representative democracy and capital taxation abstract in this paper we study a political model of capital taxation voters who differ in their relative shares of capital and labor income choose tax policy under majority rule we compare two political regimes direct democracy where the voters vote directly on the policy and representative democracy where they elect a representative who then chooses policy in both regimes some form of commitment by the voters is necessary to avoid excessive taxation of capital but the necessary commitment under representative democracy corresponds closely to that provided by the actual institutions of most democracies

does direct democracy reduce public debt evidence from swiss municipalities although some countries have managed toobtain balanced budgets or even budgetsurpluses in recent times public debts ofmany oecd countries remain at high levels since structural reforms of public spendinghave only infrequently taken place in mostcountries fiscal pressure will increaseagain in the future due to society s ageingand the accompanying increases in socialtransfer spending constitutionalrestrictions on debt levels and legal rulesof the budgetary process such as a strongrole of the minister of finance aresupposed to be helping against the debtbias inherent in political decision makingprocedures in addition to such top downbudgetary procedures this paperinvestigates the impact of referendumapproval of budget deficits by the voterson the level of public debt in a crosssection of the 134 largest swissmunicipalities in 1990

saving wealth and the exchange bequest motive a model of exchange motivated bequests based upon childrens attentions to parents provided when the children are young adults is joined to a standard life cycle specification to examine the consequences for wealth and savings the results of general equilibrium simulations show contribution to be far below some recent estimates exchange motivated bequests produce offsets to life cycle savings that limit their ability to increase total savings epargnes richesse et le legs motive par la logique de l echange l auteur combine un mod0e de legs motive par la logique de l 6change les parents obtenant en echange l attention de leurs enfants quand ceux ci sont jeunes adultes et une specification standard du modele

expenditure taxes income taxes and time inconsistency abstract traditional welfare based comparisons of different tax structures implicitly assume that the government can precommit to its future optimal policy when optimal tax rates are time inconsistent however such comparisons may be misleading this paper uses a two period representative consumer optimal taxation model to study the implications of time consistency for the welfare rankings of expenditure and income taxation i show that the welfare rankings of optimal policies may not be preserved by time consistent ones

macroeconomic policy in a two party system as a repeated game this paper considers the interaction of two parties with different objectives concerning inflation and unemployment and rational and forward looking wage setters if discretionary policies are followed an economic cycle related to the political cycle results in equilibrium this cycle is significantly different from the traditional political business cycle reputational mechanisms due to the repeated interaction of the two parties and the public or commitments to a common policy rule can improve upon the discretionary outcome by reducing or eliminating the magnitude of the economic fluctuations

macroeconomic features of the french revolution this paper describes aspects of the french revolution from the perspective of theories about money and government budget constraints we describe how unpleasant fiscal arithmetic gripped the old regime how the estates general responded to reorganize france s fiscal affairs and how fiscal exigencies impelled the revolution into a procession of monetary experiments ending in hyper inflation

some models for estimating technical and scale inefficiencies in data envelopment analysis in management contexts mathematical programming is usually used to evaluate a collection of possible alternative courses of action en route to selecting one which is best in this capacity mathematical programming serves as a planning aid to management data envelopment analysis reverses this role and employs mathematical programming to obtain ex post facto evaluations of the relative efficiency of management accomplishments however they may have been planned or executed mathematical programming is thereby extended for use as a tool for control and evaluation of past accomplishments as well as a tool to aid in planning future activities the ccr ratio form introduced by charnes cooper and rhodes as part of their data envelopment analysis approach comprehends both technical and scale inefficiencies via the optimal value of the ratio form as obtained directly from the data without requiring a priori specification of weights and or explicit delineation of assumed functional forms of relations between inputs and outputs a separation into technical and scale efficiencies is accomplished by the methods developed in this paper without altering the latter conditions for use of dea directly on observational data technical inefficiencies are identified with failures to achieve best possible output levels and or usage of excessive amounts of inputs methods for identifying and correcting the magnitudes of these inefficiencies as supplied in prior work are illustrated in the present paper a new separate variable is introduced which makes it possible to determine whether operations were conducted in regions of increasing constant or decreasing returns to scale in multiple input and multiple output situations the results are discussed and related not only to classical single output economics but also to more modern versions of economics which are identified with contestable market theories

