multinational supermarket chains in developing countries does local agriculture benefit there is no consensus in the empirical literature on how entry of multinational supermarket chains affects farmers in developing countries econometric analyses struggle with causality issues and are unclear about the channel of effects we quantify the dynamic effects of supermarket expansion on agriculture within a structural framework that clarifies the adjustment mechanisms involved the model specification allows for endogenous interaction between agricultural productivity and supermarkets choice of suppliers based on numerical simulations two results emerge first we offer a possible interpretation of the conflicting evidence in the empirical literature whether farmers benefit from supermarkets or get stuck in a low productivity trap depends on the extent of local constraints related to production capacity and market access second supply chain development initiated by supermarkets can help farmers escape the low productivity trap while supermarkets face a short run cost to supplier upgrading they gradually gain from more productive local suppliers

agricultural price instability a survey of competing explanations and remedies there are two explanations for agricultural price dynamics one follows cobweb logic and models fluctuations driven by expectation errors but emphasises that these expectations create complex dynamics and possibly chaos the other stems from the rational expectations tradition of dynamics driven by real shocks the empirical evidence tends to support the latter but is not conclusive the rational expectations model generates an optimal dynamic path from which no improvement can be expected from public intervention however if we take account of all the potential market failures in agricultural markets and especially in developing countries this conclusion might require some qualifications although an appropriate policy design for stability has still to be achieved this paper surveys the positive and normative literature on agricultural prices highlighting empirical evidence and identifying remaining unresolved issues

lobbying by capital and labor over trade and labor market policies abstract this paper uses the common agency approach to analyze the joint determination of product and labor market distortions in a small open economy capital owners and union members lobby the government on both tariffs and minimum wages while other factors of production are not organized the paper shows that product and labor market distortions always move in the same direction and that their level is not modified by social pacts between capital and labor it also shows that labor market distortions are second best hence conditionality by foreign organizations should target distortions in product markets but not in labor markets

dynamic perspectives on agricultural policy issues among the innovators fred waugh was one of the most prolific he made pioneering contributions in linear programming statistics and econometrics demand analysis the welfare effects of price risk and the analysis and explanation of commodity cycles as a research leader mentor and teacher at the usda he left his mark on the work of later generations of researchers i find myself no exception as will become clear from what i have to say in this paper even though i never met him in person my work has been influenced by what he wrote and by what his students wrote and taught among the many topics that interested waugh were the dynamics of free market behavior and the implications for policy formation in this paper i consider models of markets in which the dynamics run in two directions forward from current conditions to expectations of future prices and back from price expectations to current decisions both types of linkages can be crucial in competitive models of agricultural production in which land has a prominent role as the quintessential fixed asset a central challenge of market analysis from waugh s time till now has been to infer from market observations whether markets are behav

distortionary taxes and the provision of public goods economists have long been concerned with finding an efficient level of public expenditure the classic statement of the problem was given by paul samuelson 1954 an optimal level of expenditure is where the sum of the marginal rates of substitution between the public good and a reference good equals the marginal rate of transformation between the public good and the reference good mrs mrt however samuelson s formula assumes that all of the revenue needed to finance public goods can be raised with lump sum taxes since this is not generally possible the formula must be modified to account for the distortionary effects of the tax system an appropriate modification is to multiply the cost side of the equation by a term that is commonly called the marginal cost of public funds mcf in the case of samuelson s formula where government is entirely financed with lump sum taxes the mcf would be exactly 1 0 in the traditional view of economists distortionary taxes cause the mcf to be greater than one thus raising the cost of providing public goods in this paper we discuss some cases where the mcf may be less than one we will illustrate this possibility using numerical examples for labor taxes

saving puzzles and saving policies in the united states in the past two decades the widely reported personal saving rate in the united states has dropped from double digits to below zero first we attempt to account for the decline in the national income and product accounts nipa saving rate the macroeconomic literature suggests that 40 50 per cent of the drop since 1988 can be attributed to households spending stock market capital gains another 30 per cent is accounting transfers from personal saving into government and corporate saving because of the way pensions and capital gains taxes are treated in the nipa second while nipa saving measures are well suited to measuring the supply of new funds for investment and capital accumulation it is not clear that they should be the target of government saving policies finally we emphasize that the nipa saving rate is not useful in judging whether households are preparing for retirement or other contingencies many households have accumulated significant wealth primarily through retirement saving vehicles and capital gains even as the saving rate slid there remains a segment of the population who save little and whose behaviour appears untouched either by the stock market boom or the slide in personal saving we explore reasons and policy options for their puzzling low saving rate copyright 2001 oxford university press

taxation and housing old questions new answers this paper sketches how the tax reforms of the 1980s affected the incentives and distortions associated with tax policy toward housing markets there are three principal conclusions 1 reductions in marginal tax rates particularly for high income households reduced the tax induced distortion in the user cost of owner occupied housing this lowered the deadweight losses associated with the favorable tax treatment of homeownership 2 the increase in the standard deduction in the tax reform act of 1986 tra86 removed several million middle income homeowners who previously itemized from the ranks of itemizers for these households tra86 raised the marginal cost of owner occupied housing these changes also exacerbated the regressive nature of the mortgage interest subsidy in 1988 more than half of the tax losses associated with mortgage interest deductions accrued to the 8 of taxpayers with the highest economic incomes 3 tra86 reduced incentives for rental housing investment contributing to the decline in new multifamily housing starts from 500 000 per year in 1985 to less than 150 000 in 1991 in the long run these policies will lead to higher rents this abstract was borrowed from another version of this item

