comparing the welfare effects of public and private health care subsidies in the united kingdom we use a calibrated analytical model to compare the welfare costs gross of externalities of increasing subsidies for public and private health care in the uk the model incorporates wait costs for rationed public care burdens that subsidies impose on the tax system and distributional weights for different households welfare costs are significantly higher for expanding public health care over a range of parameter scenarios both policies reduce average wait times but for public health care this is offset by new waiting costs incurred on extra treatments and the burden on the tax system is much larger for expanding public health care

gasoline taxes and revenue volatility an application to california this paper examines how applying different combinations of excise and sales taxes on motor fuels impact the volatility of retail fuel prices and tax revenues two features of gasoline and diesel markets make the choice of tax mechanism a unique problem first prices are very volatile second demand for motor fuels is extremely inelastic as a result fuel expenditures vary substantially over time tying state revenues to these expenditures as is the case with a sales tax results in a volatile stream of revenue which imposes real costs on agents in an economy on july 1 2010 california enacted assembly bill x8 6 the gas tax swap increasing the excise tax and decreasing the sales tax on gasoline purchases while the initial motivation behind the revenue neutral swap was to provide the state with greater flexibility within its budget we highlight that this change has two potentially overlooked benefits it reduces retail fuel price volatility and tax revenue volatility simulating the monthly fuel prices and tax revenues under alternative tax policies we quantify the potential reductions in revenue volatility the results reveal that greater benefits can be achieved by going beyond the tax swap and eliminating the gasoline sales tax entirely

fiscal policy and growth in a small open economy with elastic labour supply endogenizing labour supply leads to fundamental changes in the equilibrium structure of the ak growth model of a small open economy the balanced growth equilibrium is described by two tradeoff loci relating the equilibrium growth rate to the fraction of time devoted to leisure the implications of endogenous labour supply for fiscal policy are addressed the effects of distortionary taxes and government expenditure on the equilibrium growth leisure employment tradeoff are analysed the responses contrast with both those of a closed economy having an elastic labour supply and an open economy with fixed labour supply optimal fiscal policy is also characterized jel classification f41 f43 politique fiscale et croissance dans une petite economie ouverte quand l offre de travail est elastique l endogeneisation de l offre de travail entraine des changements fondamentaux dans la structure d equilibre du modele de croissance du type ak d une petite economie ouverte l equilibre de croissance balancee est decrit par deux lieux de relations d equivalence reliant le taux de croissance d equilibre a la fraction du temps allouee au loisir on examine les implications de cette endogen6isation de l offre de travail pour la politique fiscale on analyse les effets de taxes distorsionnantes et des depenses gouvemementales sur la relation d 6equivalence entre taux de croissance et loisir et donc emploi on obtient des reactions differentes de celles qu on obtient en economie ferm6e quand l offre de travail est elastique et en economie ouverte quand l offre de travail est fixe on proc ede alors a la definition de la politique fiscale optimale

optimal taxation and cross price effects on labor supply estimates of the optimal gas tax abstract this study estimates parameters necessary to calculate the optimal second best gasoline tax most notably the cross price elasticity between gasoline and leisure prior theoretical work indicates the importance of this elasticity but despite this almost none of the prior studies of commodity taxation and none of the studies on second best environmental regulation actually estimate it using household data we find that gasoline is a relative complement to leisure and thus that the optimal gasoline tax is significantly higher than marginal damages the opposite of the result suggested by the bulk of the prior literature indeed even if there were no externalities at all associated with gasoline the optimal tax rate would still be almost equal to the average gas tax rate in the u s following this approach to estimate cross price elasticities with leisure could strongly influence estimates of optimal rates for other important commodity or pollution taxes

hegemony imperialism and the profitability of foreign investments socialists at the turn of the century explained modern imperialism as an attempt to escape the crisis of monopoly capitalism super profits that could be secured in the periphery according to lenin were necessary to offset declining rates of return in the advanced economies today radical theorists stress the role of the multinational corporations in accounting for neocolonialism if great national power does produce material benefits for foreign investors this should be apparent in two cases the experience of british capitalists in the high age of imperialism 1870 1913 and the operations of u s multinational corporations abroad after world war ii but rates of return on foreign investments have not been significantly different in the developed and less developed regions of the world a finding that is relevant not only for theories of imperialism but also for understanding development and modernization the operation of the multinational corporation and international capital markets