cooperation in ongoing organizations this paper argues that overlapping games can provide a natural theory of long lived organizations it shows that participation in organizations of infinite duration changes the incentives of agents with finite lives and will induce more cooperation than a static model would predict after developing the general theory we apply it to the description of career paths in organizations and show that it can be optimal to give the youngest workers the most arduous tasks

the long run relationship between inflation and output in postwar economies abstract we investigate the relationship between inflation and real output in a large sample of postwar economies our methodology is to use a structural vector autoregression to estimate the response of the level of real output to permanent inflation shocks separately for each country we find that a permanent shock to inflation is not associated with a permanent movement in the level of real output for most countries in our sample the main exceptions are certain low inflation countries in which permanent inflation shocks permanently increase the level of output we also find that permanent inflation shocks do not permanently influence real output growth rates in our sample

productivity growth technical progress and efficiency in their comment subhash c ray and evangelia desli 1997 hereafter rd point out that the specification of the decomposition of the malmquist productivity index used by fare et al 1994 hereafter fgnz is not unique and propose and compute an alternative specification of that decomposition we will discuss additional decompositions at the end of this note but proceed here by comparing the rd decomposition with fgnz based on both conceptual and computational grounds rd provide a discussion of the overall malmquist productivity index including the important issue of when this index is equivalent to the traditional notion of total factor productivity tfp namely under the condition that the reference technology be consistent with constant returns to scale crs as they point out this will yield a measure of tfp even if the true underlying technology is not crs for example both rd and fgnz use the crs reference technology to compute overall malmquist productivity one of the key issues raised is the role of the underlying scale properties of the benchmark technologies used to define and compute both productivity and its components in particular two reference technologies are employed in both rd and fgnz what we refer to as crs and variable returns to scale vrs technologies by construction these technologies are nested the crs technology contains the vrs technology as in figure 1 in rd this nestedness provides the logical basis for our decomposition at a very intuitive level we would argue that these two benchmarks can be used to provide bounds on the underlying true but unknown technology 2 intuitively we see the vrs technology providing a type of convex inner approximation whereas the crs technology provides a type of convex outer approximation thus these two technologies provide alternative benchmarks they do not require that the data satisfy either crs or vrs another possible intuitive interpretation is that the crs captures a perhaps hypothetical long run and the vrs approximates the short run as a reference technology the crs technology has some very useful features for example it captures the notion of maximal

the transition from payroll to consumption receipts with endogenous human capital abstract the transition from payroll to consumption receipts is simulated in a life cycle growth model featuring adult human capital as in other studies savings are higher under the consumption base however unlike those studies much of the additional savings here take human form human capital production increases for all cohorts in or yet to join the labor market as of the tax change the additional human capital production tends to dampen physical capital accumulation when compared with otherwise identical simulations which hold human capital constant the implications for intergenerational incidence are similar to that found in other examinations of the transition to a consumption base

dynamic tax incidence and intergenerationally neutral reform the paper proposes a basic definition of intergenerational neutrality in the overlapping generations model when agents have a pure life cycle motive of savings the derivation of intergenerationally neutral tax effects provides a redistribution free benchmark case that isolates the relative price effects of taxes and the deadweight losses associated with them the paper clarifies the intergenerational incidence which has to be determined simultaneously with the substitution effects of taxes on savings a tax reform example demonstrates how taxes with diverging intergenerational incidence may be combined to achieve intergenerational neutrality finally the paper extends the analysis of generational tax incidence to the case of a small open economy