deregulation shock in product market and unemployment in a dynamic general equilibrium model with endogenous markups and labor market frictions we investigate the effects of increased product market competition unlike most macroeconomic models of search we endogenize the labor supply along the extensive margin we find numerically that a model with endogenous labor force participation decision produces a decline in the unemployment rate which is almost three times larger than that in a model with fixed labor force for a calibration capturing alternatively the european and the us labor markets a deregulation episode which lowers the markup by 3 percentage points results in a fall in the unemployment rate by 0 17 and 0 05 percentage point respectively while the labor share is almost unaffected in the long run the sensitivity analysis reveals that product market deregulation is more effective in countries where product and labor market regulations are high unemployment benefits are small and labor force is more responsive

fiscal consequences of structural reform under constrained monetary policy abstract structural reforms in particular reductions in mark ups in product and labour markets can entail short run output costs unless offset by a demand expansion when monetary policy is constrained and cannot carry out this short run expansion there is a potential role for fiscal policy although this idea has received a lot of attention in the policy debate there has been little formal study of the fiscal consequences of reforms under constrained monetary policy this paper uses a model to quantify the short run fiscal costs and long run fiscal benefits of reforms in order to see to what extent the latter justify the former the fiscal costs and benefits of reforms are both generally found to be small although larger reforms entail larger rises in deficit to gdp in the short run results suggest that reforms in labour markets have little effect on public finances in the long run but their short run costs can be ameliorated if combined with product market reforms

safe and satisfied external effects of homeownership in rotterdam the article analyses the impact of homeownership on neighbourhood safety and neighbourhood satisfaction using a unique panel dataset for the city of rotterdam the results show that there are significant but economically small effects of homeownership on safety and satisfaction moreover the relation between ownership and satisfaction is significantly moderated by neighbourhood safety the paper examines whether the marginal impact of increases in homeownership on external effects diminish once ownership levels are higher according to the data this seems to be the case the results are robust to alternative specifications the findings provide insights for the evaluation of housing market policies that subsidise or stimulate homeownership

endogenous markups and the effects of income taxation theory and evidence from oecd countries abstract existing studies on the effects of fiscal policy under imperfect competition typically treat each firm s price cost markup as fixed this paper examines the implications of endogenising the markup in a simple model of income taxation under monopolistic competition it is demonstrated that an increase in income tax reduces the number of firms lessens competition among surviving firms and raises the optimal markups in the new steady state through this channel the effects of income taxation on the key macroeconomic variables as well as on consumer welfare are unambiguously enlarged the simple model prediction is largely supported by cross section regressions with data from oecd countries

welfare analysis of tax reforms using household data abstract this paper discusses a methodology for calculating the distribution of gains and losses from a policy change using data for a large sample of households estimates are based on the equivalent income function which is money metric utility defined over observable variables this enables calculations to be standardised and a computer program to compute the statistics presented in the paper is available for a general demand system equivalent income is related to measures of deadweight loss and standard errors are computed for each of the welfare measures an application to u k data for 5 895 households is given which simulates a reform that involves eliminating housing subsidies

the welfare effects of the introduction of storage this paper examines the welfare effects of introducing storage into a market with stochastic supply in which all agents are competitive profit maximizers with rational expectations these welfare effects are the net result of the initial increase in demand for stock building and the partial and asymmetric reduction in the dispersion of consumption brought about by storage the distributional impacts depend crucially on the information available to producers before storage is introduced the elasticity of supply the specification of the consumption demand curve and the cost of storage

fiscal incidence in an overlapping generations model with a fixed asset abstract we analyze a model of overlapping generations with a fixed factor land malleable capital and labor we consider the dynamic effects of various fiscal policies including taxes on rent wages and creation of public debt on capital accumulation land prices and intergenerational welfare minimal assumptions uniqueness and stability imply that a land tax may initially raise land values but the upper bound is less than one half of the tax revenues assuming homothetic utility the ratio between the long run capital responses to a land tax and to a lump sum transfer of equivalent revenue from the young to the old depends solely on the share of labor

the cyclical behavior of the price cost markup countercyclical markups constitute the key transmission mechanism for monetary and other demand shocks in new keynesian models this paper tests the foundation of those models by studying the cyclical properties of the markup of price over marginal cost the first part of the paper studies markups in the aggregate economy and the manufacturing sector we use bils s 1987 insights for converting average cost to marginal cost but do so with richer data we find that all measures of markups are either procyclical or acyclical moreover we show that monetary shocks lead markups to fall with output the second part of the paper merges input output information on shipments to the government with detailed industry data to study the effect of demand changes on industry level markups industry level markups are found to be acyclical in response to demand changes

