediate consumption and investment for future consumption in sequential job search models of labor economics workers must decide between continuing their job search at a cost or accepting the best wage offered so far in oligopoly models of tacit collusion firms decide whether or not to defect from collusive behavior and the defection leads to short term benefit but future punishment these models are all dynamic in the sense that an action at one stage influences the available actions or rewards at a future stage many such examples fall into the class of dynamic programming problems and for large classes of such problems techniques for finding optima are well understood less well understood however are the decisions which individuals actually make in such dynamic settings this is an empirical issue which lends itself to the methodology of laboratory investigation there have already been a number of experiments in which subjects face a sequence of related decisions examples include the asset market studies of camerer and weigelt 3 and smith suchanek and williams 13 the predictions of dynamic game theory have been tested extensively for example in the contexts of the centipede game by mckelvey and palfrey 9 of the repeated prisoner s dilemma by selten and stoecker 11 and andreoni and miller 1 and of bargaining by ochs and roth 10 dynamic job search has been studied by cox and oaxaca 4 and two armed bandits have been studied by banks olson and porter 2 in the market and game theory studies the decisions made by subjects are complicated by the strategic aspects of the games subjects decisions must take into account the strategies they expect the other players to use in asset markets subjects seem to have difficulty making decisions and speculative bubbles frequently result as noted by mccabe rassenti and smith 8 the robust tendency of laboratory stock markets to produce bubbles is attributable to the myopic trading behavior of subjects in effect subjects fail to act according to the backward induction

the fisher effect and the term structure of interest rates tests of cointegration the literature on the fisher effect has ignored the potential relationship between inflation and long term interest rates using an expectations model of the term structure of interest rates the authors establish the conditions under which innovations in short term inflation will be transmitted to long term as well as short term interest rates cointegration tests find support for both the fisher effect and the expectations theory of the term structure copyright 1993 by mit press

factor market search and the structure of simple general equilibrium models this paper presents a simple general equilibrium model in which unemployed workers search for jobs and vacant firms search for employees formally i develop a two sector constrained efficient version of the diamond mortensen pissarides matching model of trade coordination this approach to modeling factor market search appears promising since its algebraic development parallels jones s treatment of the two sector model of production and the latter framework underlies most applied general equilibrium analyses some illustrative short run and steady state results are presented concerning the behavior of open and closed economies that exhibit unemployment and vacancies

keynesian involuntary unemployment and sticky nominal wages this paper presents a model in which sticky nominal wages and keynesian involuntary unemployment result as a consequence of the intertemporal optimisation decisions of profit maximising monopsonistic firms and fully rational and informed workers in an uncertain environment uncertainty associated with the business cycle and its impact on product price generates disequilibrium wages and identifies the labour demand function in contractions and the supply of labour in expansions the theoretical prediction of a negative relationship between real wages and employment during contractions and a positive relationship during expansions is strongly supported by the empirical evidence presented central to keynesian macroeconomics is the concept of involuntary unemployment the existence of which once was a commonly agreed upon stylised fact however as noted by hoover i988 and mccafferty i990 among others existing models either fail to provide a satisfactory reason why wages do not adjust to clear the market or seek some sort of equilibrium explanation in which unemployment is not strictly involuntary in the sense of keynes moreover the failure of recent empirical studies to support the keynesian prediction of a countercyclical wage has led some to doubt the relevance of keynesian economics and even the meaningfulness of the notion of involuntary unemployment lucas 1978 farmer 1993 keynes i 939 cited findings of a countercyclical real wage during the great depression argued that the relationship between real wages and employment depends upon whether changes in employment are due to changes in effective demand or due to other factors and recommended that observations on real wages ought to be classified by periods of contraction and expansion an examination of us data for the period 1920 89 presented in section ii of this paper confirms the importance of keynes s argument and motivated the development of the new keynesian model of employment and wages presented in section iii the model is characterised by a market structure in which representative monopsonistic firms post nominal wage rates which they may find optimal to partially but not totally index in advance of knowing product price and of hiring labourers who may have complete knowledge relevant to their choices price forecasts are assumed to be rational while prices vary with the state of the economy the theoretical framework i incorporates all of the characteristics of keynesian involuntary unemployment while not attributing the cause of unemployment to the supply behaviours of labourers 2 provides an explanation of why wages do not adjust to clear the market that is based explicitly on the optimising behaviour of firms and implicitly on that of