welfare effects of capital income taxation under variable and fixed labor supply not every model of economic behavior can allow for variable labor supply when attention is focused on other economic issues the effect on welfare change measurement of assuming labor to be in fixed supply becomes important the traditional view is that allowing labor supply to be variable will reduce the measured benefits of replacing an interest income tax with a payroll or consumption tax owing to the introduction or increase in a static distortion between consumption and leisure however this view ignores two mechanisms by which variable labor supply may actually increase the benefits of relaxing the capital income tax first an interest income tax distorts the intertemporal path of leisure and thus of labor supply second as explained below the interest elasticity of savings may be augmented by changes in the intertemporal labor supply path eliminating the labor supply path distortion and increasing capital accumulation can provide benefits which may potentially exceed the disadvantages of increased static distortion this paper tests which effects dominate by simulation in a life cycle growth model previous papers have not addressed these issues feldstein 3 discusses welfare measurement in a two period model in which an individual supplies labor in the first period and consumes in both periods feldstein s partial equilibrium efficiency measure incorporates the elasticity of labor supply with respect to the interest rate but his single period of labor supply may be misleading summers 8 demonstrates that in multi period models interest rate changes may have a large effect upon the present value of lifetime resources human wealth and consequently consumption that finding when applied to frameworks allowing for leisure consumption implies that both the compensated and uncompensated elasticities of labor supply with respect to the interest rate may be markedly different for multi period than for one period labor supply models summers exploits a multi period life cycle growth model to measure numerically the steady state efficiency gains following an elimination of interest income taxation he assumes labor to be fixed in supply at each moment consequently changes in human wealth cannot affect the leisure profile and the benefits of eliminating intertemporal leisure distortions are not captured summers concludes that steady state consumption and welfare would increase

the political economy of policy credibility the new classical macroeconomics and the remaking of emerging economies the criterion of policy credibility is invoked with increasing frequency today by new classical development economists in debates over economic and institutional reform in developing and transitional countries the paper argues that the credibility criterion is used to privilege neoliberal economic policies and associated institutions the paper demonstrates that the credibility criterion is theoretically anti pluralist and politically anti democratic in this connection the paper argues that a policy s credibility is always secured endogenously through political and economic power rather than exogenously by virtue of the epistemiological status of the theory that promotes it the paper concludes by suggesting two alternative criteria by which policy regimes and the governance structure of monetary institutions could be adjudicated these alternative criteria are termed the principle of democratic credibility and the principle of fallibility copyright 2000 by oxford university press

equity and the time consistent taxation of income in a theoretical model the share of intraindustry trade in an industry s bilateral trade flows is determined by relative factor prices in the trading countries factor intensity and the elasticity of substitution in demand between products in the industry the more similar the relative factor prices in different countries the less extreme the factor intensity while the lower the elasticity of substitution between the products in an industry the larger the intraindustry trade the empirical study confirms these implications furthermore tariffs and transport costs are shown to have a greater negative effect on intraindustry trade copyright 1991 by the editors of the scandinavian journal of economics

an overlapping generations model of electoral competition this paper presents a dynamic model of political competition between two parties with different policy preferences a party is explicitly modeled as a sequence of overlapping generations of candidates all of whom face finite decision horizons in general there is a conflict between the interests of the individual policymakers and those of the party which includes subsequent generations of candidates we characterize this conflict and suggest a scheme of intergenerational transfers within the party which can resolve or mitigate this conflict the paper shows how the overlapping generations model can be usefully applied to the political arena this abstract was borrowed from another version of this item

a positive theory of discretionary policy the cost of democratic government and the benefits of a constitution we offer an explanation of government s preference for discretionary policy action the main elements are asymmetric information and the ability and desire of governments to maximize reelection prospects discretionary policy imposes a social cost we show that the cost is eliminated if all voters have the same information as the government an optimal state contingent policy rule that precommits government through a constitution eliminates the cost by removing government s opportunities to exploit its informational advantage rules of this kind and constitutional restrictions are difficult to enforce in the presence of uncertainty and different information available to government and the public

a study of bank efficiency taking into account risk preferences abstract i use the stochastic cost frontier approach to investigate efficiency of banks operating in the third federal reserve district accounting for the quality and riskiness of bank output in addition to the mean and mode of the conditional distribution of the one sided error term i calculate confidence intervals for the inefficiency measures based on the conditional distribution the results indicate that third district banks are operating at cost efficient output levels and product mixes but are not efficiently using their inputs the second part of the article relates the inefficiency measures to several correlates

political business cycles and macroeconomic credibility a survey there is clear evidence that government popularity and election performance is affected in part by economic performance suggesting that governments may manipulate the economy to political advantage simple models incorporating adaptive expectations which allowed the government to exploit this relationship were developed in the 1970s but fell out of fashion with the advent of new classical economics however modern theories of the political business cycle which are closely related to the macroeconomic policy game literature assume rational expectations and lead to forms of political business cycle driven by the existence of uncertainty of one type or another the international evidence suggests that some aspects of the theories apply although definitive conclusions are as we might expect hard to come by

