time consistent public policy in this paper we study how a benevolent government that cannot commit to future policy should trade off the costs and benefits of public expenditure we characterize and solve for markov perfect equilibria of the dynamic game between successive governments the characterization consists of an inter temporal first order condition a generalized euler equation for the government and we use it both to gain insight into the nature of the equilibrium and as a basis for computations for a calibrated economy we find that when the only tax base available to the government is capital income an inelastic source of funds at any point in time the government still refrains from taxing at confiscatory rates we also find that when the only tax base is labour income the markov equilibrium features less public expenditure and lower tax rates than the ramsey equilibrium

capital taxation and government debt policy with public discounting abstract this paper characterizes capital taxation and public debt policy in a quantitative macroeconomic model with an impatient government and uncertainty the government has access to linear taxes on capital and labor and to non state contingent bonds government impatience generates positive and empirically realistic long run levels of both capital taxes and public debt prior predictive analysis shows that the simulated model matches the distribution of both variables in a sample of 42 countries alongside other statistics the paper then presents econometric evidence that countries with higher political instability used as an approximation of unobservable public discount rates have both higher capital taxes and debt

infrastructure and aggregate agricultural productivity international evidence a relationship has long been recognized between a country s agricultural development and its investment in infrastructure capital such as transportation and communication facilities that is not directly related to the agricultural production process the relevant literature spans adam smith s proposition that the division of labour is limited by the extent of the market the work of von thtinen numerous studies by historians and economic historians and the work of economists such as schultz kuznets wharton owens and johnston and kilby to mention a few despite the apparently widespread recognition and acceptance that a relationship exists between agricultural development and infrastructural development few if any empirical studies test this as a hypothesis and provide estimates of the magnitude of such a relationship 2 the aim of this paper is to utilize 1965 aggregate agricultural production data and the concept of the aggregate production function to study the effects of transportation and communication infrastructure on aggregate agricultural productivity the aggregate data come from 47 less developed countries ldcs and 19 developed countries dcs the sample countries are listed in the appendix the use of intercountry comparisons for development studies dates to clark and the pioneering work of kuznets and it has been exploited econometrically by chenery 3 an important contribution to the study of international agricultural productivity was made by hayami and ruttan who showed that an aggregate agricultural production function that accounts for intercountry differences in resource endowments technical modern inputs and human capital can explain a large proportion of the variation in aggregate agricultural output across more and less developed agricultures 4 evenson and kislev modified hayami and ruttan s model by including a variable measuring each country s investment in agricultural research 5 essentially the same

how should control theory be used to calculate a time consistent government policy we study different solutions to a simple one dimensional linear quadratic game with a large number of private agents and a government a time consistent solution is defined as a solution to the hamilton jacobi bellman equation i e as a policy for which the government has noprecommitment capability this solution is compared to a policy where the government has an instantaneous pre commitment i e an equilibrium in which the government has a period by period leadership in both cases we show how control theory should be applied to calculate the equilibrium and how to relate these equilibria to the differential game literature

governance and agricultural productivity a cross national analysis abstract in this study we examine the relationship between governance and agricultural performance by employing the world bank s aggregate governance indicators based on a cross country panel sample two methods are employed to test the hypothesis that better governance fosters agricultural productivity the empirical results of both methods support the hypothesis as for the first method the estimation results of the widely used inter country aggregate agricultural production function show that a country with better governance can produce more agricultural outputs given the same amounts of agricultural inputs the same education level and the same climate condition as for the second method the empirical results of a structural equation model reveal that given the same amounts of agricultural capital stock and land an agricultural worker in a country with better governance produces more better governance can indirectly improve agricultural productivity by driving agricultural capital accumulation our empirical work lends support to the claim of hayami and ruttan hayami y ruttan v 1985 agricultural development an international perspective john hopkins university press baltimore that governance is a basic factor explaining the poor economic performance of many developing countries in order to improve the agricultural performance of many developing countries apart from physical and education investments more emphasis should be placed on improving the governance infrastructure of these countries

the role of investment specific technological change in the business cycle this is a quantitative investigation of the importance of technological change speci c to new investment goods for postwar us aggregate uctuations a growth model that incorporates this form of technological change is calibrated to us data and simulated using the relative price of new equipment to identify the process driving investmentspeci c technology shocks the analysis suggests that this form of technological change is the source of about 30 of output uctuations 2000 elsevier science b v all rights reserved

optimal fiscal and monetary policy with occasionally binding zero bound constraints abstract this paper studies optimal fiscal and monetary policy when the nominal interest rate is subject to the zero lower bound zlb constraint in a stochastic new keynesian economy in the baseline model calibrated to match key features of the u s economy it is optimal for the government to increase its spending when at the zlb in the stochastic environment by about 60 percent more than it would in the deterministic environment the presence of uncertainty creates a unique time consistency problem if the steady state is inefficient although access to government spending policy increases welfare in the face of a large deflationary shock it decreases welfare during normal times as the government reduces the nominal interest rate less aggressively before reaching the zlb

time consistent consumption taxation abstract we characterise optimal tax policies when the government has access to consumption taxation and cannot credibly commit to future policies we consider a neoclassical economy where factor income taxation is distortionary within the period due to endogenous labour and capital utilisation and non tax deductibility of depreciation contrary to the case where only labour and capital income are taxed the optimal time consistent policies with consumption taxation are remarkably similar to their ramsey counterparts the welfare gains from commitment are negligible while they are substantial without consumption taxation further the welfare gains from taxing consumption are much higher without commitment