the fisher hypothesis a critique of recent results and some new evidence the fisher hypothesis 5 that nominal interest rates should respond point for point to changes in the expected inflation rate while theoretically appealing has had limited success in explaining actual interest rate movements most empirical work has shown that net after tax nominal interest rates are not as sensitive to changes in expected inflation as the hypothesis suggests they should be more troublesome still are the results of two recent studies carmichael and stebbing 3 4 hereafter cs and amsler 1 turn the fisher hypothesis on its head by demonstrating that net nominal yields on financial assets do not respond at all to changes in the expected inflation rate rather the net real yield on these assets falls point for point with increases in the expected inflation rate

environmental policy and competitiveness the porter hypothesis and the composition of capital abstract the porter hypothesis suggests a win win situation in the sense that environmental policy improves both environment and competitiveness the suggestion received strong criticism from economists driven by the idea that if opportunities exist firms do not have to be triggered by an extra cost in this paper a model is developed which confirms this point but which also draws attention to some general mechanisms that relax the trade off considerably downsizing and modernization of firms subject to environmental policy will increase average productivity and will have positive effects on the marginal decrease of profits and environmental damage

the effectiveness of the public support policies for the european industry financing as a contribution to sustainable development in recent years the debate about the role of the public institutions in the fields of corporate social responsibility and sustainable development has gained momentum nevertheless the ambiguity of the latter concepts makes it difficult both to measure them and to estimate the impact that the different public initiatives may have on them in this sense the present research has the aim to design a fuzzy logic based methodology applied to the evaluation of the above mentioned processes in relation to the state aid policies for the european industry regarding the study contour the european union state aids seems not to have introduced important changes leading to socially responsible results and therefore favourable for the sustainable development generated by the european manufacturing industry

toward a new conception of the environment competitiveness relationship accepting a fixed trade off between environmental regulation and competitiveness unnecessarily raises costs and slows down environmental progress studies finding high environmental compliance costs have traditionally focused on static cost impacts ignoring any offsetting productivity benefits from innovation they typically overestimated compliance costs neglected innovation offsets and disregarded the affected industry s initial competitiveness rather than simply adding to cost properly crafted environmental standards can trigger innovation offsets allowing companies to improve their resource productivity shifting the debate from pollution control to pollution prevention was a step forward it is now necessary to make the next step and focus on resource productivity

on some predictions of the quantity theory of money recently efforts have been made to test some of the long term propositions implied by the quantity theory of money of these two of the more interesting studies are those of lucas 11 and lothian 10 lucas using time series data for the united states and applying fourier transforms detrends the series and then using scatter diagrams of these detrended series finds considerable support for the proposition of one to one correspondence between rate of growth of money and the rate of inflation and for the fisher hypothesis lothian 10 following upon a suggestion of lucas 11 uses cross country averages of time series data for twenty o e c d countries to test the classical neutrality hypothesis the monetary approach to the exchange rate determination and the fisher hypothesis his approach consists of treating the cross country averages to represent longterm steady state points and once again uses scatter diagrams of the appropriate variables he reports complete support for the first two hypotheses and partial support for the fisher hypothesis the aim of this paper is to reexamine two of the propositions implied by the quantity theory of money namely the neutrality hypothesis and the fisher hypothesis for six developed countries by using a methodology recently proposed by wickens and breusch 12 which is an elaboration of an earlier work by bewley 2 their methodology starts with the well known autoregressive distributed lag model which can be estimated to extract long term parameters of interest wickens and breusch s point of departure is that unlike this traditional procedure this model can be transformed in such a way that direct estimates of the long term parameters along with their standard errors can be obtained provided the model is estimated appropriately as explained below clearly this methodology is then ideally suited for application to the issue under consideration the outline of the paper is as follows the hypotheses and the models are explained in section ii the estimation issues are discussed in section iii the results are presented in section iv the paper concludes with a brief summary of the main findings

are optimal search rules reasonable and vice versa and does it matter anyway abstract the economics of search has made rapid progress in recent years and its results have contributed siginificantly to economic knowledge recent work has been particularly marked for the steadily increasing realism of the assumptions describing the environment surrounding the searcher however concomitant with this improvement has been a steady growth in the technical complexity of the problem supposedly solved by the searcher indeed many of the recent models are so complicated that their solutions are beyond the capacity of even modern day computers after elaborating on this impracticability of optimal search rules the paper goes on to consider two more realistic and practical alternatives the adoption of either suboptimal or reasonable rules paradoxically reasonable rules may in some circumstances be better than optimal rules the paper contains a preliminary discussion of what might be meant by reasonable behaviour and shows that a minimal set of criteria for reasonableness leads to the major qualitative conclusions at a market level of optimal search theory