donations in a recursive dynamic model this paper studies how donations respond to unexpected permanent changes in income and tax rates in a recursive dynamic model the dynamic approach yields several interesting insights if marginal tax rates are progressive a permanent jump in a household s income increases its consumption and donations in the short run but has no effect in the long run the permanent income elasticity of current donations is likely to exceed one if the marginal tax rate is flat the jump in income raises consumption and donations in both the short and the long run a permanent marginal tax rate cut raises consumption and donations in the long run if marginal tax rates are progressive while it reduces donations in the short run if it has little direct impact on tax payments if the marginal tax rate is flat a tax cut has a positive effect on consumption in both the short and the long run but has an ambiguous effect on donations jel classification e20 j24 015 041 dons dans un modele dynamique recursif ce memoire etudie comment les dons repondent a des changements non anticipes dans le niveau de revenu et les taux d imposition dans un modele dynamique recursif l approche dynamique revele des resultats interessants si les taux marginaux d imposition sont progressifs un saut permanent dans le revenu du menage accroit sa consommation et ses dons a court terme mais il n a aucun effet a long terme l elasticite des dons par rapport au revenu permanent est vraisemblablement plus grande que l unite si le taux marginal d imposition est plat le saut dans le revenu entraine une augmentation de la consommation et des dons a court et a long termes une reduction permanente dans le taux d imposition augmente consommation et dons a long terme si les taux d imposition sont progressifs alors qu elle reduit les dons si cela n a que peu d effet sur les paiements d impots si le taux marginal d imposition est plat une reduction d impot a un effet positif sur la consommation a la fois a court et a long termes mais a un effet ambigu sur les dons

productivity growth in large us commercial banks the initial post deregulation experience abstract we explore productivity growth for a group of 201 large us commercial banks over the initial post deregulation period from 1984 to 1990 using data envelopment analysis dea we measure productivity growth using malmquist productivity indexes and isolate the contributions of technical change technical efficiency change and scale change to productivity growth we find overall productivity growth at the rate of about 4 5 per year on average but productivity declined by 7 61 between 1984 and 1985 and by 0 33 between 1988 and 1989 our second stage panel regressions reveal that larger asset size and specialization of product mix associate with higher productivity growth while higher equity to assets associates with lower productivity growth

the political theory of the business cycle two strands of recent empirical work pose a challenge for the macro theorist when brought together one is the rational expectations interpretation of the business cycle the other is the political theory of the business cycle this paper attempts a reconciliation of these two strands in a theory where national political parties have to satisfy the preference of their own supporters as well as the floating voter the implications are that party voters evaluate government performance with respect to expected inflation and output and their variances and that parties will pursue different feedback rules

interjurisdictional capital mobility fiscal externality and a corrective subsidy abstract recent studies emphasize that local property taxation may result in inefficiently small amounts of local public spending this paper shows that the inefficiency can be traced to a fiscal externality when one jurisdiction increases its taxes it causes a flow of capital to other jurisdictions that increases their tax revenues the inefficiency can be corrected with a subsidy that internalizes the externality key empirical parameters determining the magnitude of the externality are identified illustrative calculations indicate that subsidy rates on the order of 40 might be required to achieve efficiency

productivity and efficiency change and shareholder value evidence from the spanish banking sector productivity change and shareholder value have been analysed in the banking sector in the last few years although it should be noted that these two important aspects have been studied separately in this regard the main contribution of our study is to link these two lines of research by verifying whether those banks characterized by higher levels of efficiency and productivity change have a higher shareholder value to measure changes in efficiency and productivity we use the malmquist nonparametric technique which is calculated from data envelopment analysis dea linear programming approach the malmquist total factor productivity index enables separation of the catching up effect i e changes over time in technical efficiency from technological change i e the shift of best practice frontier over time due to technological progress our results for a sample of listed spanish banks in the period 2000 to 2004 confirm that those banks with higher efficiency and productivity changes have a higher

fiscal policy and saving under distortionary taxation an empirical investigation of the e ects of fiscal policy on saving is carried out using israeli data which display large variability in both the saving rate and the fiscal variables the framework is a small open economy model with distortionary taxation the theoretical analysis of the partial e ect of each fiscal variable on the national saving rate takes into account the necessary adjustment in future taxes the present model predicts for example that the income tax rate should have a negative e ect on saving in contrast to the keynesian view and that transfer payments and interest payments on the public debt should have positive e ects in contrast to the ricardian view under lump sum taxation the empirical results partly support the predictions of the model in particular for the income tax rate the methodology consists of two steps first quantitative predictions are obtained via simulation and then the simulated e ects are compared with the estimated coe cients 1998 elsevier science b v all rights reserved jel classification e62