thermal plant bids and market clearing in an electricity pool minimization of costs vs minimization of consumer payments the spanish wholesale electricity market started on january 1st 1998 though it is based on simple price quantity bids it incorporates some provisions to take thermal plant running requirements into account this paper presents these rules and its mathematical treatment focusing on a possible implementation of the minimum income condition which allows thermal generators to declare minimum stable loads it also shows another key point in the debate whether the algorithm should minimize costs or consumer payments

on the solution of revenue and network constrained day ahead market clearing under marginal pricing part ii case studies this paper presents the numerical analysis of the bilevel programming approach for revenue and network constrained market clearing developed in its companion paper the impact of minimum revenue conditions and minimum declared profits on generation and consumption levels as well as on locational marginal prices for energy is examined in detail through three case studies first the results from an illustrative example including minimum revenue conditions are comprehensively analyzed the second case study is based on the ieee reliability test system and considers minimum declared profits in the third case study a modified version of the ieee 118 bus system is tested while accounting for minimum revenue conditions in addition the computational behavior of the proposed approach is illustrated with several case studies including the ieee 300 bus system numerical results show the effectiveness of the proposed approach to handle revenue constraints as well as its superiority over the heuristic currently implemented in the iberian electricity market moreover simulations reveal that unlike previous works in the literature generation revenue constraints can be precisely incorporated in day ahead market clearing while explicitly considering the standard economic dispatch based marginal pricing scheme and without requiring price uplifts

on the aggregation problem in international comparisons of agricultural production aggregates abstract the major aim of this short paper is to provide an original systematic statement of the index number problem involved in obtaining internationally comparable agricultural production aggregates alternative output repricing and implicit exchange rates methods are expounded the standard method of comparison based on wheat relatives as used in the work of hayami and associates is critically reviewed and a case is made for the use of alternative procedures

the politics of fdi expropriation i examine the role of political instability and fractionalization as potential explanations for the lack of capital flows from rich countries to poor countries i e the lucas paradox using panel data from 1984 to 2014 i document that i developed countries exhibit larger inflows of foreign direct investment fdi ii countries subject to high investment risk ir receive low fdi inflows and iii ir is higher in fractionalized and politically unstable economies these findings suggest a negative relationship between political instability and fdi through the ir channel i inspect the theoretical mechanism using a dynamic political economy model of redistribution wherein policymakers can expropriate resources from foreign investors the proceeds are used to finance group specific transfers to domestic workers but hinder economic growth by discouraging fdi i show that the political equilibrium exhibits overexpropriation and underinvestment

optimal taxes without commitment abstract in the problem of optimal taxation in an economy with labor and capital the optimal solution when the government can commit to a sequence of tax rates entails that the tax on capital tends to zero in the limit with all the tax burden on labor it is well known however that this solution is time inconsistent so if the commitment power is not perfect this second best tax plan will not be sustainable we model explicitly the trade off between the cost of revising the tax plan and the benefit of the revision as a result when commitment is not possible both the limit tax rate and the steady state capital are different from their levels in the second best solution limit taxes on capital may be strictly positive but it may also be the case that the only sustainable plan has subsidies to capital the subsidies induce an overaccumulation of capital which becomes a commitment device against revisions of the tax plan journal of economic literature classification numbers h21 c73

revenue adequate bidding strategies in competitive electricity markets energy trading in a competitive electricity market can be modeled as a two level optimization at the top level a centralized economic dispatch ced uses a priority list method to solve the fundamental problem of reliable market clearing with price discovery the lower level consists of a set of decentralized bidding db subproblems the db model uses a self unit scheduling simulator based on parametric dynamic programming to produce hourly bid curves for the central dispatch coordinator unit operating constraints and costs such as the unit minimum up and minimum down times ramp rates and the unit start up no load and sunk capital costs are internalized in the bid curves through the simulator a special algorithm is presented to solve the revenue adequacy problem for marginal units both ced and db models are based on the revenue maximization in contrast with the cost minimization criteria used in the conventional unit commitment uc the proposed method has been tested in a study case and some interesting results have been demonstrated

factor income taxation in a horizontal innovation model we consider the optimal factor income taxation in a standard r d model with technical change represented by an increase in the variety of intermediate goods in the model there are externalities both to working and to saving due to market power by firms incomplete appropriability of the benefits of inventions and the cost of economic activity in terms of public expenditures redistributing the tax burden from labor to capital will increase employment but in most cases reduce the rate of growth with conflicting effects on the deadweight loss from the externalities under plausible calibrations of the model the optimal tax rate on capital will be sizable

optimal fiscal policy in a business cycle model this paper develops the quantitative implications of optimal fiscal policy in a business cycle model in a stationary equilibrium the ex ante tax rate on capital income is approximately zero there is an equivalence class of ex post capital income tax rates and bond policies that support a given allocation within this class the optimal ex post capital tax rates can range from close to independently and identically distributed to close to a random walk the tax rate on labor income fluctuates very little and inherits the persistence properties of the exogenous shocks thus there is no presumption that optimal labor tax rates follow a random walk most of the welfare gains realized by switching from a tax system like that of the united states to the ramsey system come from an initial period of high taxation on capital income

prices technology and farm size in this paper we construct and empirically test a theory of the agricultural firm which explains the long term growth in farm size in the united states typically the u s farm unit is a family enterprise consequently the ratio of the opportunity cost of farm labor to the price of machinery services determines the size of the farm operation by influencing the machine labor ratio applying the model to u s data we explain virtually all of the growth in the machine labor ratio and in farm size over the 1930 70 period by changes in relative factor prices without reference to technological change or economies of scale