the fisher hypothesis revisited new evidence the nominal interest rate is examined with the is lm model incorporating the fisher hypothesis eight different interest rates are considered for different sample periods ending in 1993 when the livingston survey data are used the coefficients for the expected inflation rate real quantity of money and government spending are significant in most cases when the adaptive expectations model is applied the coefficients for real quantity of money and government spending are insignificant in most cases the fisher hypothesis only holds for the federal funds rate or the aaa bond rate the linear form regression can be rejected at the 1 level in favour of the box cox general functional form

inflation uncertainty and interest rates is the fisher relation universal this paper tests the validity of the fisher hypothesis which establishes a positive relation between interest rates and expected inflation for the g7 countries and 45 developing economies for this purpose we estimate a version of the garch specification of the hypothesis for all countries included in the sample we also test the augmented fisher relation by including the inflation uncertainty in the equation the simple fisher relation holds in all g7 countries but in only 23 developing countries there is a positive and statistically significant relationship between interest rates and inflation uncertainty for six of the g7 and 18 of the developing countries and this relationship is negative for seven developing countries

understanding and assessing financial risk tolerance a biological perspective 1990 understanding and assessing financial risk tolerance a biological perspective financial analysts journal vol 46 no 6 pp 50 62 80

does the fisher effect apply in australia the fisher hypothesis claims that changes in the expected inflation rate will be fully reflected in nominal interest rates and hence that real interest rates will remain constant over time evidence with australian data from 1965 to 1990 suggests that the fisher effect does not hold in the long run analysis is performed using recently developed econometric techniques which take account of possible nonstationarity in the date attention is also given to the effects of financial market deregulation on interest rates

environmental policy and the equilibrium rate of unemployment abstract this paper integrates environmental policy instruments with the theory of equilibrium unemployment we investigate the question of whether a low equilibrium rate of unemployment and a high quality of the environment are complementary policy goals or must be traded off it turns out that an interval exists for a tax on emissions where the two goals are indeed complementary the tax stimulates the emergence of an abatement sector which provides pollution control and vacancies for the job seekers for constrained efficiency the policy maker operates five instruments to internalize the environmental and the search externalities a tax on emissions employment subsidies and recruiting allowances for the polluting industries are sufficient to implement the first best the optimal emission tax is an increasing function of the workers bargaining strength for labor markets where workers have a strong bargaining position the optimal pollution tax may easily exceed the pigouvian tax

an international evaluation of the fisher hypothesis using rational expectations the fisher hypothesis that the real rate of interest is invariant with respect to changes in the expected rate of inflation has been the subject of intense empirical scrutiny for many years 3 5 9 13 16 17 21 22 23 24 26 several recent studies have sought to model and measure the impact of other variables besides the expected rate of inflation on the real rate of interest 3 5 16 17 18 19 25 and two papers fama 4 and lahiri and lee 15 are notable for their attempts to model expectations rationally the purposes of this paper are two fold to develop explicit rational expectations models for forecasting inflation and to evaluate the fisher hypothesis for long term interest rates in the united kingdom west germany italy and the united states an empirical evaluation of the fisher hypothesis requires a variable which measures inflationary expectations optimal arima box jenkins models for consumer price inflation are derived for each country and forecasts of long term inflation are calculated inflationary expectations computed in this fashion are weakly rational since these forecasts make optimal use of the information contained in the available inflation history

theory ahead of language in the economics of unemployment this paper discusses from the perspective of modern theories of unemployment several unemployment concepts that have been used over the years it argues that many of these concepts are of limited value and are dominated by a few simple concepts that are basic in the analysis of stochastic general equilibrium models

fisher s paradox and the theory of interest irving fisher s theory of interest has proved to be a most durable and influential contribution to economic theory a central element of fisher s contribution is the fisher hypothesis that over the longer term the real rate of interest is approximately constant being determined largely by time preference with movements in the nominal interest rate reflecting movements in the rate of inflation one for one the paradox of the fisher hypothesis is that despite its wide acceptance as the cornerstone of interest rate theory most empirical evidence appears to be inconsistent with the hypothesis at least in its strictest form this empirical anomaly was noted by fisher himself who attributed it to money illusion in the fifty years following the publication of the theory of interest a considerable literature has evolved around this paradox the unifying theme of this literature is a common acceptance of the essence of fisher s hypothesis most of the energy in this literature has been devoted to explaining systematic movements in the real rate of interest and to providing reasons why the relationship between the nominal interest rate and inflation may only be approximate in