the effectiveness of gasoline taxation to manage air pollution abstract higher gasoline taxes can be justified because cars cause significant local regional and global air pollution damages this study examines whether charging higher taxes would result in significant emission reductions both experimental survey data and actual behavior in southern california and connecticut are evaluated to explore whether people would change their driving behavior in response to higher gasoline prices both sets of results reveal that drivers are price inelastic in the short run 0 4 to 0 6 and long run 0 5 to 0 7 imposing environmental surcharges on gasoline will result in only a small reduction in driving and thus only a small improvement in the environment such taxes will place a heavy and clear burden on drivers however making gasoline taxes extremely unpopular finally the study finds that the income elasticity of gasoline is low 0 1 0 2 so that the gas tax will fall heavily on the poor

fuel taxes an important instrument for climate policy abstract this article shows that fuel taxes serve a very important role for the environment and that we risk a backlash of increased emissions if they are abolished fuel taxes have restrained growth in fuel demand and associated carbon emissions although fuel demand is large and growing our analysis shows that it would have been much higher in the absence of domestic fuel taxes people often assert that fuel demand is inelastic but there is strong research evidence showing the opposite the price elasticity is in fact quite high but only in the long run in the short run it may be quite inelastic which has important implications for policy makers had europe not followed a policy of high fuel taxation but had low us taxes then fuel demand would have been twice as large hypothetical transport demand in the whole oecd area is calculated for various tax scenarios and the results show that fuel taxes are the single most powerful climate policy instrument implemented to date yet this fact is not usually given due attention in the debate

the elasticity of demand for gasoline in china abstract this paper estimates the price and income elasticities of demand for gasoline in china our estimates of the intermediate run price elasticity of gasoline demand range between 0 497 and 0 196 and our estimates of the intermediate run income elasticity of gasoline demand range between 1 01 and 1 05 we also extend previous studies to estimate the vehicle miles traveled vmt elasticity and obtain a range from 0 882 to 0 579

the economics of development a survey i the subject our definition of the subject will be the use of economic analysis to understand the economies of poor or developing countries this includes in particular how standards of living in the population are determined and how they change over time and further how policy can or should be used in the influence of these processes the definition contains in principle much or most of analytical methods in economics insofar as they can be put to use in the examination of the issues of interest this is as it should be but it poses a problem for a survey in a journal a comprehensive treatment is infeasible so we shall follow a different route the survey will focus on what i take to be the major themes and approaches which characterise the productive aspects of the subject there is therefore no pretence at being exhaustive the purpose is rather to highlight some of the advances many of these have been of real substance there are a number of possible purposes for a survey and it is important to be clear at the outset for whom it is intended what it is and what it is not this survey is addressed to economists and students of economics who know the tools of their trade but not necessarily how they have been applied to and fashioned for the analysis of the economics of developing countries it is a description of the ways in which problems can be productively formulated and approached in terms of examples chosen for their intrinsic importance and interest the vastness of the subject means that we have to be highly selective it does not seek to provide a summary evaluation of the current view of the appropriate response to immediate policy questions it is not a history of thought nor a research manifesto nor an attempt to adjudicate or settle the major debates where they arise naturally from the major purpose some judgements on these subjects will be offered but they do not themselves constitute the primary intent of this survey there are three lines of enquiry or sets of questions which have i suggest been distinctive of the most fruitful work in development economics they will

rents and the cost and optimal design of commodity taxes this paper numerically investigates the significance of rents for both the welfare costs and the optimal design of commodity taxes using a general equilibrium model calibrated to 1986 canadian data in the data we use ricardian rents are concentrated in agriculture and utilities with market structure rents concentrated in manufacturing different types of rents have different implications for the welfare cost of taxes and hence also for appropriate tax design ricardian rents lower the cost of taxes rents supported by imperfect competition with no free entry raise the cost of taxes rents supported by regulation generate rent seeking costs and if taxed improve resource allocation model results show a markedly nonuniform optimal tax structure and a substantial influence of the treatment of rents on the pattern of optimal tax rates by commodity