an analysis of short run response of export and domestic agriculture in sub saharan africa abstract short run responses of export and domestic shares of total agricultural output to changes in stocks of domestic savings sav development assistance oda private foreign commercial capital pfx and other variables is investigated a profit function approach is used time series data for 19 sub saharan african countries are pooled into three panels using similarities in changes in economic policy regime statistical evidence suggests that for the panel of countries that were undertaking liberalized economic reforms the slope coefficients of some of the variables in the models have changed significantly between 1970 1980 and 1981 1993 for the 1981 1993 period the impacts of oda pfx and sav on export and domestic shares were different for this panel the effect of increases in agricultural labor was different across the three panels there is also evidence that productivity growth in the export agriculture sub sector is negative in all the groups it is recommended that to halt the decline in export share of agricultural output in the group of countries that have undertaken substantial improvements in economic policy environment efforts must be made to reduce the negative impact of domestic savings and agricultural labor while at the same time working to reduce the bias of development assistance against food security

time consistent public expenditures in this paper we study the optimal choice of public expenditures when there is no way of committing to future policy and reputational mechanisms are not operative this amounts to conflning our attention to markov equilibria the environment is a neoclassical growth model where consumers derive utility from a public good this environment gives rise to a dynamic game between successive governments and the private sector and this game is made interesting by the presence of a state variable the capital stock we characterize equilibria in terms of an intertemporal flrst order condition a generalized euler equation gee for the government and we use this condition both to gain insight into the nature of the equilibrium and as a basis for computation the gee reveals how the government optimally trades ofi tax wedges over time it also allows us to discuss in what sense a current government may be strategically in uencing future governments in their taxation decisions for a calibrated economy we flnd that when the tax base available to the government is capital income an inelastic source of funds at any moment in time the government still refrains from taxing at high rates in order to smooth distortions over time as a result the economy is far from the mix of public and private goods that would be optimal in a static context in return the savings distortion is not very severe and the capital stock is quite high

time consistent optimal fiscal policy this article studies the properties of optimal fiscal policy in a stochastic growth model when the government cannot commit itself beyond the next period s capital income tax rate we find that the results contrast markedly with those under full commitment first capital income tax rates are very high 65 on average versus close to zero on average under full commitment second labor income taxes are rather low on average about 12 versus a value of around 31 under full commitment finally labor income taxes are quite volatile whereas under full commitment their standard deviation is essentially zero

ldc agriculture nonparametric malmquist productivity indexes abstract this paper examines changes in agricultural productivity in 18 developing countries over the period 1961 1985 we use the nonparametric output based malmquist index to examine whether the results from such an approach confirm results from other methods that have indicated declining agricultural productivity in less developed countries ldcs the results confirm previous findings indicating that at least half of these countries have experienced productivity declines in agriculture we also found that those countries that tax agriculture most heavily had the most negative rates of productivity change

production cost minimization versus consumer payment minimization in electricity pools algorithms that involve some kind of optimization have been adopted by several electricity pools as a tool to clear the market traditionally this kind of models were used on a cost minimizing basis but recent papers have pointed out that alternative dispatches may be obtained that even with higher production costs result in lower electricity prices for consumers this paper studies this new payment minimization approach including the long term economic signals that it provides and their impact on future investments the authors results show that minimizing consumer payment results in discriminatory scheduling for certain generation resources and may cause in the long run higher prices for consumers

the intercountry agricultural production function another view factor productivity in agriculture is estimated from repeated observations on a sample of fifty eight countries under the assumption that all countries have access to the same technology technology is viewed as a collection of techniques each technique is represented by a production function the choice of the implemented techniques is determined by the state variables which represent the physical and economic environment within which the firms operate the statistical model is that of varying coefficients and it is estimated by a method which utilizes principal components and multiple comparisons

education and economic growth some cross sectional evidence from brazil abstract capital labor human capital and technical progress are the four principal sources of growth of aggregate real output based on data from individual brazilian states in 1970 and 1980 an aggregate meta production function relating aggregate real output of each state to capital labor average education and time is estimated it is found that one additional year of average education per person of the labor force increases real output by approximately 20 percent however there is also evidence that this large measured effect of average education may be due to the existence of a threshold effect in average education at between three and four years of the four sources of growth technical progress or equivalently total factor productivity is the most important accounting for approximately 40 percent of the growth in brazilian output in the 1970s followed by human capital accounting for approximately 25 percent physical capital and labor together account for the remainder

sustainable plans and mutual default this paper presents a simple general equilibrium model of optimal taxation in which both private agents and the government can default on their debt as a benchmark we consider ramsey equilibria in which the government can precommit to its policies at the beginning of time but in which private agents can default we then consider sustainable equilibria in which both government and private agent decision rules are required to be sequentially rational we adapt abreu s 1988 optimal trigger strategies to completely characterize the entire set of sustainable equilibria in particular we show that when there is sufficiently little discounting and government consumption fluctuates enough the ramsey allocations and policies in which the government never defaults can be supported by a sustainable equilibrium by way of an example we show that the larger the variance of government consumption the easier it is to support good outcomes we also show for moderate discount factors that in the best sustainable equilibrium tax rates are more volatile and debt is smaller than in the ramsey equilibrium