tax subsidies to owner occupied housing an asset market approach inflation reduces the effective cost of homeownership and raises the tax subsidy to owner occupation this paper presents an asset market model of the housing market and estimates how changes in the expected inflation rate affect the real price of houses and the equilibrium size of the housing capital stock simulation results suggest that the accelerating inflation of the 1970s which substantially reduced homeowners user costs could have accounted for as much as a 30 percent increase in real house prices persistent high inflation rates could lead ultimately to a sizable increase in the stock of owner occupied housing

the determination of spot and futures prices with storable commodities this paper analyzes the effects of futures trading in a market for a storable commodity in which producers and speculators are assumed to be risk averse and specifications of the aggregate supply and inventory demand functions are derived from explicit optimization a critical aspect is how the parameters of these functions change with the introduction of the future market as it is through these induced parameter changes that the futures market exerts its influence on the spot price the effects of the futures market on both the long run average spot price and its variance are analyzed while we are unable to draw any definitive conclusions on this issue we find that in all cases considered the futures market stabilizes the spot price as well as lowering its long run mean for many years now the question of the effects of futures trading on the stability of spot prices has been extensively debated this topic has been discussed at various levels for example farmers and agricultural interest groups have claimed that futures trading destabilizes spot prices thereby imposing welfare losses on the economy in the united states congress has decided that futures trading can cause price destabilization and has subjected futures trading to the regulation of the commodity futures trading commission at a more analytical level economists have been investigating the issue both empirically and more recently theoretically as well

the effects of commodity price stabilization programs in this paper the authors analyze the effects of commodity programs in which the government attempts to support and stabilize price through open market purchases and sales specifically they as sess the effects of such programs on the u s soybean market using a rational expectations model that allows for private storage expected price responsive production and arbitrary support and release price s a salient feature of the model is that private storage and product ion behavior adjusts to changes in government policy stochastic simu lations of the market model demonstrate that price stabilization prog rams can reduce long run market price and destabilize producer revenu e copyright 1988 by american economic association

low income homeownership american dream or delusion summary this paper is a critical analysis of recent us policy to promote low income homeownership it examines the ideology and assumptions buttressing this policy evidence on the effects of low income homeownership and the viability of homeownership as a strategy for low income families evidence suggests that the prospect for sustained growth in low income homeownership may be limited research does not provide uniform support for it as a tool for asset accumulation neighbourhood economic development or other social and political goals alleged effects of homeownership may be artefacts of self selection and the conflation of homeownership with unobserved characteristics coincident with buying homes what homeownership does and why are not well understood because of difficulties disentangling what homeownership means the elevation of low income homeownership to its current status has deflected political attention away from alternative policies for affordable housing

the role of product market regulations in the process of structural change abstract the sectoral allocation of labor differs considerably across developed economies even in the presence of similar patterns of structural change a general equilibrium model that captures the stylized facts of structural change is presented in this framework economy wide product market regulations hinder the development of dynamic sectors such as service industries this is consistent with the negative cross country relationship between product market regulations and the service employment share discussed in the paper additionally the model suggests that higher service prices and rents in regulated economies reduce labor supply providing a rationale for the negative association between product market regulations and the employment rate previously found in the literature

the dynamics of race income and homeownership abstract this paper treats household decisions regarding homeownership as a dynamic process rather than a static phenomenon the analysis employs a duration model of the sequential housing choices made by families to examine the adjustment of their housing tenure over time this model of housing choice is estimated for the nine year period 1984 to 1992 utilizing the panel study of income dynamics psid particularly for lower income and minority families the analysis finds that these households achieve homeownership more slowly they are less likely to maintain this status and they are less able to move up to better units over time

the incidence of market stabilising price support schemes the introduction of a stabilization scheme can raise or lower the wealth of initial owners of land and commodity stocks substantially even if the are risk neutral the incidence consists of the capitaliz ed value of the revenue changes along the path to the new stochastic steady state by ignoring the dynamic path traditional comparative statics understates the benefits to initial asset holders because of differences in dynamic paths destruction of the commodity can have a lower marginal deadweight loss than a public bu ffer stock and deficiency payments can be especially attractive when the variability is exogenous to the domestic market copyright 1988 by royal economic society

can imperfect competition explain the difference between primal and dual productivity measures estimates for u s manufacturing it is well known that under the assumptions of constant returns to scale perfect competition and the absence of factor hoarding primal and dual productivity measures should be highly correlated the apparent lack of correlation is usually attributed to fixed factors of production in this paper i propose an alternative explanation by relaxing the assumption of perfect competition by controlling for the presence of a markup component i demonstrate that both productivity measures are in fact highly correlated for u s manufacturing the analysis also provides an alternative method of estimating a markup of prices over marginal cost that avoids certain difficulties inherent in some existing methods of estimation

the indexation of interest depreciation and capital gains and tax reform in the united states abstract the treasury s 1984 tax plan suggests features of a comprehensive income tax including the indexation of interest depreciation and capital gains the 1985 president s proposal retains some of these indexing provisions but the tax reform act of 1986 does not this paper looks at the incentives under these tax regimes to make marginal investments in the corporate sector noncorporate sector and owner occupied housing it finds that inflation in the old system caused effective tax rates to rise for some assets and fall for others under the treasury or president s proposals the interference of inflation is virtually eliminated also the effects of inflation are substantially reduced by the 1986 act because mismeasured depreciation and interest deductions are taken at much lower rates