investment in education and the time inconsistency of redistributive tax policy time inconsistency of tax policy is shown to arise in a setting where households differ in their ability to accumulate wealth and where the government has redistributional objectives it is assumed that wealth accumulation takes the form of human capital acquired through education the government is precluded from redistributing to a first best optimum by a self selection constraint the second best is shown to be time inconsistent in the time consistent optimum households underinvest in education an argument can be made for public intervention in the provision of education

the politics of intergenerational redistribution this paper studies the political economic equilibrium of a two period model with overlapping generations in each period the policy is chosen under majority rule by the generations currently alive the paper identifies a politically viable set of values for public debt any amount of debt within this set is fully repaid in equilibrium even without commitments by issuing debt within this set the first generation redistributes revenue in its favor and away from the second generation the paper characterizes the determinants of the equilibrium intergenerational redistribution and identifies a difference between debt and social security as instruments of redistribution

technological change in large u s commercial banks this article examines technological change its relationship to firm size and its impact on the efficient scale of output and product mix for large u s commercial banks the results suggest that technological change lowered real costs by about one percent per year increased the cost minimizing scale of outputs and affected product mix the authors do not find support for the galbraith schumpeter hypothesis this suggests that the largest banks cannot use innovation alone to outpace smaller banks the major implications are that public policies allowing freer banking combinations do not necessarily run counter to the public interest copyright 1991 by university of chicago press

taxation and the tiebout model the differential effects of head taxes taxes on land rents and property taxes on the theory of state and local public finance is the seminal paper by charles tiebout 1956 tiebout constructed a multijurisdictional model in which independent local governments offer a wide variety of expenditure and tax policies and perfectly mobile consumers reveal their preferences for local public goods through their choice of residential community he argued that under such circumstances local public service provision would be efficient the tiebout model has formed the basis of a vast number of subsequent articles in the state and local public finance literature and has also been very influential in urban and regional economics the efficiency properties of various tiebout type models of local public good provision have been examined and the role of politics in these models has been debated at length in this literature of more direct relevance to this paper however is the fact that although tiebout had little to say directly about taxation simply assuming the existence of head taxes subsequent analyses have used adaptations of this model to examine the effects of local head taxes land taxes and property taxes it is the literature on the efficiency and distributional effects of alternative local taxes that is the subject of this survey 1

government size productivity and economic growth the post war experience a substantial portion of the slowdown in productivity and economic growth in the seventies and eighties cannot be ascribed to traditional factors we have found one potential additional source the dramatic growth in the scale of government employing a theoretical model of output growth we derive an equation which controls for cyclical influences and which permits distinguishing the effects of government growth on the economic base from the effects on the economic growth rate we find that increases in the scale of government lead to statistically significant reductions in both the economic base and the economic growth rate in addition we find that most of this government induced retardation of economic activity arises from reductions in productivity rather that reductions in the employment of factors

the influence of political distortions on economic performance alberto alesina is the nathaniel ropes professor of political economy and chairman of the department of economics at harvard university in this interview he discusses with brian snowdon his views on several important contemporary issues including politics and the business cycle budget deficits currency unions the european union the size of nations economic growth inequality democracy foreign aid ethnic fractionalisation and the welfare state in the us and europe

from the static to the dynamic some problems in the theory of taxation abstract this paper considers problems and issues that arise when we attempt to extend the static theory of taxation and production planning to a dynamic context and to combine that theory with theories of growth the reasons dynamic theory is less developed include problems with the analytical tractability of even those dynamic models which attempt to retain the basic structure of the static model furthermore difficult and interesting issues arise in a dynamic context which are either not present or are much less severe in the static theory special attention is paid to these new issues and the difficulties they pose