redistributive taxation in a simple perfect foresight model abstract we investigate the redistributive potential of capital taxation in an intertemporal maximizing model of capital formation first even unanticipated redistributive capital taxation is severely limited in its effectiveness since it depresses wages second under any convergent redistributive tax policy which maximizes a paretian social objective the capital income tax will converge to zero independent of the factor supply elasticities these results are independent of workers holdings of capital

coordination in markets with nonconvexities as a mathematical program with equilibrium constraints part ii case studies this paper is the second of a two paper series it is concerned with the numerical study of the solution procedure derived in to solve the coordination problem that arises in a new equilibrium model which for the purpose of this presentation applies to a static no time coupling costs or constraints electricity pool market with price inelastic demand and no network the new equilibrium model has the following main properties i every scheduled generator satisfies its minimum surplus or bid profit condition ii the energy price is a system marginal cost a lagrange multiplier associated with the power balance constraint in the related economic dispatch problem where all of the discrete variables are fixed to their optimal values iii the power balance and all of the generators technical constraints are satisfied we present some numerical results based on three test systems a simple three generating unit system that can be solved by hand a 32 generating unit system that consists of piecewise linear offer curves and a large system of 768 generating units with monotone and nonmonotone piecewise linear offer curves some of which are set as must run units the results demonstrate that the proposed procedure is more efficient than a heuristic approach both in terms of solution quality and computational efficiency

effective tax rates in macroeconomics cross country estimates of tax rates on factor incomes and consumption abstract this paper proposes a method for computing tax rates using national accounts and revenue statistics using this method we construct time series of tax rates for large industrial countries the method identifies the revenue raised by different taxes at the general government level and defines aggregate measures of the corresponding tax bases this method yields estimates of effective tax rates on factor incomes and consumption consistent with the tax distortions faced by a representative agent in a general equilibrium framework these tax rates compare favorably with existing estimates of marginal tax rates and highlight important international differences in tax policy

decomposition of productivity growth using distance functions the case of dairy farms in three european countries within an output distance function framework the total factor productivity growth index is decomposed into four components technical change technical and allocative efficiency and scale component we estimate stochastic translog output distance functions using panel data from dairy farms over the period 1991 94 for three european countries germany the netherlands and poland results indicate that the change in the productivity growth index in germany 6 and poland 5 are mainly dictated by the technical change component in contrast the productivity growth index in the netherlands 3 is influenced by allocative efficiency components

productivity of agricultural labour and land an international comparison abstract this paper examines partial agricultural land and labour productivity in 1975 and 1980 for different world regions the results suggest that land and labour productivity are higher in developed countries relative to developing countries however agricultural labour productivity differences are more marked than those for agricultural land productivity the productivity values for 1975 and 1980 indicate a widening of productivity differences more so in the case of agricultural labour than land the paper also proposes an alternative approach to estimating agricultural land and labour productivity this approach which regresses agricultural labour productivity on a given level of agricultural land productivity suggests a narrowing of agricultural land productivity differences relative to the initial approach across africa asia and europe during the 1975 1980 period a brief discussion of the agricultural development policy implications of the results concludes the paper

coordination in markets with nonconvexities as a mathematical program with equilibrium constraints part i a solution procedure this paper is concerned with developing an algorithm for solving the coordination problem that arises in a new equilibrium model which for the purpose of this presentation applies to a static no time coupling costs or constraints electricity pool market with price inelastic demand and no network the new equilibrium model has the following main properties i every scheduled generator satisfies its minimum surplus or bid profit condition ii the energy price is a system marginal cost lagrange multiplier associated with the power balance constraint in the related economic dispatch problem where all of the discrete variables are fixed to their optimal values iii the power balance and all the generators technical constraints are satisfied to solve the coordination problem which is a subproblem of the new equilibrium model it is mathematically convenient to cast the former as a three level nested optimization problem we substitute the ensuing lower level subproblems with an equivalent set of explicit algebraic equalities and inequalities hence we obtain a one level problem which is a discrete continuous mathematical program with complementarity or equilibrium constraints mpec finally we transform the one level mathematical program into mixed integer linear form by substitution of the complementarity terms and the remaining nonlinear terms

the intercountry agricultural production function and productivity differences among countries comment abstract kawagoe hayami and ruttan 1985 find using an intercountry agricultural production function that scale economies explain 15 of the difference in labour productivity between developed and less developed countries in this note their finding of large scale economies in developed countries is contrasted with the commoner finding of approximately constant returns to scale in studies using farm level data and is likened to other studies employing grouped data which also find large scale economies it is suggested that the latter finding may be due to statistical artefact arising from the grouped nature of the data

is agricultural productivity in developing countries really shrinking new evidence using a modified nonparametric approach abstract nonparametric productivity analyses performed to date show that most developing countries are experiencing relatively rapid technical regress in agriculture we discuss the plausibility of these results and argue that they stem from the existence of biased technical change and the definition of technology used we reestimate the malmquist index for a group of developing countries using a different definition of technology and find that most developing countries in our sample are experiencing positive productivity growth with technical change being the main source of this growth

on the solution of revenue and network constrained day ahead market clearing under marginal pricing part i an exact bilevel programming approach the first of this two paper series addresses a practical day ahead auction model where generation revenue constraints are explicitly incorporated in the problem formulation as routinely done in several national electricity markets across europe the revenue constrained market clearing procedure includes the effect of the transmission network inter temporal constraints associated with generation scheduling demand side bidding and marginal pricing this auction design is an instance of price based market clearing which features two major complicating factors first locational marginal prices become decision variables of the optimization process in addition producer revenues are formulated as bilinear and highly nonconvex products of power outputs and market clearing prices the resulting problem is formulated as a mixed integer nonlinear bilevel program with bilinear terms for which available solution techniques rely on heuristics approximations or modeling simplifications this paper presents a novel and exact methodology whereby the original problem is recast as an equivalent single level mixed integer linear program as a consequence finite convergence to optimality is guaranteed and the use of standard commercial software is allowed the proposed transformation is based on duality theory of linear programming karush kuhn tucker optimality conditions and integer algebra results in the second part of this two paper series numerical results from several case studies illustrate the effective performance of the proposed solution approach

