inflation taxation and welfare with externalities and leisure this paper examines how inflation taxation affects resource allocation and welfare in a neoclassical growth model with leisure a production externality and money in the utility function switching from consumption taxation to inflation taxation to finance government spending reduces real money balances relative to income but increases consumption labor capital and output the net welfare effect of this switch depends crucially on the strength of the externality and on the elasticity of intertemporal substitution while it is always negative without the externality it is likely to be positive with a strong externality and elastic intertemporal substitution

alternative approaches to money and growth this paper reexamines the issue of money and growth in an economy with both endogenous labor supply and endogenous capital stock using three recently developed approaches the money in the utility function approach the cash in advance approach and the transactions costs approach by establishing a qualitative equivalence between alternative setups the authors find economically justifiable conditions such that all comparative statics results derived from the aforementioned approaches are identical copyright 1992 by ohio state university press

the spread of municipal reform temporal spatial and social dynamics the adoption of commission and managerial administrative structures and their subsequent abandonment by the 267 largest american cities during the period 1900 1942 is studied using event history methods full period equations show no significant direct effect of percentage catholic culture clash or population size hierarchical diffussion and only a modest impact of city age modernization a strong effect from average annual manufacturing wages is found but in a direction contrary to that posited by the class conflict hypothesis the variable affecting transition rates most strongly appears to be regional adoption percentages an indicator of neighborhood diffusion these findings suggest revisions of the conventional image of the municipal reform experience

analytical evaluation of lead time demand in polytree supply chains with uncertain demand lead time and inter demand time abstract in a stochastic supply chain network knowing the exact distribution of lead time demand ltd for each node allows determining inventory policy parameters service levels and optimal costs to determine the ltd distributions a stochastic analytical model has been developed for a multi echelon supply chain organised into an arbitrary polytree network where the variables demand quantity lead time and inter demand time are uncertain and can follow any probability distribution the model is based on a conventional nq batch policy for each node with discrete time and continuous demand any network can be broken down into four basic elements which represent root and leaf node topologies the model derives key convolutions for the four basic elements and then follows the same technique for evaluating resulting ltd distributions for each node in the network the paper presents the formulation in seven steps that can be used to obtain exact ltd distributions either in the two dimensional form or as a compound one dimensional ltd distribution per variable lead time for each node in any polytree supply chain the ltd distributions can be calculated either analytically for smaller networks or using numerical integration for larger networks the validation of the developed framework has been conducted by comparing the obtained formalism based ltd distribution for two test networks against simulation the pairs of simulated and formalism based distributions have been plotted against each other as well as subjected to various goodness of fit tests and error analysis the results suggest that the formalism based and simulated probability distributions are consistent

monetary policy and fiscal limits with no default abstract this paper discusses monetary and fiscal policy interactions that stabilize government debt two distortions prevail in the model economy income taxes and liquidity constraints possible obstructions to fiscal policy include a ceiling on the equilibrium debt to gdp ratio zero or negative elasticity of tax revenues and a political intolerance of raising tax rates at the fiscal limit two mechanisms restore solvency fiscal inflation which reduces the real value of nominal debt and open market operations which diminish the size of government debt held by the private sector three regimes achieve this goal in all regimes monetary policy is passive in all regimes a muted tax response to government debt is consistent with equilibrium the propensity of a fiscal authority to smooth output is found to determine what is an acceptable response in the form of tax rate changes to the level of government debt while monetary policy determines the timing and magnitude of fiscal inflation impulse responses show that the inflation and tax hikes needed to offset a permanent shock to transfers are lowest under nominal interest rate pegs in this regime most of the reduction in the real value of government debt comes from open market purchases

estimating the lead time demand distribution when the daily demand is non normal and autocorrelated hon shiang lau abstract this paper develops convenient formulas for estimating the probability distribution of lead time demand when the inventory item s daily demand follows a probability distribution of any arbitrary shape and when simple univariate models can be found for the autocorrelated daily demand series numerical examples are presented to illustrate the use of these formulas the numerical results also indicate that significant error may be incurred when inventory decisions are made without proper consideration of the autocorrelations or the arbitrary distribution shapes of daily demands