pareto efficient taxation and expenditures pre and re distribution abstract this paper shows that there is a presumption that pareto efficient taxation entails a positive tax on capital when tax and expenditure policies can affect the market distribution of income in ways that cannot be directly offset those effects need to be taken into account reducing the burden imposed on distortionary redistribution the paper extends the 1976 atkinson stiglitz results to a dynamic overlapping generations model correcting a misreading of the result on the desirability of a zero capital tax that result required separability of consumption from labor and that the only unobservable differences among individuals were in fixed labor productivities in a general equilibrium model one needs to take into account the effects of policy changes on binding self selection constraints in a simple model with time separability but with non separability between consumption and leisure capital taxation depends on the complementarity substitutability of leisure during work with retirement consumption the final section constructs a simple two class model capitalists who maximize dynastic welfare and workers who save for retirement whose productivity can be enhanced by publicly provided education it derives a simple expression for the optimal capital tax which is positive so long as the social welfare function is sufficiently equalitarian and the productivity of educational expenditures is sufficiently high

optimal gasoline tax in developing oil producing countries the case of mexico this paper uses the methodology of parry and small 2005 to estimate the optimal gasoline tax for a less developed oil producing country the relevance of the estimation relies on the differences between less developed countries ldcs and industrial countries we argue that lawless roads general subsidies on gasoline poor mass transportation systems older vehicle fleets and unregulated city growth make the tax rates in ldcs differ substantially from the rates in the developed world we find that the optimal gasoline tax is 1 90 per gallon at 2011 prices and show that the estimate differences are in line with the factors hypothesized in contrast to the existing literature on industrial countries we show that the relative gasoline tax incidence may be progressive in mexico and more generally in ldcs

on the neoclassical growth model with non constant discounting we study the neoclassical growth model with non constant discounting we do not assume specific functional forms for discounting and demonstrate that the competitive economy always performs better than the planning economy

fiscal policy elastic labor supply and endogenous growth abstract endogenizing labor supply leads to fundamental changes in the equilibrium structure of the ak growth model the balanced growth equilibrium can be described in terms of two tradeoff loci relating the equilibrium growth rate to the fraction of time devoted to leisure the implications of endogenous labor supply for fiscal policy are analyzed three issues are addressed first the effects of various distortionary tax changes and government expenditure changes on the equilibrium growth leisure employment tradeoff are analyzed second optimal fiscal policy is characterized finally the formal analysis is supplemented by numerical results focusing particularly on the quantitative welfare implications

does britain or the united states have the right gasoline tax this paper develops an analytical framework to assess the second best optimal level of gasoline taxation taking into account unpriced pollution congestion and accident externalities as well as interactions with the broader fiscal system we provide calculations of the optimal taxes for the us and the uk under a variety of parameter scenarios under our central parameter values the second best optimal gasoline tax is 1 01 gal for the us and 1 34 gal for the uk current tax rates are much lower than this in the us and higher in the uk the calculations are moderately sensitive to alternative parameter assumptions the congestion externality is the largest component in both nations revenue raising needs also play a significant role as do accident externalities and local air pollution potential welfare gains from reducing the current uk tax rate are estimated at nearly one fourth the production cost of all gasoline used in the uk even larger gains could be achieved by switching to a tax on vehicle miles with equal revenue yield for the us the welfare gains from optimizing the gasoline tax are smaller but those from switching to an optimal tax on vehicle miles are very large

international investment and colonial control a new interpretation the impact of economic factors on colonial imperialism in the late nineteenth century has long been a topic of debate this article examines the expected relationship between different forms of international investment and different patterns of political ties between developed and developing countries drawing on the literature on relational contracts and collective action it argues that direct colonial control was likely to be associated with cross border investments whose rents were particularly easy to seize or protect and whose protection did not require multilateral action where such rents were difficult to seize or protect unilaterally colonialism is expected to be less likely the most common example of the former sort of investment is primary raw materials or agricultural investment of the latter multinational manufacturing affiliates the argument is weighed against both a survey of the qualitative evidence and some simple quantitative evaluations the approach also has potential applications to more general problems of international conflict and cooperation

value functions for infinite period planning cost benefit and risk analysis studies that model tradeoffs between the present and the distant future by means of present value discounting have been criticized for according the future and thus future generations far too little importance this paper presents an alternative means of modeling tradeoffs between different periods that accords the future far more importance than present value discounting and that is no more difficult to apply the paper also presents a means of modeling the preference issue of concern for equity or stability between different periods

the contributions of angus deaton angus deaton was awarded the 2015 sveriges riksbank prize in economic sciences in memory of alfred nobel for his analysis of consumption poverty and welfare this article reviews his contributions to economics

regulation versus taxation abstract we study which policy tool and at what level a majority chooses in order to reduce activities with negative externalities we consider three instruments a rule that sets an upper limit to the activity which produces the negative externality a quota that forces a proportional reduction of the activity and a proportional tax on it for all instruments the majority chooses levels which are too restrictive when the activity is performed mainly by a small fraction of the population and when costs for reducing activities or paying taxes are sufficiently convex also a majority may prefer an instrument different than what a social planner would choose for instance a rule when the social planner would choose a tax