debt inflation and central bank independence abstract increasing the independence of a central bank from political influence although ex ante socially beneficial and initially successful in reducing inflation would ultimately fail to lower inflation permanently the smaller anticipated policy distortions implemented by a more independent central bank would induce the fiscal authority to decrease current distortions by increasing the deficit over time inflation would increase to accommodate a higher public debt by contrast imposing a strict inflation target would lower inflation permanently and insulate the primary deficit from political distortions

optimal ramsey taxation with endogenous risk aversion abstract in this paper we study optimal ramsey taxation under endogenous risk aversion formulation in an otherwise standard real business cycle economy we show that when the risk aversion coefficient co moves counter cyclically the canonical chamley judd chamley 1986 judd 1985 result does not hold true and the ramsey planner chooses a positive capital income tax rate in the long run we report that result is due to additional wedges both in the intratemporal and the intertemporal optimality condition of the representative household

international productivity patterns accounting for input quality infrastructure and research in this paper we present measures of land and labor productivity for a group of ninety eight developed and developing countries using an entirely new data set with annual observations spanning the past three decades the substantial cross country and intertemporal variation in productivity in our sample is linked to both natural and economic factors we extend previous work by dealing with multiple sources of systematic measurement error in conventional agricultural inputs the mix of conventional inputs indicators of quality of agricultural inputs and the amount of publicly provided infrastructure are all significant in explaining observed cross sectional differences in productivity patterns

optimal fiscal policy in the neoclassical growth model revisited this paper studies optimal taxation in a version of the neoclassical growth model in which investment becomes productive within the period thereby making the supply of capital elastic in the short run because taxing capital is distortionary in the short run the government s ability desire to raise revenues through capital income taxation in the initial period or when the economy is hit with a bad shock is greatly curtailed our timing assumption also leads to a tractable ramsey problem without state contingent debt which can give rise to debt financed budget deficits during recessions

total factor productivity growth in agriculture a malmquist index analysis of 93 countries 1980 2000 in this paper we examine levels and trends in agricultural output and productivity in 93 developed and developing countries that account for a major portion of the world population and agricultural output we make use of data drawn from the food and agriculture organization of the united nations and our study covers the period 1980 2000 due to the non availability of reliable input price data the study uses data envelopment analysis dea to derive malmquist productivity indexes the study examines trends in agricultural productivity over the period issues of catch up and convergence or in some cases possible divergence in productivity in agriculture are examined within a global framework the paper also derives the shadow prices and value shares that are implicit in the dea based malmquist productivity indices and examines the plausibility of their levels and trends over the study period

on the optimal taxation of capital income abstract we show that in models in which labor services are supplied jointly with human capital the chamley and judd result on zero capital income taxation in the limit extends to labor taxes as long as accumulation technologies are constant returns to scale moreover for a class of widely used preferences consumption taxes are zero in the limit as well however we show by the construction of two examples that these results no longer hold for certains types of restrictions on tax rates or if there are profits generated journal of economic literatureclassification numbers e62 h21

markov perfect capital and labor taxes abstract this paper analyzes the markov perfect equilibrium of an economy were a benevolent government that lacks the ability to commit to future policy choices uses taxes on capital and labor income to finance the provision of a public good the main finding is that the government taxes capital and subsidizes labor so that only the dynamic inefficiency of future capital taxes remains if agents preference for the public good is sufficiently high then capital is confiscated setting bounds on taxes alleviates the dynamic inefficiency inherent in capital taxation but some implementations carry a high welfare cost allowing for endogenous capital utilization makes the current capital tax distortionary and implies capital and labor tax rates that are relatively close to those measured for the u s economy

inflation and central bank independence a meta regression analysis using 59 studies we perform a meta regression analysis of studies examining the relationship between inflation and central bank independence cbi the studies considered are very different with respect to the cbi indicator used the sample of countries and time periods covered model specification estimators used and publication outlet we conclude that there is a significant publication bias however we also find a significant genuine effect of cbi on inflation differences between studies are not caused by differences in cbi indicators used

farm mechanization scale economies and polarization the japanese experience abstract whether economies of scale are the major factor underlying concentration of agricultural land in large farms has long been under debate the case study of japanese agriculture for the past three decades confirmed the tendency observed from international comparison that increasing returns in agricultural production emerge when economic development reaches a stage at which real wage rates begin to rise sharply it was found that the effect of scale economies was highly significant even though the intersectoral labor market effect was greater on land concentration the results imply that developing countries need not worry about mechanization to cause more unequal land distribution if factor markets are not unduly distorted

the meta production function approach to technological change in world agriculture abstract an alternative meta production function for agriculture is estimated with the cross section data for 43 countries and three years 1960 1970 and 1980 constructed and used by kawagoe hayami and ruttan and hayami and ruttan in their studies by allowing for country specific efficiency factors and using a flexible functional form the transcendental logarithmic production function strikingly different results from those of kawagoe hayami and ruttan are obtained in particular it is found that elasticity of output with respect to machinery is variable and the degree of local returns to scale is not constant and increases with the usage of machinery