the proper scope of government theory and an application to prisons when should a government provide a service in house and when should it contract out provision we develop a model in which the provider can invest in improving the quality of service or reducing cost if contracts are incomplete the private provider has a stronger incentive to engage in both quality improvement and cost reduction than a government employee has however the private contractor s incentive to engage in cost reduction is typically too strong because he ignores the adverse effect on noncontractible quality the model is applied to understanding the costs and benefits of prison privatization

inflation uncertainty and growth in a cash in advance economy abstract this paper analyzes the effects of inflation variability on economic growth in a model where money is introduced via a cash in advance constraint in this setting we find that inflation adversely affects long run growth even when the cash in advance constraint applies only to consumption at the same time we find that inflation and growth are positively related in the short run furthermore variability increases average growth through a precautionary savings motive since inflation and inflation variability tend to be highly correlated the presence of uncertainty attenuates the negative long run relationship between inflation and real growth it also provides a partial rationale for the apparent lack of robustness in cross country regressions of growth and inflation

understanding the dynamic effect of contracting out on the delivery of local public services manez j perez lopez g prior d and zafra gomez j l understanding the dynamic effect of contracting out on the delivery of local public services regional studies contracting out is a mechanism through which the delivery of public services can be made more efficient however the process has yielded conflicting results this paper presents a dynamic mixed approach incorporating an intertemporal frontier and a matching technique to measure the short and long term effects of the implementation of contracting out on the efficiency of local public service delivery the study demonstrates the existence of temporary inefficiency arising from the change in service management when contracting out takes place followed by an increase in efficiency among municipalities that contract out with respect to comparable municipalities that do not do so

local government type and municipal bond ratings what s the relationship abstractthere is an extensive literature analysing the executive branch within local u s government jurisdictions this has largely revolved around the differences between elected mayors and appointed city managers much of the academic work has considered the potential efficiency gains that may be associated with either form of government and comparative analyses between the two however the empirical literature has been divided regarding the relative efficiency of either form this article attempts to add to that literature by considering how bond markets may perceive potential efficiencies that emerge from one executive type over the other by evaluating bond ratings for a sample of large municipal governments in the united states overall the results suggest that municipalities headed by a city manager are associated with increased bond ratings and thus lower borrowing costs which may lend support that this form of administration is on some margin relatively more efficient than others these re

interest rate smoothing and price level trend stationarity abstract this paper discusses the definition and mechanics of central bank interest rate smoothing under rational expectations a tension arising between interest rate smoothing and macroeconomic stabilization objectives induces non trend stationary price level and money stock behavior the paper thereby helps explain why such nominal non stationarities are widely observed further implications are drawn for base drift distribution of real returns on long term fixed rate nominal debt and operating characteristics of interest rate pegs and policy instruments

the electoral budget cycle on municipal waste collection expenditure abstractthis article analyses the determinants of municipal waste collection expenditure specifically the effects of electoral cycles on municipal waste collection expenditure we use a database with information on spanish municipalities with more than 1000 inhabitants for the period 2002 2011 our results reveal that incumbents adopt an opportunistic behaviour increasing spending on waste in the preelection year and reducing it in the election and post election years therefore we confirm an electoral budget cycle on waste collection expenditures in spain additionally we find that the levels of income unemployment and upper level governments transfers have a positive impact on waste collection spending finally population density level of urbanization average age of the population of the municipality and less fragmented governments negatively influence waste collection spending

distributive politics ward representation and the spread of zoning this analysis examines two alternative explanations for the adoption of comprehensive zoning ordinances in the years immediately following its initial adoption in new york city the market failure explanation predicts zoning adoption in cities where externality problems represented by heavy incidence of manufacturing exist the distributive policymaking model treats zoning as a form of regulation that is most likely to be found in cities where local legislators are elected from geographically concentrated constituencies e g wards and therefore try to target policy benefits to their own constituencies while spreading the policy costs over all constituencies some support is found for each model especially striking is the interactive effect of ward representation and of economic interest i e levels of home ownership