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

the theory of reform and indian indirect taxes abstract given a set of value judgements an initial state and a model of the economy one can ask whether some feasible tax change would increase welfare we do this by defining the marginal cost in terms of welfare of raising an extra rupee from the i th good the inverse optimum problem is the calculation of non negative welfare weights on households which imply that the initial state is optimum if no such welfare weights exist then a pareto improvement is possible we illustrate the concepts and results using data from the indian economy for 1979 1980 directions of tax reform for a number of specific social welfare functions and for pareto improvements are presented

using survey data to assess the distributional effects of trade policy the author develops and applies a methodology to empirically explore the effects of trade policies on the distribution of income and poverty in developing countries he uses a methodology based on two links one connecting trade policies to prices and another connecting prices to household welfare the author applies the methodology to the study of the distributional effects of mercosur on argentine families the main finding is that mercosur benefits the average argentine household across the entire income distribution there is evidence of a pro poor bias of the regional trade agreement on average poor households gain more from the reform than middle income households whereas the effects on rich families are positive but not statistically significant prior to the reform argentine trade policy protected the rich over the poor and after the reform granted some protection to the poor as relative pre mercosur tariffs are higher on relatively skill intensive goods the tariff removals tend to benefit the poor over the rich these findings indicate that trade reforms may actually help improve the distribution of income and reduce poverty in the country

the profitability of u k foreign direct investment under colonialism abstract the effects of discrimination in favor of metropolitan direct investment in colonies on the size and composition of foreign investment there and the profits accruing therefrom have been derived with the help of a simple model empirical studies show that the rate of return to u k investment in her colonies was significantly higher than in non british ldcs although some doubt remains as to the extent to which this result is explained by data imperfections

equilibrium welfare and government policy with quasi geometric discounting abstract we consider a representative agent equilibrium model where the consumer has quasi geometric discounting and cannot commit to future actions we restrict attention to a parametric class for preferences and technology and solve for time consistent competitive equilibria globally and explicitly we then characterize the welfare properties of competitive equilibria and compare them to that of a planning problem the planner is a consumer representative who without commitment but in a time consistent way maximizes his or her present value utility subject to resource constraints the competitive equilibrium results in strictly higher welfare than the planning problem whenever the discounting is not geometric journal of economic literature classification numbers e21 e61 e91

the optimal gas tax for california this paper calculates the optimal gasoline tax for the state of california according to our analysis the optimal gasoline tax in california is 1 37 gal which is over three times the current california tax when excluding sales taxes the pigovian tax is the largest part of this tax comprising 0 85 gal of this the congestion externality is taxed the most heavily at 0 27 followed by oil security accident externalities local air pollution and finally global climate change the other major component a ramsey tax comprises a full 0 52 of this tax reflecting the efficiency in raising revenues from a tax on gasoline consumption due to the inelastic demand of this consumption good

sensitivity of optimal commodity tax rates to alternative demand functional forms an econometric case study of india this study investigates on a nine commodity disaggregation of indian budget data nss 28th round the sensitivity of optimal commodity tax rates to alternative demand systems les and rnlps optimality is used here in the very special sense of being conditional on observed expenditure and fixed consumer prices the alternative sets of tax rates agree at low levels of inequality aversion but disagree widely at rawlsian levels les is heavily rejected in favour of its one parameter generalisation rnlps the results suggest that les price elasticities should not be used in optimal tax calculations the optimal tax rates imply only a modest redistribution