electricity market near equilibrium under locational marginal pricing and minimum profit conditions this paper provides a tool to determine the near equilibrium of an electric energy market this market works under locational marginal pricing i e generating units and demand loads are paid and pay respectively the locational marginal prices corresponding to the nodes they are connected to the near equilibrium is defined as the energy transaction levels for which generating companies maximize their respective profits and consumption companies maximize their respective utilities an independent system operator clears the market maximizing the social welfare conditions that ensure minimum profit for generating units can be included however these conditions may render a generating unit uncompetitive and expel it from the market demands are taken to be non constant and values are determined as part of the solution the near equilibrium is obtained through the solution of a mixed integer quadratic problem equivalent to a mixed linear complementarity problem that includes the minimum profit conditions it is important to note that the near equilibrium concept presented in this paper does not solve a market equilibrium when indivisibilities such as start up costs or the like are present lastly we validate the proposed model on a case study using data from the ieee reliability test system

productivity growth in world agriculture sources and constraints during the last half century advances in crop production came from expansion in areas irrigated from more intensive application of fertilizers and crop protection chemicals and from crop varieties that were more responsive to technical inputs and management advances in animal production came from genetic improvements and advances in animal nutrition differences among developed and developing countries in output per hectare and per worker have widened if these gaps are to be narrowed agricultural research capacity in developing countries will have to be substantially strengthened

on the joint determination of fiscal and monetary policy abstract the conduct of fiscal and monetary policy absent commitment depends on the interaction between the objective of smoothing distortions intertemporally and a time consistency problem when net nominal government obligations are positive both fiscal and monetary policies are distortionary and the choice of debt depends on how the anticipated response in future monetary policy affects the current demand for money and bonds there exists a unique steady state with positive net nominal government obligations which is stable and time consistent for any initial level of debt the welfare loss due to lack of commitment is small

consumption savings decisions with quasi geometric discounting we study the consumption savings problem of an infinitely lived rational consumer who has time inconsistent preferences in the form of quasi geometric discounting the consumer operates a weakly concave production function and must simply divide current resources into current consumption and savings there is no uncertainty a solution to the consumer s problem is a subgame perfect equilibrium of a dynamic game between the consumer s successive selves we show that this game has a continuum of equilibria in stationary markov strategies not only is the stationary point of the consumer s asset holdings indeterminate but each stationary point has a continuum of dynamic paths converging to it the savings policy rules underlying these dynamic paths are step functions

the impact of prices and macroeconomic policies on agricultural supply a synthesis of available results abstract this paper reviews the literature dealing with the link of agricultural prices and macroeconomic policies to agricultural supply with particular emphasis on sub saharan africa although the study echoes the stylized facts on price elasticities underlined in previous literature reviews the paper points out that our understanding of the quantitative dimensions of agricultural supply response is weak given the importance of this assumed response for growth poverty alleviation and the environment indeed issues such as simultaneity of variables data pooling omission of variables and asymmetry in supply responses to price changes have not been adequately addressed in many instances

consumer payment minimization in power pool auctions this paper presents a new methodology within the framework of centralized optimization for calculating optimal generation schedules that minimize energy payments by power pool consumers this paper addresses issues related to market structure and the operation of power pools such as bid evaluation generator no load and start up cost recovery generator unit operating constraints and market clearing price determination unlike conventional unit commitment algorithms that minimize total energy production costs the method presented here minimizes payments by power pool consumers a payment minimization objective leads to a different unit commitment and dispatch solution and lower market clearing prices additionally optimal allocation of generator no load and start up costs over the scheduling period is integrated in the bid evaluation process leading to a further reduction in consumer payments

the intercountry agricultural production function and productivity differences among countries abstract the sources of differences in labor productivity in agriculture between developed countries dc s and less developed countries ldc s are identified by estimating an aggregate agricultural production function based on cross county data for 1960 1970 and 1980 the production function was found to be stable over the entire period agriculture in the dc s was characterized by increasing returns and in the ldc s by constant returns to scale the results imply that unfavorable man land ratios do not represent an immediate barrier to rapid agricultural development in the low income ldc s but they may create a serious agricultural adjustment problem as those countries advance into the middle income range

government policy in monetary economies i study how the specic details of a micro founded monetary economy aect the determination of government policy i consider three variants of the lagos wright monetary framework a benchmark were all markets are competitive a case which allows for nancial intermediaries and a case with trading frictions although intitutions frictions are shown to have a signicant structural impact in the determination of policy the calibrated articial economies are observationally equivalent in steady state the policy response to aggregate shocks is qualitatively similar in the variants considered however there are signicant quantitative dierences in the response of government policy to productivity shocks mainly due to the idiosyncratic behavior of money demand the variants with no trading frictions display the best t to u s post war data

cross country disparity in agricultural productivity quantifying the role of modern seed adoption inequality of agricultural labour productivity across the developing world has increased substantially over the past 40 years this article asks to what extent did the diffusion of green revolution seed varieties contribute to increasing agricultural labour productivity disparity across the developing countries we find that 22 per cent of cross country variation in agricultural labour productivity can be attributed to the diffusion of high yielding seed varieties across countries and that the impact of such diffusion differed significantly across regions we discuss the implications of these findings for policy directed at increasing agricultural labour productivity in the developing world