the optimum quantity of money rule in the theory of public finance this paper examines optimal tax policy in a monetary economy in which money serves as an intermediate good that helps facilitate the conversion of scarce resources into tinal consumption goods by enabling consumers to economize on the costs of transacting it is shown that in such an environment even though distorting taxes must be levied for revenue purposes the optimal tax structure calls for abstaining from inflationary finance and adopting the optimum quantity of money rule

a periodic review model with serially correlated inventory level dependent demand abstract it has been established that the demand rates of many consumer products are serially correlated and are dependent on the amount of inventory displayed to the customer a periodic review model is developed that considers both of these effects an adaptive base stock policy based on the critical fractile is presented and a solution methodology is developed the effect of this demand pattern on the safety stock requirement is investigated

diffusion of regulatory impact analysis among oecd and eu member states with the exception of few comparative case studies the literature on regulatory reform and regulatory impact analysis ria tends to focus on internal political actors activities and processes furthermore empirical analyses of new public management have overlooked the dynamics of communications among networks of administrative reformers this article fills these gaps presenting results of an event history analysis on the diffusion of ria it probes rationales for the origin of ria and administrative capacity explanations in combination with variables referring to international and transnational communication channels of administrative reforms a hypothesis based on legal origin is also tested the findings show that the decision to adopt ria rests on transnational networks as well as administrative variables such as government expenditure and legal origin

increasing returns and increasing rates of growth romer 1986b documented that industrial economies have tended to have growth rates that increase over time having explained why the aggregate growth models of ramsey 1928 cass 1965 and koopmans 1965 fail to account for this observation romer proposed an alternative view of long run prospects for growth combining three elements externalities increasing returns in the production of output and decreasing returns in the production of new knowledge he constructed an equilibrium model of growth in his infinite horizon continuous time analysis qualitative conclusions were reached using the geometry of the phase plane no examples with an explicit dynamic solution were given the present paper provides a fully worked out example that fills this gap and that can serve as a confirmation of romer s claim that monotonically increasing growth rates for the capital stock and for consumption can arise in the framework he specified this paper also presents an example that can generate increasing growth rates without imposing some of the restrictions essential to romer s model those restrictions are not appealing on economic grounds and were added to his paper purely for technical reasons any infinite horizon model with increasing returns to scale must impose some restrictions to ensure the existence of both a social optimum and a competitive equilibrium otherwise the discounted sum of utility could go to infinity romer 1986b used a production function of the form f k k akvkw with v y 1 where k is the capital stock at the level of the firm and k is aggregate capital the

on the optimality of interest rate smoothing abstract this paper studies some continuous time cash in advance models in which interest rate smoothing is optimal we consider both deterministic and stochastic models in the stochastic case we obtain two results of independent interest i we study what is to our knowledge the only version of the neoclassical model under uncertainty that can be solved in closed form in continuous time and ii we show how to characterize the competitive equilibrium of a stochastic continuous time model that cannot be computed by solving a planning problem we also discuss the scope for monetary policy to improve welfare in an economy with a suboptimal real competitive equilibrium focusing on the particular example of an economy with externalities

is the friedman rule optimal when money is an intermediate good in contrast to the recent literature on the optimal inflation tax we show that in models where money reduces transactions costs it is optimal to set the inflation tax to zero when seigniorage is replaced by revenue from distortionary taxes the main reasons for this result are that the variable costs of supplying real balances are negligible and the inflation tax is a unit tax we also show that the intermediate good optimal taxation rules in the public finance literature cannot be directly applied both when money is costless and when it requires resources to be produced

when is it optimal to abandon a fixed exchange rate the influential krugman flood garber kfg model of balance of payment crises assumes that a fixed exchange rate is abandoned if and only if international reserves reach a critical threshold value from a positive standpoint the kfg rule is at odds with many episodes in which the central bank has plenty of international reserves at the time of abandonment we study the optimal exit policy and show that from a normative standpoint the kfg rule is generally suboptimal we consider a model in which the fixed exchange rate regime has become unsustainable due to an unexpected increase in government spending we show that when there are no exit costs it is optimal to abandon immediately when there are exit costs the optimal abandonment time is a decreasing function of the size of the fiscal shock for large fiscal shocks immediate abandonment is optimal our model is consistent with evidence suggesting that many countries exit fixed exchange rate regimes with still plenty of international reserves in the central bank s vault copyright 2008 wiley blackwell