the accident externality from driving we estimate auto accident externalities more specifically insurance externalities using panel data on state average insurance premiums and loss costs externalities appear to be substantial in traffic dense states in california for example we find that the increase in traffic density from a typical additional driver increases total statewide insurance costs of other drivers by 1 725 3 239 per year depending on the model high traffic density states have large economically and statistically significant externalities in all specifications we check in contrast the accident externality per driver in low traffic states appears quite small on balance accident externalities are so large that a correcting pigouvian tax could raise 66 billion annually in california alone more than all existing california state taxes during our study period and over 220 billion per year nationally

incidence of federal and state gasoline taxes the federal specific gasoline tax falls equally on consumers and wholesalers whereas state specific taxes fall almost entirely on consumers the consumer incidence of state taxes is greater in states that use relatively little gasoline

analysing gasoline demand elasticities a survey this paper is a survey of studies on gasoline demand although there are very many dxerent studies in this eld which sometimes appear to arrive at contradictory results we find that with proper stratification of studies by model and data type much of the contict turns to consensus in this survey we classtfy studies by data type and by ten d erent categories of model and with the exception of estimates on seasonal data which tend to be unstable and of certain inappropriate model formulations we find a fair degree of agreement concerning average short run and even long run income and price elasticities

how much can co2 emissions be reduced if fossil fuel subsidies are removed abstract this paper analyzes consumers price elasticities of demand for fossil fuels and how a reduction of fossil fuel subsidies can lead to important reduction in co 2 emissions for various groups of countries that have relatively high fossil fuel subsidies and notably on diesel including countries in the middle east and north africa mena these countries continue to maintain significant levels of fuel subsidies with iran and saudi arabia being the largest contributors to co 2 emissions this paper illustrates that fuel price policy reforms by these countries would be an important instrument for both climate and economic policies we estimate that a reduction in subsidies to both gasoline and diesel by about 20 us cents per liter will lead to significant decreases in co 2 emissions both in the mena region and globally in iran for example the reductions could be up to 90 and 50 of current emissions generated from diesel and gasoline consumption respectively and for saudi arabia approximately 70 and 40 respectively

optimal taxes and the structure of preferences if optimal tax theory is to be the basis for calculating tax rates a close understanding is required of the relationship between the structure of preferences and the configuration of optimal tax rates otherwise hypotheses chosen by the econometrician for practical convenience may completely determine the results independently of measurement this paper explores the relationship between various types of separability particularly weak and implicit separability and optimal tax rates in the various models discussed in the literature the use of distance functions and the antonelli matrix provides a significant unification of previously disparate results in the final analysis optimal tax theory should be the basis for actual calculation of tax rates although recently there have been great advances in theoretical results and in our understanding of their meaning we are still some way from a working knowledge of whether uniform commodity taxes are in practice optimal or if not which commodities should be discriminated against present theoretical formulae do not yield clear cut results except in special cases and it has recently become clear that optimal rates depend crucially on the detailed structure of consumer preferences for example atkinson and stiglitz 3 show that with an optimal nonlinear income tax discriminatory commodity taxes are only necessary to the extent that individual commodities are not weakly separable from leisure more recently deaton 6 has shown that a similar result holds for what is perhaps the most interesting of the standard models that where there are many consumers and only a linear income tax and proportional commodity taxes are allowed in this case separability between goods and leisure together with linear engel curves for goods removes the need for differential commodity taxation in consequence nothing can be learned about commodity taxes from consumer demand studies in which commodity demands are explained conditionally on total expenditure and commodity prices and which assume linear engel curves all such studies require separability from leisure as a maintained hypothesis and so are consistent with uniform commodity taxation these results suggest that the prospects for meaningful empirical calculations of tax rates are bleak econometricians estimating commodity demand and labor supply equations make generous use of separability assumptions to enable estimation at all in consequence it is likely that empirically calculated tax rates based on econometric estimates of parameters will be determined in structure not by the measurements actually made but by arbitrary untested and even unconscious hypotheses chosen by the econometrician for practical convenience to remedy this situation and as a prelude to fruitful empirical work it is necessary to have a more explicit understanding of how preference structure affects optimal tax rates such is the object of this paper three different

evaluating policy interventions with general equilibrium externalities abstract we report on the results of analytical and numerical models that describe the effects of non separable externalities or public goods on public policies with important general equilibrium consequences in the numerical exercise we calibrate a general equilibrium model with non separable air quality benefits in order to measure the excess burden and total net benefits of transportation and energy taxes in the 1995 u s economy the change in the physical level and the economic value in air quality associated with a given policy is a function of the substitution patterns between air quality and market goods that we assume the size of the deadweight loss due to pre existing distortions such as a tax on labor income is substantially affected by these substitution patterns