optimal fiscal and monetary policy in an economy without capital abstract this paper is concerned with the structure and time consistency of optimal fiscal and monetary policy in an economy without capital in a dynamic context optimal taxation means distributing tax distortions over time in a welfare maximizing way for a barter economy our main finding is that with debt commitments of sufficiently rich maturity structure an optimal policy if one exists is time consistent in a monetary economy the idea of optimal taxation must be broadened to include an inflation tax and we find that time consistency does not carry over an optimal inflation tax requires commitment by rules in a sense that has no counterpart in the dynamic theory of ordinary excise taxes the reason time consistency fails in a monetary economy is that nominal assets should from a welfare maximizing point of view always be taxed away via an immediate inflation in a kind of capital levy this emerges as a new possibility when money is introduced into an economy without capital

central bank reputation and the monetization of deficits the 1981 italian monetary reform in 1981 the bank of italy was freed from the obligation to purchase the unsold public debt at the treasury auctions since then the bank of italy has reduced debt monetization the paper seeks to explain this policy shift by analyzing a game between the monetary and fiscal authorities the fiscal authority is imperfectly informed about the central bank preferences an equilibrium exists in which the central bank does not monetize so as to establish a reputation of being independent monetization raises fiscal deficits and may raise public debt relative to a non accommodative policy

the luenberger indicator and productivity growth a note on the european savings banks sector we employ the luenberger productivity indicator to estimate productivity growth and its decomposition into technical change and efficiency change components for savings banks sectors in 10 eu countries between 1996 and 2003 the luenberger indicator requires less restrictive assumptions than standard nonparametric productivity indexes and it allows the assumption of profit maximization to be made for sample firms we estimate average productivity growth in the savings banks sector to be 2 78 per annum and driven almost entirely by technical change whilst the general results confirm earlier findings this study is one of the earliest to identify cross border differences in productivity growth in the savings banks sector

incumbent performance and electoral control in the pure theory of electoral competition citizens compare the platforms of the candidates and vote for the one whose platform is preferred candidate strategies are identified with promises about future performance in office models of this sort have been developed in both static mckelvey 1975 and dynamic kramer 1977 i settings and all appear to have the property that if the set of alternatives is large enough in some sense equilibrium platforms rarely exist but these models have another feature that is quite as disturbing as their instability in the static setting discussed by mckelvey little attention is paid to the possibility that once in office the politician s preferences may diverge from those of his constituents and that he may therefore choose policies at variance from his platform instead it is simply assumed that promises will be kept whether or not such behavior is congruent with the interest of the officeholder it is sometimes argued that an enforcement mechanism may exist to discipline politicians for failing to keep promises but without a specification of the mechanism it is not obvious that it would be in the interests of the

productivity in the united states and its relationship to government activity an analysis of 57 years 1929 1986 under the classical supply side paradigm of productivity grouth raising government economic above rudimentary levels integrates markets and provides useful public goods which enhance growth beyond some point however increasing government activity discourages growth through tax disincentives and by rewarding dependence on government expenditures defining government economic activity to be government expenditures as a percentage of gnp this study looks first at data for the period 1889 1986 and shows that the u s economy has experienced what is predicted by the supply side paradigm in addition the study presents an econometric analysis of government s effects on productivity for the period 1929 1986 using a standard neoclassical growth model this analysis validates the classical supply side paradigm and shows that maximum productivity growth occurs when government expenditures represent about 20 of gnp far less than the 35 which existed in 1986

does bank efficiency matter market value relevance of bank efficiency in australia the stochastic frontier analysis is employed to investigate efficiency of publicly listed australian banks over the period 1985 to 2008 the results suggest that technical cost and profit efficiency of australian banks have improved over time large banks have attained a higher level of cost efficiency but a lower level of technical efficiency compared to small banks no substantial difference between the two groups is found in terms of profit efficiency a panel regression of bank stock return on bank efficiency suggests that an improvement in technical cost or profit efficiency contributes to the market value of a bank thus the shareholder wealth maximization goal is aligned with the goal of maximizing bank efficiency in the australian context

productivity technical and efficiency change in singapore s services sector 2005 to 2008 the current study was motivated by statements made by the economic strategies committee that singapore s recent productivity levels in services were well below countries such as the us japan and hong kong massive employment of foreign workers was cited as the reason for poor productivity levels to shed more light on singapore s falling productivity a nonparametric malmquist productivity index was employed which provides measures of productivity change technical change and efficiency change the findings reveal that growth in total factor productivity tfp was attributed to technical change with no improvement in efficiency change such results suggest that gains from tfp were input driven rather than from a best practice approach such as improvements in operations or better resource allocation