the second theorem of the second best abstract this paper interprets many results from the literature on incentive compatibility and cost benefit analysis as illustrations of a second theorem of the second best the theorem states that if there exists any restriction on transactions required for first best efficiency then there is no presumption that a social welfare maximum entails equal marginal social utilities of income across individuals one reason is that incentive constraints shift with redistributions of wealth so that redistributions have an instrumental role in relaxing constraints that make the economy second best two examples relate such wealth effects to countervailing incentives and hostage taking

housing taxation and capital accumulation this paper studies the impact of the preferential tax treatment of housing capital in a dynamic general equilibrium life cycle economy populated by heterogeneous individuals the model includes the main housing tax provisions currently in place in the u s and a minimum downpayment requirement upon purchasing non divisible houses the tax code makes the return on housing capital larger than that on business capital which distorts the lifetime profile and composition of individuals savings the wedge between the two rates of return emanates from the failure to tax imputed rents and is amplified by the presence of mortgage interest deductibility simulations show that individuals at all income levels would rather live in a world where imputed rents are taxed or one where mortgage interest payments are not deductible furthermore distributional effects are much smaller than conventionally believed

does entry regulation hinder job creation evidence from the french retail industry are product market and entry regulation key sources of low employment growth in many european countries we investigate this question in the context of the french retail trade industry since 1974 approval by regional zoning boards has been required for the creation or extension of any large retain store in france we exploit a unique database that provides time and region specific variation in boards approval decisions we show that stronger deterrence of entry by the boards increased retailer concentration and slowed down employment growth in france

taxing residential housing capital this paper discusses the main aspects of the taxation of housing drawing on general principles of optimal taxation it focuses on the role of the property tax in achieving neutrality between rental and owner occupied housing assuming that landlords are taxed according to a neutral profits tax it follows that the property tax should be based on the rate of interest the paper discusses how the tax rate could be adjusted to account for the lack of effective taxation of capital gains the double taxation of dividends and the differences in the cost of labour between rental and owner occupied housing in most oecd countries the combined effect of the different housing taxes amounts to a tax subsidy to owner occupied housing it is demonstrated how this subsidy has been reduced in sweden as in many other countries in the past decade as a result of tax reforms and a lower rate of inflation the subsidy has effects on consumption patterns saving capital accumulation the distribution of welfare across gener

macroeconomic effects of regulation and deregulation in goods and labor markets product and labor market deregulation reduce and redistribute rents leading economic players to adjust to this new distribution it typically comes with distribution and dynamic effects to study these effects we build a macroeconomic model on two central assumptions monopolistic competition in the goods market which determines the size of rents and bargaining in the labor market which determines the distribution of rents product market regulation determines entry costs and the degree of competition labor market regulation determines the bargaining power of workers we show the effects of deregulation we then use our results to discuss the political economy of deregulation and recent macroeconomic evolutions in europe

patterns of work across the oecd market work per person of working age differs widely across the oecd countries and there have been some significant changes in the last forty years how to explain this pattern taxes are part of the story but much remains to be explained if we include all the elements of the social security systems like early retirement benefits sickness and disability benefits and unemployment benefits then we can capture some aspects of the overall pattern but still a lot remains unexplained the story favoured by alesina et al cepr dp 5140 2005 is that the nexus of strong unions generous welfare and social democracy implies both high taxes and pressure in favour of work sharing in response to adverse shocks this story however falls foul of the simple fact that most scandinavian countries now do much more work than the french and germans despite having stronger unions more generous welfare higher taxes and more social democracy ultimately we are forced into the position that there is no simple story some of the broad patterns can be explained but there remain country specific factors which are hard to identify but lead to substantial differences from one country to another

the allocation of capital between residential and nonresidential uses taxes inflation and capital market constraints we have constructed a simple two sector model of the demand for housing and corporate capital economic growth and an increase in the inflation rate were then simulated with a number of model variants the model and simulation experiments illustrate both the tax bias in favor of housing and the manner in which the increase in inflation between 1965 and 1978 magnified it the existence of capital market constraints offsets the bias against corporate capital but it introduces a sharp inefficient reallocation of housing from less wealthy constrained households to wealthy households who do not have gains on mortgages and are not financially constrained

imputed rental income taxation and income distribution in finland in most western countries owner occupied housing is tax favoured compared with other investments and housing tenure modes this paper analyses the effects of imputed rental income and its tax treatment on income distribution in finland using household data from the 2004 wealth survey produced by statistics finland it is found that imputed rental income has a major effect on homeowners well being as it constitutes on average almost 10 per cent of homeowner households disposable income furthermore including imputed rental income in household disposable income decreased overall inequality measured by the gini index the tax subsidy resulting from non taxation of imputed rental income is skewed towards high income households however the effects of a new tax on imputed rental income on overall inequality would depend vitally on the way the increased government tax revenue is transferred back to the households

wages rents and the quality of life this study focuses on the role of wages and rents in allocating workers to locations with various quantities of amenities the theory demonstrates that if the amenity is also productive then the sign of the wage gradient is unclear while the rent gradient is positive the theory is extended to include the housing market and nontraded goods these extensions require little modification of the conclusion the empirical work on wages shows that the regional wage differences can be explained largely by these local attributes with the use of site price data implicit prices are estimated and quality of life rankings for the cities are computed