technology adoption subsidies an experiment with managers we evaluate the impact of technology adoption subsidies on investment behavior in an individual choice experiment in a laboratory setting professional managers are confronted with an intertemporal decision problem in which they have to decide whether or not to search for and possibly adopt a new technology technologies differ in the per period benefits they yield and their purchase price increases with the per period benefits provided we introduce a subsidy on the more expensive technologies that also yield larger per period benefits and find that the subsidy scheme induces agents to search for and adopt these more expensive technologies even though the subsidy itself is too small to render these technologies profitable we speculate that the result is driven by the positive connotation affect that the concept subsidy invokes

economic search an experimental study this paper presents results of experiments designed to test several of the hypotheses present in the theoretical literature on optimal economic search first we test whether the subjects searchers actually search for wages in ways that are consistent with setting an optimal reservation wage we then proceed to determine experimentally the effects of risk aversion increased search costs changes in risk brought about by a mean preserving transformation of the distribution of wage offers the presence or absence of recall the existence of a finite horizon and the searcher s state of knowledge about the underlying distribution of wages in general we find that the searchers exhibit behavior that is consistent with that predicted by theory differences between risk neutral and risk averse searchers are found and the responses of both groups to changes in search costs in the degree of risk or in the state of knowledge are consistent with theoretical predictions

the fisher hypothesis under different monetary regimes we examine the relation between inflation and nominal interest rates under the various monetary regimes in effect in the united states since the turn of the century our data include a newly constructed time series of short term municipal bond yields observed annually since 1902 the results generally support the hypothesis that after tax nominal yields adjust point for point with rationally forecasted inflation for the postwar years but strongly reject that hypothesis for the preceding years we suggest and offer supporting evidence that the difference between the two subperiods may be attributable to differences in the optimal forecasting technique for each era when forecasting is a costly endeavor

risk attitudes and reservation wages of unemployed workers evidence from panel data abstract this paper studies risk attitudes of unemployed job seekers and their relationship to self reported reservation wages we find that risk aversion is prevalent and that reservation wages decrease slightly over time furthermore risk aversion and reservation wages are negatively correlated

labor market search an experimental study the theoretical results derived from models of economic search have implications which relate to the structure and performance of labor markets utilizing a series of laboratory experiments we attempt to capture many of the features of workers search and also the conditions under which labor markets operate by varying certain of the experimental conditions we are able to determine the searchers responses to changes in the terms of unemployment insurance to the existence of a minimum wage and to different states of information about the underlying distribution of wages in most cases the behavior of the searchers is consistent with that predicted by theory

an examination of the relationship between australian industry equity returns and expected inflation this paper analyses the relationship between inflation and equity returns in australia over the period january 1974 to march 1996 analysis is based on monthly and quarterly data using value weighted equity indices at both the aggregate market and industry level three price indices the consumer price index cpi quarterly and the manufactured materials used index mmu and the manufacturing articles produced index map both monthly and quarterly are used to measure inflation results provide little evidence of the statistically significant negative relationship observed in the us for the full study period analysis is also conducted on three subperiods monetary targeting july 1976 january 1985 checklist approach february 1985 december 1989 and anti inflation january 1990 march 1996 at the market level the anti inflation subperiod does provide some evidence of a negative relationship between inflation and equity returns though statistical significance is not apparent with quarterly tim

real time search in the laboratory and the market the standard model of labor market search posits repeated infinite horizon search from a fixed distribution of wages in a stationary environment under these circumstances the optimal search policy has a reservation wage property i e the decision to accept an offer involves a comparison of the offer with a time invariant constant w which itself is a function of the parameters characterizing the search environment a wage offer greater than or equal to w is accepted while any other is rejected and search is continued some early empirical job search studies however accumulated evidence of a declining trend in reservation wages over the course of an unemployment spell 1 since then several theoretical explanations for the declining reservation wage profiles have emerged all of which relax the stationarity assumption of the standard model for example reuben gronau 1971 assumes searchers have finite lives kenneth burdett 1977 gerard j van den berg 1990 james albrecht and susan vroman 2005 and others model short term unemployment benefits albrecht pieter a gautier and vroman 2006 permit directed search to heterogeneous prospects 2 john p danforth 1979 and silvio rendon 2006 consider general liquidity con strained search and burdett and tara vishwanath 1988 model learning about the job offer distribution behavioral explanations for declining reservation wages have been suggested by braunstein and schotter 1981 schotter and braunstein 1982 and others in this paper we present the results of the first ever to our knowledge real time search laboratory experiment performed in an effort to investigate this falling res ervation wage phenomenon where field studies of unemployed search often rely on strong identifying assumptions to recover searchers unobservable reservation wages in the laboratory we are able to elicit subjects complete reservation wage profiles in an incentive compatible manner 3 further in the laboratory we are able to