dynamic behavior of capital accumulation in a cash in advance model abstract this paper analyzes the dynamic behavior of capital accumulation in stockman s cash in advance model if the cash in advance constraint applies only to consumption then money is superneutral along the transition path as well as in the long run alternatively if the cash in advance constraint applies to gross investment as well as consumption then a permanent increase in the rate of monetary growth reduces the steady state capital stock the effect on the speed of adjustment depends on the sign of a certain simple function of the parameters of preferences and technology

economic growth under money illusion abstract empirical and experimental evidence documents that money illusion is persistent and widespread this paper incorporates money illusion into a stochastic continuous time monetary model of endogenous growth we model an agent s money illusion behavior by assuming that he maximizes nonstandard utility derived from both nominal and real quantities money illusion affects an agent s perception of the growth and riskiness of real wealth and distorts his consumption savings decisions it influences long run growth via this channel we show that the welfare cost of money illusion is negligible whereas its impact on long run growth is noticeable even if the degree of money illusion is low

the spirit of capitalism asset pricing and growth in a small open economy abstract conventional models of economic behavior have failed to account for a number of observed empirical regularities in macroeconomics and international economics this may be due to preference specifications in conventional models in this paper we consider preferences with the spirit of capitalism the desire to accumulate wealth as a way of acquiring status we analyze a number of potential effects of international catching up and the spirit of capitalism on savings growth portfolio allocation and asset pricing moreover we obtain a multi factor capital asset pricing model capm our results show that status concerns have non trivial effects on savings growth portfolio allocation asset prices and the foreign exchange risk premium

fiscal policy inflation and the accumulation of risky capital the effect of government policies on the level of investment and inflation has become a major concern of policy makers in a number of industrial countries proposals to raise the level of business investment have included overall tax cuts tax incentives to spur investment and a reduction in the level of government spending this paper presents a theoretical apparatus to explore the relationships between fiscal policy government debt inflation and capital accumulation it develops a one sector growth model embodying a stochastic production function and government fiscal policy atomistic agents in the economy choose consumption levels and allocate their wealth between risky capital and risky government debt to maximize expected discounted utility over an infinite horizon fiscal policy by affecting asset yields affects the composition of portfolios the price of government bonds and the accumulation of capital the model is used to answer three general questions 1 does the level of government expenditure affect the rate of capital accumulation and inflation in steady state 2 does the mode of government finance when the choice is between an income tax and deficit finance affect these magnitudes 3 what is the effect of uncertainty in the productivity of capital on growth the analysis relates to several areas of literature 1 the analysis of the relationship between capital accumulation and debt 2 the theory of the demand for government debt 3 considerations of the effect of income taxation on risk bearing and 4 the analysis of capital accumulation under uncertainty 1 the effects on output and the capital stock of the government s expenditure decision and its decision to finance its expenditure by taxation or debt issue are explored in two major bodies of economic theory the literature on the burden of the debt as developed by modigliani 1961 diamond 1965 and phelps and shell 1969 for example implies that policies which increase the value of outstanding government debt will tend to lower the level of the capital stock by displacing capital with public debt in private wealth the theory of money and growth as represented by tobin 1965 and sidrauski 1967b also implies that government debt displaces capital but specifically recognizes the role of capital gains on government debt

inflation wealth and interest rates in an intertemporal optimizing model abstract this paper analyzes the relationship between the growth of the money supply and capital accumulation in a monetary optimizing model under certain conditions we show that a large intertemporal elasticity of substitution makes the nominal rates of interest undershoot its long term value that a low elasticity gives rise to overshooting while a unitary elasticity is shown to make the nominal rate of interest a constant these considerations plus explicit attention paid to the income and substitution effects induced by the changes in the nominal rates of interest provide us with an understanding of the correlation between growth of money and capital accumulation

anticipated inflation and the capital stock in a cash in advance economy abstract an economy is constructed in which the steady state capital stock is inversely related to the rate of inflation as a result that is directly opposite the usual conclusion