the false promise of homeownership homeowner societies in an era of declining access and rising inequality in the late 20th century homeownership became entrenched in a wider societal project that sought to transform the economy and increase social inclusion this project focused on mortgaged owner occ

vacancy posting job separation and unemployment fluctuations abstract what is the relative importance of hiring and separation in driving unemployment fluctuations this paper presents a framework to decompose the moments of unemployment and study the respective contributions of vacancy posting a measure of firms hiring efforts and separation separation accounts for about 40 of unemployment s variance compared to 60 for vacancy posting and contributes to about 60 of unemployment steepness asymmetry the fact that unemployment increases faster than it decreases further while vacancy posting is on average the most important contributor of unemployment fluctuations the opposite is true around business cycle turning points when separation is responsible for most of unemployment movements

competition and the capital labor conflict abstract this paper analyzes the distributional effects of changes in the intensity of product market competition the focus is on the interaction between imperfect competition in product markets and bargaining in the labor market the main result is that while a uniform intensification of product market competition increases employment it may cause real wages to fall in the short run as well as in the long run this is especially likely if labor market regulations are favorable to workers therefore product market and labor market regulations tend to reinforce each other politically and compensatory fiscal transfers may be needed in order to enact employment enhancing deregulation policies

homeownership in the 1980s and 1990s aggregate trends and racial gaps abstract housing policy under the clinton and bush administrations has sought to boost homeownership while also narrowing racial gaps in owner occupancy rates against that backdrop homeownership rose sharply in the 1990s but white minority gaps remain in excess of 25 percentage points we analyze these patterns using data from the 1983 to 2001 survey of consumer finances results indicate that household characteristics explain most of the increase in homeownership and roughly two thirds of the white minority homeownership gap credit barriers account for no more than 5 percentage points of the remaining gap this suggests that policy makers will need to look beyond innovations in mortgage finance if their goal is to further expand homeownership

regulation and investment use newly assembled data on regulation in several sectors of many oecd countries to provide evidence that regulatory reform of product markets is associated with an increase in investment a component of reform that plays a very important role is entry liberalization but privatization also has a substantial effect on investment sensitivity analysis suggests that our results are robust jel e22 l5

a dynamic general equilibrium model of industrialization when manufactures are unnecessary abstract a dynamic general equilibrium model of industrialization is presented that conforms with some of the stylized facts regarding the development process without appeal to non convexities rather we explicitly distinguish between sectoral outputs on the basis of necessity primary sector outputs are essential for survival whereas manufactures are not the model supports both the push and pull hypotheses of the origins of industrialization exact numerical analyses of transition paths for both of these industrialization scenarios are presented

on the organization of rural markets and the process of economic development the authors consider how the organization of rural markets will affect capital accumul ation and long run aggregate income in the development process they show that in a simple dual economy overlapping generations model c apital accumulation and aggregate income will be lowest when both fac tor markets in the agricultural sector are fully competitive both ca pital and aggregate income will be higher when land is not traded but the labor market is competitive and highest in the absence of compe titive markets in both factors in the agricultural sector when incom e distribution favors rural workers over landlords copyright 1988 by american economic association

who actually decides parental influence on the housing tenure choice of their children we focus on the role of within family socialisation and the relationship between socialisation and resource transfers in the intergenerational transmission of housing preferences the formation of

real estate assets and consumer spending in an interesting contribution to this journal elliott 1980 shows that consumer spending is better explained if permanent income is estimated from explicit measures of wealth the wealth approach rather than current and past incomes the income approach in the income approach permanent income yp is computed as a distributed lag mechanism in the wealth approach this procedure is followed for labor income but permanent nonhuman income is specified as a constant multiple 72 of actual nonhuman wealth at the beginning of a period ant the distinction between income and wealth approaches is intuitively appealing and has been tried before elliott s equation 12 is the same as equation 5 in bhatia 1972 except that elliott uses actual wealth instead of bhatia s expected wealth the novelty in elliott s specification lies in considering different components of wealth which is also appealing because measures of wealth ranging from real money balances to broad aggregates of human and nonhuman wealth have been used in the literature elliott s most striking result that real assets mainly real estate and durable goods have no significant effect on consumer spending however is disturbing because real estate is a major household asset in fact the largest one in many years according to frb balance sheets 1983 and accrued gains on real estate have often been larger than gains on corporate equities during the last decade or two also there is some recent empirical evidence that gains on real assets significantly reduce personal saving peek 1983 the main purpose of this note is to reexamine and rehabilitate the role of real assets one can question elliott s specification which does not adequately allow for expected gains or his use of undistributed corporate profits as a contemporaneous proxy for all capital gains tenuous at best but the heart of the matter is the residential value series derived by elliott from perpetual inventory benchmarks pp 533 34 which being accumulations of construc