co integration error correction and the fisher effect 1989 co integration error correction and the fisher effect applied economics vol 21 no 12 pp 1611 1620

does the long term interest rate predict future inflation a multi country analysis according to the fisher hypothesis an increase decrease in the spread between the long term or multiperiod interest rate and the one period inflation rate signals an increase decrease in future one period inflation this implication is tested on data from thirteen oecd countries for the period 1962 93 integration and cointegration techniques are applied to examine the time series properties of interest rates and inflation rates and the var methodology developed by john y campbell and robert j shiller 1987 is applied to examine the predictive power of the spread as well as in testing the fisher hypothesis under rational expectations and constant ex ante real rates copyright 1995 by mit press

fisher hypothesis in japan analysis of long term interest rates under different monetary policy regimes this paper investigates the validity of the fisher hypothesis in japanese long term interest rates two three four five seven and ten years using non stationary time series models initially the entire sample period october 1987 june 2006 is investigated then the samples divided into three segments depending on each period s monetary policy regimes are investigated thus the asymmetric impacts of inflation expectation on japanese long term interest rates can be investigated the first period examined is from october 1987 june 1991 the second period is from july 1991 july 2000 the third period is from march 2001 june 2006 in the first period monetary policy is tightening but in the second and third periods it is easing thus it is concluded that the fisher hypothesis is valid only in all maturities of long term interest rates in the first period however it does not hold in any of the maturities in the entire sample period or in the second and third periods

consumer search behavior and sunk costs abstract this paper presents the results of four economic experiments involving 41 undergraduate students who were assigned the task of searching for the lowest price from a known distribution of prices economic theory predicts that individuals should continue to draw until the expected gain of another search is less than the marginal search cost additionally once individuals have made a draw and then continued they should never return to a price drawn earlier exercise recall both of these predictions are tested in the paper and the results show that behavior is not always consistent with them it appears that individuals are making decisions based on the total return from searching rather than simply the marginal return from another draw

tax reform structural unemployment and the environment the effects of environmental tax reform i e using the proceeds of a higher energy tax rate to lower the labour tax rate on wage formation employment and environmental quality are analysed in the context of a small open economy with structural unemployment caused by hiring costs we find that such a reform may boost employment if it shifts the tax burden away from workers towards those without employment in the formal sector environmental tax reform succeeds in shifting the tax burden away from workers in the formal sector if higher energy taxes reduce earnings in the informal sector by reducing labour productivity

revenue raising vs other approaches to environmental protection the critical significance of pre existing tax distortions using analytical and numerical general equilibrium models we show that preexisting factor taxes produce a tax interaction effect that increases the costs of pollution taxes and quotas under policies that raise revenue and recycle it through cuts in marginal factor tax rates this effect is partially offset by a revenue recycling effect grandfathered pollution quotas such as those used under the 1990 clean air act amendments to regulate electric utilities so2 emissions do not benefit from this offset preexisting taxes raise this regulation s cost by over 70 more than half of this additional cost could be avoided by auctioning quotas and exploiting the revenue recycling effect

evidence of the fisher effect from u k indexed bonds newly available data from the u k market for indexed securities are used to test the fisher hypothesis for monthly observations of interest rates at 14 maturities the hypothesis that the after tax nominal interest rate is a constant plus anticipated inflation proves to be a reasonable approximation of reality for longer maturities the coefficients on the expected rate of inflation are approximately equal to one the mundell tobin effect is in evidence for shorter maturities the inverted fisher effect is in evidence for shorter maturities the inverted fisher effect is decisively rejected the evidence suggests that past difficulties encountered in trying to prove the fisher effect have been due to the lack of a direct measure of inflation expectations and real interest rates copyright 1992 by mit press

the impact of environmental regulations on industry productivity direct and indirect effects abstract the paper develops an approach to measuring the impact of environmental regulations on total factor productivity growth which is less restrictive than a simple growth accounting approach environmental regulations have a direct impact on productivity growth due to the diversion of resources toward required abatement capital there can be a further indirect effect however as conventional inputs and production processes are changed in response to requirements to purchase abatement capital we estimate this indirect effect using a flexible functional form cost function total factor productivity and the direct and indirect productivity effects of environmental regulations are presented for five polluting industries we find that the indirect effect can be either positive or negative and in all industries is energy using the net impact of environmental regulations on total factor productivity growth is fairly small given that these are the most polluting industries they account for about 10 30 of the productivity decline of the 1970s in these industries