is there a slowdown in agricultural productivity growth in south america this article estimates agricultural productivity growth in 10 south american countries in 1969 2009 with the objective of investigating if the slowdown being measured in other countries is present in the region results show that productivity growth accounts for half of the three fold increase in agricultural output during this period and that performance is sensitive to r d investments in the sector the slowdown found for the 1990s to 2000s in the u s and some european economies does not seem to be present yet in south america the region s total factor productivity tfp growth rate increased steadily from 1 07 during the 1970s to 2 29 during the 2000s given lags in adoption and the adaptive nature of innovations in these economies we have yet to see the potential effects in south american agriculture of decreases in r d in advanced economies

land distribution and international agricultural productivity the unequal distribution of agricultural land is often cited as a source of inefficiency in agriculture previous cross country studies of agricultural productivity differences though have not considered land inequality this article addresses this issue by using cross country data on inequality in operational holdings of agricultural land from deininger and squire 1998 in an estimation of an agricultural production function the gini coefficient for land holdings is found to have a significant negative relationship with productivity this is consistent with the existence of heterogeneity in productivity by farm size within countries a one standard deviation drop in the gini coefficient implies an increase in productivity of 8 5

public trust and government betrayal abstract this study presents a simple model of government reputation in which government type cannot be directly observed by households with the variation that government type rather than being permanent follows an exogenous markov process this formulation captures three characteristics of bad policy outcomes governments which betray public trust do so erratically public trust is regained only gradually after a betrayal and governments with recent betrayals betray with higher probability than other governments

sequential equilibria in a ramsey tax model this paper presents a full characterization of the equilibrium value set of a ramsey tax model more generally it develops a dynamic programming method for a class of policy games between the government and a continuum of households by selectively incorporating euler conditions into a strategic dynamic programming framework we wed two technologies that are usually considered competing alternatives resulting in a substantial simplification of the problem

an intercountry comparison of agricultural production efficiency intercountry cross section comparison of total productivity in agriculture showed that differences in production efficiency were small relative to differences in labor productivity among countries at a same stage of economic development but very large among different stages of development moreover the large differences in total productivity between the developed and the less developed countries widened further during the past two decades the results suggest a hypothesis that agriculture in the less developed countries as a whole has not yet entered the phase of modern economic growth a la kuznets

fiscal policy under loose commitment due to time inconsistency or political turnover policymakers promises are not always fulfilled we analyze an optimal fiscal policy problem where the plans made by the benevolent government are periodically revised in this loose commitment setting the properties of labor and capital income taxes are significantly different than under the full commitment and no commitment assumptions because of the occasional reoptimizations the average capital income tax is positive even in the long run also the autocorrelation of taxes is lower their volatility with respect to output increases and the correlation between capital income taxes and output changes sign our method can be used to analyze the plausibility and the importance of commitment in a wide class of dynamic problems

strategic bidding under uncertainty a binary expansion approach this work presents a binary expansion be solution approach to the problem of strategic bidding under uncertainty in short term electricity markets the be scheme is used to transform the products of variables in the nonlinear bidding problem into a mixed integer linear programming formulation which can be solved by commercially available computational systems the be scheme is applicable to pure price pure quantity or joint price quantity bidding models it is also possible to represent transmission networks uncertainties scenarios for price quantity plant availability and load financial instruments capacity reinforcement decisions and unit commitment the application of the methodology is illustrated in case studies with configurations derived from the 80 gw brazilian system

optimal taxation of capital income in general equilibrium with infinite lives this paper analyzes the optimal tax on capital income in general equilibrium models of the second best agents have infinite lives and utility functions which are extensions from the koopmans form the population is heterogeneous the important property of the models is the equality between the social and the private discount rates in the long run i find that the optimal tax rate is zero in the long run for a special case of additively separable utility functions i then determine the tax rates along the dynamic path and conditions that are sufficient for the local stability of the steady state

impact and implications of price policy and land degradation on agricultural growth in developing countries abstract in many developing countries a high proportion of the population resides and works in rural areas agriculture is the dominant sector in rural areas and has the greatest concentration of poverty landless workers small tenant farmers and small farm owners thus any development strategy that is directed towards increasing employment and alleviating a country s hunger must concentrate on sustainable agricultural growth historically economic development in most countries has been based on exploitation of natural resources particularly land resources soil erosion and land degradation have been serious worldwide due to reasons such as high population pressure on land and limited fossil energy supplies land degradation is generally more serious in the developing world empirical studies show that soil erosion and degradation of agricultural land not only decrease the land productivity but they can also result in major downstream or off site damage which may be several times that of on site damage in promoting industrialization governments of many developing countries adopt a package of price and other policies that reduce agricultural production incentives and encourage a flow of resources out of agriculture increasing evidence shows that these policies cause a substantial efficiency or social welfare loss and a great loss in foreign exchange earnings in addition a world bank study on the effect of price distortions on economic growth rates concluded that neither rich resource endowments nor a high stage of economic development nor privatization are able to make up the adverse effects caused by high price distortions this analysis is primarily concerned with identifying the factors that determine the agricultural production growth rate and in testing the effects these factors have on agricultural growth in developing countries specifically this study involves statistical estimation of an aggregate agricultural growth function based on cross country data for 28 developing countries special attention is devoted to land degradation and agricultural pricing policy and to the policy implications resulting from the effects these variables have on agricultural and food production growth the overall results of this study show that price distortions in the economy and land degradation had statistically significant negative impacts while the change in arable and permanent land was positively related to the growth of agricultural production and food production in 28 developing countries from 1971 to 1980 these results emphasize the importance of getting prices right and implementation of sustainable land and water management practices if future growth in food and agricultural output is to be realized and sustained in developing countries