safety stock determination with correlated demands and arbitrary lead times abstract in this new paper a new method is proposed for determining the safety stock when daily demands are autocorrelated and lead times follow an arbitrary distribution the method is then used as a basis for examining effects on the safety stock when the usual assumptions namely independence and normality of daily demand and normality of lead times are violated the new method is derived by using inequalities on the basis of probability arguments it is simple to use and provides an upper bound of the safety stock further numerical investigation based on the new method shows that the effect of autocorrelation is more pronounced than departure from normality in determining the safety stock substantial error may be incurred if such autocorrelation is ignored in the test cases

the mechanisms of policy diffusion local policy adoptions provide an excellent opportunity to test among potential mechanisms of policy diffusion by examining three types of antismoking policy choices by the 675 largest u s cities between 1975 and 2000 we uncover robust patterns of policy diffusion yielding three key findings first we distinguish among and find evidence for four mechanisms of policy diffusion learning from earlier adopters economic competition among proximate cities imitation of larger cities and coercion by state governments second we find a temporal component to these effects with imitation being a more short lived diffusion process than the others third we show that these mechanisms are conditional with larger cities being better able to learn from others less fearful of economic spillovers and less likely to rely on imitation

demographic factors affecting constitutional decisions the case of municipal charters after decades of studying municipal charters largely by looking for patterns in the data we have a good basis for proceeding more formally with testable theories the political significance of demographic change becomes apparent by looking at its impact on political conflict in combination with the biases in social choice rules the theory of civil rights provides a framework for doing this it suggests identifying 1 the distribution of civil rights conveyed to citizens by alternative charters and 2 the bases for political conflict such as different demands for services and the unequal command of economic resources to satisfy them charters then become political tools simple statistical tests fail to refute this

social network effects on the extent of innovation diffusion a computer simulation of innovation diffusion no longer focus exclusively on explaining the rate at which innovations diffuse or the sequence in which they are adopted they also focus on explaining why certain innovations diffuse extensively be coming de facto standards whereas others do so partially or not at all many of these theories specify a bandwagon process a positive feedback loop in which increases in the number of adopters create stronger bandwagon pressures and stronger bandwagon pressures in turn cause increases in the number of adopters factors affecting if and how many times this feedback loop cycles explain if and how many potential adopters jump on a bandwagon we argue that one important factor has not yet been incorporated into theories explaining bandwagons extent the structure of social net works through which potential adopters of innovations find out information about these innovations which can cause them to adopt these innovations we advance a theory of how the structure of social networks affects bandwagons extent we propose that both the number of network links as well as small seemingly insignificant idiosyncracies of their structures can have very large effects on the extent of an innovation s diffusion among members of a social network

privatisation of waste collection services in response to fiscal stress in times of crisis according to the conventional theoretical framework fiscal stress is an explanatory factor of privatisation since the latter can provide economies of scale and cost savings as indicated by the theory of public choice however urban planning theories suggest that public choice does not take into account the collective needs of those receiving public services the present study aims to clarify two major issues firstly in the presence of fiscal stress do public managers really privatise and secondly does privatisation harm the public interest to investigate these questions we constructed and analysed a discrete time survival model which was applied to the period 2000 2010 to reflect the effects of the current global financial crisis on the fiscal stress privatisation relationship with respect to urban waste collection services the results obtained indicate that when certain aspects of financial condition worsen the likelihood of public services being privatised increases this was the case dur

a theory of competition among pressure groups for political influence this paper presents a theory of competition among pressure groups for political influence political equilibrium depends on the efficiency of each group in producing pressure the effect of additional pressure on their influence the number of persons in different groups and the deadweight cost of taxes and subsidies an increase in deadweight costs discourages pressure by subsidized groups and encourages pressure by taxpayers this analysis unifies the view that governments correct market failures with the view that they favor the politically powerful both are produced by the competition for political favors

interest rate rules vs money growth rules a welfare comparison in a cash in advance economy abstract this paper considers the welfare consequences of two particularly simple rules for monetary policy an interest rate peg and a money growth peg the model economy consists of a real side that is the standard real business cycle model and a monetary side that amounts to imposing cash in advance constraints on certain market transactions the paper also considers the effect of assuming a rigidity in the typical household s cash savings choice the competitive equilibrium of the economy is not pareto efficient partly because of two distortions a distortion on the capital accumulation decision and a distortion on portfolio choice that arises from the assumed rigidity the principal result of the paper is that the interest rate rule but not the money growth rule entirely eliminates these two distortions and is thus the benevolent central banker s policy choice