endogenous markups intensity of competition and persistence of business cycles in order to study the propagation mechanism of business cycles in particular to investigate how the intensity of competition affects market structure and output persistence over business cycles this paper presents a real business cycle model with imperfect competition and increasing returns to scale this analysis considers the markups of price over cost to be endogenous with endogenous markups two standard forms of oligopolistic competition bertrand and cournot are considered results show that 1 the propagation mechanism in the sense of output persistence is greater under cournot 2 the propagation mechanism is unequivocally greater with imperfect competition regardless of whether markups are endogenous or not and 3 under imperfect competition the propagation mechanism is greater with endogenous markups than with exogenous markups overall these results suggest that more intense competition produces lower persistence in output growth and thus a weaker propagation mechanism in a calibration exercise these differences were also found to be quantitatively important

taking apart the american dream the influence of income and family composition on residential evaluations americans overwhelming desires for single family homeownership have been so well documented that they have been termed the american dream government and financial incentives for homeownership are believed to allow the fulfillment of uniformly accepted housing norms which drive people to buy their own homes this research takes apart that american dream by examining the preferences of different income and family life cycle groups for housing and neighborhood characteristics associated with the housing bundle based on a sample of syracuse metropolitan respondents this research applies the factorial survey method to assess the variations in housing preferences by socio economic status and family composition findings show that all groups of respondents were indifferent to housings tenure all respondents desired single family housing but the intensity of these preferences for single family homes over other types of housing varied among subgroups strong desires were expressed not to live among blacks

judging agricultural policies a survey this survey provides a structured picture of 40 years of literature which uses welfare economic tools to judge agricultural policy challenges and developments of normative agricultural policy analysis are discussed in an easily accessible graphical framework it is shown how the literature has gone from examining a very small discrete set of simple policies to a much broader often continuous set of policies that combine policy instruments simultaneously the importance of the pareto criterion used to explore the limits of how government can affect welfare is revealed moreover given the importance of the objective of income redistribution in agricultural policy agricultural economists have often departed from the purely efficiency oriented tradition in economics it is shown that they have tried to incorporate equity considerations by either adding these criteria as constraints to the social welfare function or directly incorporating these criteria in the functional form of the social welfare function

a general equilibrium model of housing taxes and portfolio choice we describe a model in which rental and owner housing are risky assets tenure choice is endogenous and each household is constrained to consume the same amount of owner housing that it has in its investment portfolio at each iteration in the search for an equilibrium we determine the new taxable income for each of 3 578 households from the survey of consumer finances and we use statutory schedules to find the marginal rate and tax paid equilibrium net rates of return are major determinants of the amount of owner housing but a logit model indicates that demographic factors are the main determinants of ownership rates in our simulation taxes on owner housing would raise welfare not only by reallocating capital but also by the government s taking part of the risk from individual properties and diversifying it away measures to disallow property tax or mortgage interest deductions do not help share this risk simulations of the 1986 tax reform indicate a small shift from rental to owner housing and

sunk capital unions and the hold up problem theory and evidence from cross country sectoral data abstract in this paper we study the hold up problem by considering the effect of union bargaining power on the level of investment per worker across sectors characterised by different levels of sunk capital investment we develop a search and matching model with heterogeneous sectors and ex post collective wage bargaining and test the predictions of the model using a difference in difference approach on manufacturing sector data in a set of oecd countries during the period 1980 2000 we find that union power reduces investment per worker particularly in sunk capital intensive industries we refine our empirical analysis showing that the underlying hold up problem is exacerbated when strikes are not regulated after a collective contract is signed and there is no arbitration while the presence of social pacts may sustain cooperative equilibria that alleviate the hold up problem our results are robust to a series of controls and possible endogeneity of union power

introducing risky housing and endogenous tenure choice into a portfolio based general equilibrium model abstract portfolio based general equilibrium models are useful for analyzing the interaction between the structure of individual tax rates and the way particular assets are taxed for considering the role of differential tax rules and risk in determining household portfolio choices and for addressing distributional questions unfortunately current versions of these models give housing short shrift owner housing is assumed to be riskless rental housing is not a separately identifiable asset and tenure choice is of necessity exogenously determined this paper extends one of these models to incorporate a full housing subsector and uses the model to analyze the impact of the u s 1986 tax reform act

home ownership as a social norm and positional good subjective wellbeing evidence from panel data much attention has been devoted to examining the absolute benefits of home ownership e g security and autonomy this paper by contrast is concerned with conceptualising and testing the relative benefits of home ownership those benefits that depend on an individual s status in society home ownership has previously been analysed as a social norm implying that the relative benefits costs associated with being an owner renter are positively related to relevant others home ownership values the theoretical contribution of this paper is to additionally conceptualise home ownership as a positional good implying that the status of both home owners and renters is negatively related to relevant others home ownership consumption the empirical contribution of this paper is to quantitatively test for these relative benefits in terms of subjective wellbeing we run fixed effects regressions on three waves of the british household panel study we find that 1 a strengthening of relevant others home ownership values is associated with increases decreases in the subjective wellbeing of home owners renters and 2 an increase in relevant others home ownership consumption decreases the life satisfaction of owners but has no effect for renters overall our findings suggest that 1 the relative benefits of home ownership are both statistically significant and of a meaningful magnitude and 2 home ownership is likely to be both a social norm and a positional good without explicitly recognising these relative benefits policymakers risk overestimating the contribution of home ownership to societal wellbeing