unit commitment with dual variable constraints a new unit commitment model is proposed for market economies with some form of indivisibilities nonconvexities coordination in electricity pool auction markets with unit commitment is a conspicuous example this presentation applies to a single time period unit commitment with no network the new formulation includes a market coordinator who collects the sale and purchase bids and determines the optimal solution that balances the total generation with the forecast demand a solution to the new commitment model is said to be optimal if it maximizes the monetary margin of every accepted production unit while minimizing the sum of the margins of the unaccepted units that would achieve positive margins at the prevailing market price the new unit commitment model produces a market price that is the system wide marginal bid cost some preliminary results are reported considering the single period unit commitment problem which provide some insights into the adequacy of the proposed approach as well as its economic implications as a tool for managing restructured energy systems

economic consequences of alternative solution methods for centralized unit commitment in day ahead electricity markets many wholesale electricity markets call on the independent system operator iso to determine day ahead schedules for generators based on a centralized unit commitment up until recently the lagrangian relaxation lr algorithm was the only practical means of solving an iso scale unit commitment problem and it was the solution technique used by most isos johnson et al 1 demonstrate however that equity incentive and efficiency issues will arise from use of lr solutions because different commitments that are similar in terms of total system costs can result in different surpluses to individual units recent advances in computing capabilities and optimization algorithms now make solution of the mixed integer programming mip formulation by means of branch and bound b b tractable often with optimality gaps smaller than those of lr algorithms which has led some isos to adopt b b algorithms and others proposing to do so with the move towards b b one obvious question is whether the use of mip will eliminate or reduce the issues with lr raised by johnson et al using actual market data from an iso we demonstrate that both lr and mip solutions will suffer the same equity issues unless the iso unit commitment problems can be solved to complete optimality within the allotted timeframe which is beyond current computational capabilities our results further demonstrate that the size of the payoff deviations are not monotone in the size of the optimality gap meaning smaller optimality gaps from b b will not necessarily mitigate the issues johnson et al raise we show that the use of make whole payments which ensure units recover any startup and no load costs not recovered by inframarginal energy rents can help to reduce surplus volatility and differences to some extent

debt and deficit fluctuations and the structure of bond markets we analyse the implications of optimal taxation for the stochastic behaviour of debt we show that when a government pursues an optimal fiscal policy under complete markets the value of debt has the same or less persistence than other variables in the economy and it declines in response to shocks that cause the deficit to increase by contrast under incomplete markets debt shows more persistence than other variables and it increases in response to shocks that cause a higher deficit data for us government debt reveals diametrically opposite results from those of complete markets and is much more supportive of bond market incompleteness

endogenous capital utilization investor s effort and optimal fiscal policy abstract the present paper studies the implications of endogenous capital utilization and investor s effort on the structure and time consistency of optimal fiscal policy the main results are that levies of old capital are distortionary and should therefore not be used at confiscatory rates that in a steady state capital and labor income should be taxed at the same rate and investment should be subsidized at the same rate as the tax rate and that the optimal tax policy can be made time consistent through debt restructuring

exploring the widening food gap an international perspective using data for a long panel of 90 developed and developing countries this article explores the effects of research and development r d and fixed capital stock on agricultural land productivity over the period 1961 2012 instruments are used for r d to deal with feedback effects and measurement errors the results show very high social returns to investment in r d and to fixed capital stock suggesting that increasing investment in these factors are promising ways of arresting the increasing food prices due to increasing demand for animal protein population growth desertification salinization soil erosion climate change and decreasing growth in land productivity

efficiency and technical change in the philippine rice sector a malmquist total factor productivity analysis regional differences in total factor productivity efficiency and technological change in the philippine rice sector are examined for the post green revolution era malmquist productivity indices were constructed for 1971 90 and were decomposed into efficiency and technological change the average annual malmquist productivity growth was only slightly positive productivity growth was negative during the early 1970s and was followed by a period of positive growth growth was negative again in the late 1980s the period of positive growth coincided with the introduction of new rice varieties while the declines are likely to have been caused by intensification of rice production in lowland farming systems certain regions such as central luzon western visayas and southern and northern mindanao had higher rates of technological change than others this may be due to higher investments in infrastructure and education increased adoption of tractors and a better agroclimatic environment

optimal fiscal policy in a stochastic growth model although most neoclassical growth models focus on competitive equilibria which are pareto optimal and ignore the role of government recent works by romer 28 29 judd 20 baxter and king s and bizer and judd 7 have shown that government can be introduced into and suboptimal equilibria can be studied in these models as well their studies however are positive analyses of the effects of fiscal policy in competitive equilibria the purpose of this paper is to apply ramsey s 27 theory of optimal taxation to the normative study of fiscal policy in a stocastic growth model ramsey studied a static representative consumer economy with many goods in his formulation a government consumes a fixed amount of these goods which it purchases at market prices and finances by levying flat rate excise taxes prices and quantities are determined in a competitive equilibrium the government is benevolent and its objective is to choose the optimal tax rates to maximize the representative consumer s utility a number of economists among them kydland and prescott 23 barro 3 turnovsky and brock 31 and lucas and stockey 26 have noted that ramsey s formulation can be applied to dynamic economies with uncertainty if one reinterprets the goods in static problems as dated state contingent goods in this framework a fiscal policy is a rule which specifies state contingent tax rates and the amount of public debt issue in each date the optimal fiscal policy is defined as the one which leads to a quantity