dual exchange rates capital controls and sticky prices abstract it is often argued that capital controls are an appropriate policy response to the exchange rate overshooting which occurs when asset markets adjust more rapidly than goods markets in this paper an intertemporal disequilibrium model of an open economy is developed in which the effect of capital controls is examined the results are contrasted with recent studies by adams and greenwood 1985 and obstfeld 1986 in which capital controls are evaluated within a purely equilibrium framework and thus inevitably take the form of a welfare reducing distortion

how large are the welfare costs of tax competition abstract competition among regional governments may lead to suboptimal levels of capital taxation as governments ignore the external benefits of capital flight to other regions however there have been few attempts to quantify the magnitude of the resulting efficiency losses this paper presents extensive calculations of the efficiency costs over a wide range of parameter scenarios and assumptions about government behavior using various generalizations of wildasin journal of urban economics 25 1989 193 213 the efficiency costs tend to be fairly moderate under most though not all scenarios and particularly when allowance is made for the possibility of leviathan and non competitive government behavior

the evaluation of risky projects by voters abstract the results of a public project can change the attitudes of voters towards subsequent public projects the dynamic inconsistency problems which arise can make voters oppose risky projects favor projects expected to benefit a minority and favor income redistribution

on debt neutrality in life cycle models abstract a parallelism is established between pure life cycle models and those in which altruism is one sided in the discussion of the public debt neutrality it is argued that when indiduals behave as pure life cyclers the coercive transfers necessary to offset the effects of the debt have the same nature and take place under the same conditions as the voluntary intrafamily bequests and gifts which constitute the usual basis for the ricardian equivalence theorem

the effect of distributive goals on the time inconsistency of optimal taxes abstract in the context of a two period n consumer model of optimal wage and interest taxation this paper asks whether the government s distributive goals can inhibit its incentives to renege on its announced policies inconsistent interest tax increases may be moderated by distributed goals if they create an unacceptable utility distribution in the economy this result is developed for a general case its implications for welfare and savings are illustrated with numerical examples

exchange rate management and macroeconomic policy a national perspective this paper reviews the literature on alternative exchange rate arrangements for a small economy it discusses exchange rate management for short run stabilization purposes and the choice of exchange rate regimes to foster policy discipline recent research has emphasized that the appropriate degree of exchange rate flexibility depends on the nature of disturbances exchange rate movements provide information about shocks and can serve as a basis for intervention rules empirically operational guidelines have not yet been provided floating rates are said to be desirable because they allow policy makers greater autonomy recent research has questioned the implicit assumption that autonomy is always useful rules that prevent discretionary policy may be preferable what role if any the exchange rate should play in such rules has not yet been resolved

is inflation in developing countries driven by low productivity or monetary growth abstract this paper investigates whether inflation in developing countries is driven by retrogression in productivity or by monetary expansion our empirical methodology relies on growth accounting non parametric and generalized method of moment techniques results indicate that inflation is primarily driven by monetary growth

political influence and the dynamic consistency of policy garfinkel department of economics university of fornia 3151 social science plaza irvine ca 92697 lee artment of economics university of california 3151 soscience plaza irvine ca 92697 and international monfund 700 19th street nw washington dc 20431 we k without implicating avinash dixit amihai glazer chel grossman luisa lambertini stergios skaperdas an ymous referee and seminar participants at the university alifornia los angeles california state universityerton and the 1998 winter meetings of the econometociety for helpful comments on previous drafts of this r which had been circulated under the title political ipline and the dynamic consistency of policy the s expressed in this paper are those of the authors and ld not be attributed to the international monetary fund see torsten persson and guido tabellini 1990 for a ul survey of this literature

a nonparametric approach for assessing productivity dynamics of large u s banks the 1980s marked an era of substantial change for the us commercial banking industry an issue of considerable interest to banking analysts and economists alike is whether the intensified competitive pressure generated by deregulation and notable financial innovations enhanced productivity to investigate the response to these changes the non parametric malmquist index is used to evaluate productivity dynamics a statistically significant productivity surge found between 1983 and 1984 is followed by productivity regress the next period post 1985 sustained productivity progress is observed for the remainder of the decade productivity movements are primarily attributable to technological changes rather than scale changes or convergence to the production frontier