regulation and productivity performance the paper reviews theory and evidence on the ways in which regulation affects productivity outcomes in a context of endogenous growth it is argued that traditional measures of compliance costs miss the potentially most important impacts of regulation on productivity which occur through changes in incentives to invest and to innovate recent attempts to measure cross country variations in the strength of product market and employment regulation are considered and some weaknesses are highlighted nevertheless consistent with endogenous growth models there appears to he quite strong evidence that regulations which inhibit entry into product markets have an adverse effect on tfp growth in oecd countries although there are some discrepancies in the evidence on most measures the uk appears lightly regulated relative to france and germany and this may have contributed to a reduction in the recent past in the uk s tfp gap

the socioeconomic impact of shared appreciation mortgages on borrowers empirical evidence from south australia shared appreciation mortgages sams realign traditional incentives in the lender borrower relationship by substituting future capital gains for interest income this makes them a potentially innovative solution to affordability and other homeownership crises taxation and regulatory barriers have impeded sam development limiting empirical studies of their impact on households this has not been the case in south australia where state government implementation of sams has made available a unique and detailed dataset of low income sam financed households examining this population it is found that sam borrowers benefit from increased budgetary expenditure on discretionary items following take up while simultaneously saving on some non discretionary items relative to a control sample furthermore sam homeownership also seems associated with increased borrower levels of neighbourhood satisfaction and community involvement overall these results indicate that sam financed homeownership leads to changes in borrower behaviour and deserves further consideration by the housing industry and research community

product market reforms labour market institutions and unemployment we analyze the impact of product market competition on unemployment and wages and how this depends on labour market institutions we use differential changes in regulations across oecd countries over the 1980s and 1990s to identify the effects of competition we find that increased product market competition reduces unemployment and that it does so more in countries with labour market institutions that increase worker bargaining power the theoretical intuition is that both firms with market power and unions with bargaining power are constrained in their behaviour by the elasticity of demand in the product market we also find that the effect of increased competition on real wages is beneficial to workers but less so when they have high bargaining power intuitively real wages increase through a drop in the general price level but workers with bargaining power lose out somewhat from a reduction in the rents that they had previously captured

the social and private micro level consequences of homeownership abstract this paper reviews the literature that describes the micro level economic and social consequences of homeownership we adopt an interdisciplinary approach and include studies from economics sociology geography political science psychology and other disciplines our focus is on the set of consequences of homeownership in developed countries our list of potential outcomes of homeownership includes the impact on household wealth and portfolio choice mobility labor force participation urban structure and segregation home maintenance political and social activities health demographics self esteem and child outcomes there is substantial evidence that homeownership has important effects on some household behaviors and outcomes however we find that much of the past 30 year s literature on consequences of homeowning is deficient from a theoretical or econometric perspective we suggest solutions and identify research gaps present in the literature

housing and endogenous long term growth abstract in this paper we develop an endogenous growth model where housing plays a role as a consumption and an investment good for households as an input to production and as a production sector we show that the long term endogenous growth rate for the economy while not affected by housing related preference parameters depends critically on housing related production parameters the key modeling assumption is that housing and other assets in the economy are not perfect substitutes with this we can show that the endogenous long term growth rate depends on the relative price of housing and other types of capital accordingly the effects of productivity shocks on growth can be understood through their effects on the relative asset price and the corresponding changes in capital intensity we show that productivity shocks to the three sectors of production manufacturing construction and educational and training activities have positive effects on long term growth for reasonable parameter values however the responsiveness of the long term growth rate to shocks in construction is greater than responsiveness to shocks in manufacturing

do urban neighborhoods benefit from homeowners evidence from housing prices homeownership is heavily subsidized in most countries the adverse effects of this policy on economic efficiency and income distribution are well documented in the economics literature the main argument in favor of subsidizing homeownership is that it creates positive externalities that offset these adverse effects in this paper we test whether homeowners create positive externalities that capitalize into housing prices in multi storey buildings using semi parametric hedonic regressions with and without instrumental variables we find no evidence of positive externalities although the results with instrumental variables are somewhat imprecise this result is robust to several sensitivity checks and to a relaxation of the identification assumptions of our instrument using set identification

the performance of rice markets in bangladesh during the 1974 famine recent discussions have further emphasised the role of speculation in foodgrains as a cause of famine hartmann and boyce i 979 sobhan i 980 rashid i 980 sen i98i greenough i982 by this reasoning famine is attributed to the expectation on the part of foodgrain stockholders of a substantial future price increase or future rationing there is a weakness in this explanation as arrow remarks in his review of sen i98i

tax treatment of housing in a dynamic sequenced general equilibrium model this paper evaluates the efliciency effects of possible changes in the tax treatment of housing using a dynamic sequenced general equilibrium model based on canadian data for 1972 our model is similar in structure to that used by fullerton shoven and whalley fsw 1983 to analyze the impacts of a switch to a consumption tax in the united states except that we include two assets rather than one the motivation for the paper arises from existing literature on the treatment of housing under the income tax most of this literature emphasizes the non taxation of imputed income from owner occupied housing as a deviation from the haig simons concept of income and approaches taxation of housing as a static resource allocation issue this implicitly argues for the inclusion of imputed income in the income tax base and suggests that a welfare gain would result when viewed from a dynamic perspective one s perception of the appropriate tax treatment for housing correspondingly changes evaluated relative to a pure consumption tax rather than a pure income tax housing is appropriately treated if imputed income goes untaxed since the income stream to the asset is not further taxed once the asset has been purchased the intertemporal misallocation problem arises not with housing but from taxation of non housing capital income this issue is however more complex than this discussion indicates because of inter asset distortions arising from the differential tax treatment of housing