optimum taxation and the allocation of time abstract a theory of optimal taxation is presented building upon becker s 1965 theory of the allocation of time optimal commodity taxation is governed by factor shares in household activities any market good which requires little household time or even saves time should carry a relatively low tax rate this policy rule does not require the estimation of price elasticities and is therefore more applicable than traditional ramsey rule taxation

tax reform with sub additive and nested additive preferences abstract this paper characterizes the direction of tax reform when preferences are sub additive or nested additive this information should be useful for researchers doing empirical research on tax reform based on some form of additive functions for preferences

optimal social health insurance with supplementary private insurance abstract this paper investigates the structure of a national health service in which there is compulsory social insurance covering a package of essentials a given part of individuals health expenditure and supplementary private policy topping up the remaining services the latter insurance contract provides for a co payment by patients limiting the so called third party payer effect thus an individual s health expenditure is divided into three parts the first covered by social insurance the second by a private policy and the third out of pocket such mixed system design has received increasing attention in recent years and has been adopted by several industrialized countries the conditions for optimal rates of social insurance coverage and of private coinsurance are analysed and discussed the optimality requirements refer to efficiency as well as equity concerns

group inefficiency in a common property resource game with asymmetric players if the joint preferences of asymmetric players having different discount rates are represented by the sum of intertemporal utilities they become time inconsistent it is shown how time consistent solutions for this problem can be strongly inefficient the sum of payoffs can be higher if cooperation or coordination is forbidden than if it is allowed

ramsey prices in the italian electricity market abstract in this paper we derive optimal zonal prices in the italian day ahead electricity market using estimation of a complete system of hourly demand in 2010 2011 in italy the hourly equilibrium price for all buyers is computed as a uniform average of supply zonal prices resulting from market splitting due to line congestion we model ex ante individual bids expressed by heterogeneous consumers which are distinguished by geographical zones using empirical estimations we compute demand elasticity values and new zonal prices according to a ramsey optimal scheme this is a new approach in the wholesale electricity market literature as previous studies have discussed the relative merit of zonal prices considering only the issue of line congestion our results show that the optimal pricing scheme can improve welfare in the day ahead italian electricity market with respect to both the existing uniform price scheme and the proposal to charge the existing supply zonal prices to the demand side

inverse demand systems and welfare measurement in quantity space most studies of welfare or cost benefit analyses are concerned with the welfare effects of price changes 11 19 27 33 50 there are however many situations in which policy options are directly related to quantity changes the welfare effects of price changes are analyzed with the traditional demand system in which commodity quantities are determined as functions of their prices the welfare effects of quantity changes on the other hand are associated with the inverse demand system in which commodity prices are dependent on their quantities in conventional welfare analysis of price change prices are taken to be exogenous or predetermined while quantities are endogenous in contrast in welfare analysis of quantity changes quantities are exogenous while prices are endogenous price based or dual welfare measures are relevant when there are well functioning competitive markets and quantities are fully adjusted to changes in prices on the other hand quantity based or primal welfare measures are useful in situations where there are constraints on commodity quantities or when transaction costs impede consumers from fully adjusting to changes in prices the choice between priceand quantity based welfare measures is empirical and proper measurement of welfare effects requires the knowledge as to which variable price or quantity is the exogenous one for individual consumers it may be reasonable to assume that the supply of commodities is perfectly elastic and therefore prices can be taken as exogenous but this assumption may not be tenable for consumers in the aggregate or if highly aggregated economy wide data are used to estimate demand relations at the aggregate level quantities are more properly viewed as exogenous than are prices although individual consumers make their consumption decisions based on given prices the quantities of commodities are predetermined by production at the market level and prices must adjust so that the available quantities are consumed 28 1 2

funding transportation spending in metropolitan washington dc the costs of alternative revenue sources abstract this paper develops and implements an analytical framework for estimating the efficiency costs of raising additional revenue from taxes on labor property gasoline peak road use and higher transit fares for the washington dc area the model incorporates driving externalities and interactions between the different policies an economic case can be made for using congestion taxes and possibly gasoline and property taxes to raise extra revenue though it should be qualified for example the inelastic demand for driving limits the congestion benefits per dollar of revenue raised and these taxes have adverse employment effects in the same way that a tax on labor income does