taxation and savings a neoclassical perspective this paper discusses recent neoclassical analyses of taxation and savings contrary to the popular view that fiscal policy has highly ambiguous impacts on savings neoclassical models admit a host of policies with clear and potentially quite powerful affects on the accumulation of wealth the paper considers four fundamental types of fiscal policies and compares their quantitative affect on savings the essential elements of these policies involve inter and intragenerational redistribution marginal and intra marginal taxation and the level of government consumption conventional accounting measures of taxes spending and deficits provide at best little guide to changes in underlying fiscal instruments and at worst precisely opposite indicators of the direction of such changes indeed the continued use of and concern with conventional fiscal measures is symptomatic of wide spread fiscal illusion these points are developed within the context of certainty models the paper also considers the role of fiscal policy in both mitigating and exacerbating economic risks facing the private sector since precaution is a major motivation for saving governments can greatly influence wealth accumulation either by using fiscal policy to pool private risks or by making fiscal policy itself highly uncertain this abstract was borrowed from another version of this item

generational accounting a new approach for understanding the effects of fiscal policy on saving working pa er 9107 generational accounting a new approach for understanding the effects of fiscal policy on saving by alan j auerbach jagadeesh gokhale and laurence j kotlikoff alan j auerbach is a professor of economics at the university of pennsylvania and an associate of the national bureau of economic research jagadeesh gokhale is an economist at the federal reserve bank of cleveland and laurence j kotlikoff is a professor of economics at boston university and an asso ciate of the national bureau of economic research working papers of the federal reserve bank of cleveland are preliminary materials circu lated to stimulate discussion and critical comment the views stated herein are those of the authors and not necessarily those of the federal reserve bank of cleveland or of the board of governors of the federal reserve sys tem may 1991

productivity growth technical progress and efficiency change in industrialized countries this paper analyzes productivity growth in 17 oecd countries over the period 1979 1988 a nonparametric programming method activity analysis is used to compute malmquist productivity indexes these are decomposed into two component measures namely technical change and efficiency change we find that u s productivity growth is slightly higher than average all of which is due to technical change japan s productivity growth is the highest in the sample with almost half due to efficiency change jel c43 d24 in this paper we apply recently developed

why are latin america s savings rates so low an international comparative analysis abstract this paper presents a theoretical and empirical assessment of the determinants of savings rates with special emphasis on latin american savings rates the study is based on international comparisons using data from 36 countries for 1970 1992 a distinction is made between private and public savings the later are endogenously determined by economic and political variables per capita income growth is the most important determinant of private and public savings public savings are lower in countries with higher political instability public savings crowd out private savings but less than proportionately low latin american savings are due to the magnitudes of their determinants rather than structural differences

optimum electoral areas should europe adopt a single election day abstract the paper lies at the intersection between the literature on macroeconomics and politics and the literature on coordination it uses models of political business cycles in an open economy setting to investigate the costs and benefits of forming electoral areas i e regions where countries share the same electoral calendar both opportunistic and partisan models are considered the main finding of the paper is that the desirability of an electoral area between two countries is enhanced when the spillovers between these countries are large and positive and when they face symmetric shocks or are of comparable size

on the sources of heterogeneity in banking efficiency literature one learns two main lessons from studying the great quantity of banking efficiency literature these lessons regard the heterogeneity in results and the absence of a comprehensive review aimed at understanding the reasons for this variability surprisingly although this issue is well known it has not been systematically analyzed before in order to fill this gap we perform a meta regression analysis mra by examining 1 661 efficiency scores retrieved from 120 papers published over the period 2000 2014 the meta regression is estimated by using the random effects multilevel model reml because it controls for within study and between study heterogeneity the analysis yields four main results firstly parametric methods yield lower levels of banking efficiency than nonparametric studies this holds true even after controlling for the approach used in selecting the inputs and outputs of the frontier secondly we show that banking efficiency is highest when using the value added approach followed by estimates from studies based on the intermediation method whereas those based on the hybrid approach are the lowest thirdly efficiency scores also depend on the quality of studies and on the number of observations and variables used in the primary papers as far as the effects of sample size dimension and quality of papers are concerned there are significant differences in sign and magnitude between parametric and nonparametric studies finally cost efficiency is found to be higher than profit and production efficiency interestingly mra results are robust to the potential outliers in efficiency and sample size distributions