a dynamic specific factors model of international trade in a dynamic economy land and capital serve not only as factors of production but as assets which individuals use to transfer income from working periods to retirement changes in the terms of trade and in the endowments of fixed factors do not necessarily have the same effects on factor prices and on the composition of output as they do in a static framework changes in these variables affect both total savings and the amount of savings that is diverted toward investment in capital results derived from the traditional specific factors model are more likely to emerge when the sector using land as a factor of production has a higher labor share than the sector using capital in this case the land using sector dominates factor markets more than asset markets once the roles for land and capital as assets are recognized the possibility of natural resource booms that reduce steady state welfare arises at the same time an increase in population can raise steady state welfare

business cycles and labor market search the quantitative implications of labor market search for economic fluctuations are evaluated in the context of a real business cycle model incorporating labor market search into the model is found to improve its empirical performance along several dimensions in particular hours now fluctuate substantially more than wages and the contemporaneous correlation between hours and productivity falls in addition the model replicates the observation that output growth displays positive autocorrelation at short horizons overall the empirical results suggest that the labor market search environment embodies a quantitatively important propagation mechanism copyright 1996 by american economic association

population and the environment a parable of firewood and other tales the author analyzes the relationship between population and the environment with a focus on the role which environmental degradation and natural resources depletion may play in producing the population pressure which lies behind such degradation and depletion especially in developing countries the principal conclusion of this analysis is that the possibilities for a stable equilibrium between human population and its environment are quite limited i show that parental altruism toward their children can only make matters worse if socially unchecked by leading to an increase of the birthrate in every environmental state in comparison with that which would occur in its absence excerpt

labor supply factors and economic fluctuations we propose a new v ar identication scheme that enables us to disentangle labor supply shocks from wage bargaining shocks identication is achieved by imposing robust sign restrictions that are derived from a new keynesian model with endogenous labor force par ticipation according to our analysis on us data over the period 1985 2014 labor supply shocks and wage bargaining shocks are important drivers of output and unemployment both in the short run and in the long run these results suggest that identication strategies used in estimated new keynesian models to disentangle labor market shocks may be misguided we also analyze the behavior of the labor force participation rate through the lenses of our model wend that labor supply shocks are the main drivers of the participation rate and account for about half of its decline in the aftermath of the great recession

relative consumption of housing marginal saving subsidies and income taxes as a second best policy this paper analyzes whether marginal taxation of labor and capital income are useful second best instruments for internalizing the externalities caused by conspicuous housing consumption when the

on optimal taxation of housing abstract this paper studies the question of optimal taxation of housing when the set of tax instruments at the government s disposal is not artificially restricted there are two groups of persons who differ in earning abilities and in tastes and two types of housing goods high and low quality the paper characterizes the pareto efficient allocations that are attainable through the tax policy it demonstrates that optimality calls for differential tax treatment of housing and that the required tax rates are nonlinear it derives conditions under which consumption of housing by the poor must be subsidized it also notes the circumstances under which taxation rather than subsidization is the required policy

the welfare cost of factor taxation in a perfect foresight model this paper examines the marginal efficiency cost of various factor taxes in a dynamic general equilibrium model the au thor solves for the excess burden of anticipated and unanticipated t emporary and permanent tax policies using a range of estimates for taste and technology parameters he finds excess burdens larger than those indicated by previous studies that use static models these exc ess burdens are sensitive to parameter values and timing however th e rankings of alternative tax policies turn out to be insensitive to structural parameter values copyright 1987 by university of chicago press

employment effects of product and labour market reforms are there synergies this article investigates the effect of product market liberalisation on employment allowing for interactions between policies and institutions in product and labour markets using panel data for oecd countries over the period 1980 2002 we present evidence that product market deregulation is more effective at the margin when labour market regulation is high the data also suggest that product market liberalisation may promote employment enhancing labour market reforms

the dynamic efficiency cost of not taxing housing traditional welfare cost estimates of tax subsidies for owner occupied housing are less than 0 5 of gnp in the united states and canada this paper argues that these static measures understate the true cost of the tax subsidy increasing the capital income tax makes untaxed housing more valuable delivering a windfall bonus to existing homeowners at the expense of future generations this intergenerational transfer has real efficiency effects in the presence of pre existing tax distortions when housing is in fixed supply the dynamic efficiency cost of preferential tax treatment for housing is as much as 2 2 of gnp or 120 billion dollars in 1990

market instability and nonlinear dynamics the potential role of nonlinear dynamics in generating market instability is investigated using a simple market equilibrium model of the u s dairy industry the supply function reflects the nonlinear dynamics of the dairy herd as estimated by chavas and klemme it is shown that in the absence of any uncertainty an inelastic demand contributes to market instability and chaos