effects of correlation on intermittent demand forecasting and stock control abstract this study investigates the effects of three different types of correlation on forecasting and stock control of intermittent demand items applying appropriate forecasting and stock control methods to theoretically generated compound poisson demand data we show that correlation in intermittent demand does play a role in forecast quality and stock control performance negative autocorrelation levels lead to higher service levels than positive values while cost does not significantly change our results also show that high intermittency levels intensify these changes in service level we also show that cross correlation produces results in the opposite direction of autocorrelation in size or intervals that is positive negative cross correlation leads to higher lower service levels

competing for global capital or local voters the politics of business location incentives the competition for global capital has led to interjurisdictional competition between countries states and cities as to who can offer the most attractive incentives to firms in this study we examine the domestic politics of this competition by focusing on incentive use in the united states from 1999 to 2012 we define incentives as the targeted tax deductions or exemptions that are used to lure businesses into a locality drawing on data from municipal incentive programs we examine how electoral competition shapes the use and oversight of targeted incentives we find evidence that cities with elected mayors provide larger incentives than non elected city managers by taking advantage of exogeneity in the assignment of city government institutions and a database of over 2000 investment incentives from 2010 to 2012 we also find that elected mayors enjoy more lax oversight of incentive projects than their appointed counterparts our results have important implications for the study of interjurisdictional competition and the role of electoral institutions in shaping economic policy

sovereignty relinquished explaining commitment to the international human rights covenants 1966 1999 this article examines whether the content of the international human rights covenants and the costs associated with their ratification influence the decision of countries to join the author evaluates three theoretical perspectives rationalism world polity institutionalism and the clash of civilizations with data for more than 130 countries between 1966 and 1999 rationalists contend that treaty ratification is tightly coupled with internal sovereignty arrangements human rights practices and ideological commitments all of which become more important as treaty enforcement strengthens world polity institutionalists expect ratification to be loosely coupled with a country s conduct or its political ideological or cultural commitments although this gap narrows as compliance is more effectively enforced a civilizations approach predicts tight coupling between ratification and cultural values regardless of the mechanisms in place for enforcing compliance results lend partial support to rationalism a

hierarchical accountability in government abstract this paper studies a setting where a relatively uninformed voter holds a policymaker accountable through an informed intermediary in equilibrium the voter uses the intermediary to insulate the policymaker from pandering incentives when the voter s policy expertise is low or the policymaker s congruence is high the voter can thus enjoy the benefits of bureaucratic expertise without forfeiting electoral responsiveness we examine the model s predictions using u s city level data and find that hierarchically accountable managers reduce popular city employment and adjust it more flexibly than electorally accountable mayors the estimated incentive effects are smaller in cities with high voter expertise and larger during election years and are robust to instrumentation by precipitation shocks that influenced early 20th century manager government adoptions for reasons obsolete today

factors influencing the privatisation of urban solid waste collection in spain this paper analyses some of the organisational aspects of urban solid waste collection it starts by discussing some of the theoretical issues of contracting out then an explanatory model is spec

production technologies in stochastic continuous time models abstract properties of dynamic stochastic general equilibrium models can be revealed by either using numerical solutions or qualitative analysis very precise and intuition building results are obtained by working with models which provide closed form solutions closed form solutions are known for a large class of models some of which however have some undesirable features such as potentially negative output this paper offers closed form solutions for models which are just as tractable but do not suffer from these shortcomings

prospective deficits and the asian currency crisis this paper argues that a principal cause of the 1997 asian currency crisis was large prospective deficits associated with implicit bailout guarantees to failing banking systems the expectation that these future deficits would be at least partially financed by seigniorage revenues or an inflation tax on outstanding nominal debt led to a collapse of the fixed exchange rate regimes in asia we articulate this view using a simple model whose key feature is that a speculative attack is inevitable once the present value of future government deficits rises we present empirical evidence in support of the key assumptions underlying our interpretation of the crisis