ramsey meets laibson in the neoclassical growth model the neoclassical growth model is modified to include a variable rate of time preference with no commitment ability and log utility the equilibrium features a constant effective rate of time preference and is observationally equivalent to the standard model the extended framework yields testable linkages between the extent of commitment ability and the rates of saving and growth the model also has welfare implications including the optimal design of institutions that facilitate household commitments steady state results are obtained for general concave utility functions and some properties of the transitional dynamics are characterized for isoelastic utility

agricultural policies in the presence of distorting taxes this article analyzes how distortionary factor taxes affect the welfare impacts of production subsidies production quotas acreage controls subsidies for acreage reductions and cash transfers to farmers pre existing taxes substantially raise the costs of all these policies these additional costs reflect the welfare losses from financing certain policies by distortionary taxes they also reflect interactions with factor markets caused by changes in the costs of producing agricultural output previous studies ignore the latter types of effect consequently they significantly overstate the costs of production subsidies and understate the costs of production quotas acreage controls and subsidies for acreage reductions

comparing alternative policies to reduce traffic accidents abstract this paper derives and implements formulas for the welfare effects of uniform mileage taxes gasoline taxes per mile insurance premiums and mileage taxes differentiated across vehicle and driver groups for reducing the external costs of passenger vehicle accidents the average external accident cost is estimated at 2 2 6 6 cents per mile accidents costs differ substantially across driver groups but only moderately across vehicles groups annual welfare gains from a mileage tax equal to marginal external costs for each driver vehicle group are 9 4 billion in the benchmark case the uniform mileage tax and per mile insurance reform can achieve 76 and 65 of this welfare gain respectively while the gasoline tax can achieve only 28 of the welfare gain unlike other policies the gasoline tax induces costly improvements in average fleet fuel economy that have little effect on reducing external costs

ramsey tax rules for economies with imperfect competition abstract this paper derives optimal commodity tax rules for a general equilibrium model with imperfect competition to achieve this functions are constructed that describe the effects of taxation upon the equilibrium prices and profit levels of imperfectly competitive industries the use of these functions allows existing tax rules to be generalised to accommodate imperfect competition

intertemporal tradeoffs for gains and losses an experimental measurement of discounted utility this article provides a parameter free measurement of utility in intertemporal choice and presents new and more robust evidence on the discounting of money outcomes intertemporal utility was concave for gains and convex for losses consistent with a hypothesis put forward by loewenstein and prelec 1992 discount rates declined over time but less so than previously observed under the assumption of linear utility for approximately 40 of our subjects constant discounting provided the best fit the remaining 60 were most consistent with harvey s 1986 power discounting our data provide little support for the popular quasi hyperbolic model which is widely used in economics today we observed an asymmetry in the discounting of gains and losses that unlike earlier findings cannot be explained by a framing effect

redistributive taxation in a simple life cycle model an overlapping generations model with rich and poor life cycle planners is developed positive aspects of redistributive capital and labor taxation are then analyzed the conditions required for feldstein s result that the long run capital labor ratio is invariant to wage taxations are discussed the utility frontier is shown to generally have a slope with an absolute value different from one in the neighborhood of a no tax equilibrium labor income is clearly a more efficient base for long run redistribution only if the economy is dynamically inefficient and the rich household benefits from an increase in the gross interest rate even in this case the labor income base may not be considered more desirable when transitional effects are considered copyright 1989 by the london school of economics and political science

non constant discounting social welfare and endogenous growth with pollution externalities abstract we analyze the effect of non constant discounting on economic growth and social welfare in an endogenous growth model with pollution externalities for time consistent agents who play a game against their future selves the balanced growth equilibrium is compared to the case of standard exponential discounting a decaying instantaneous discount rate leads to slower growth in a centralized economy while its effect for a competitive economy is ambiguous interestingly when comparing the planned and the competitive equilibria the assumption of non constant discounting may imply greater social welfare in the market equilibrium under two conditions first the pollution externality on utility must be large with respect to the externality on production so that the central planner slows down growth below the growth rate in the market economy secondly individuals degree of impatience should decrease sharply with the time distance from the present concerning policy implications we observe that under log utility policies may not be necessary while for an isoelastic utility with an elasticity lower than one introducing policy instruments is less effective than under constant discounting

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