negative international transmission of economic expansion abstract this paper uses a conventional two sector real trade model and demonstrates how within that framework the relative price effect resulting from a demand expansion in one country may quite plausibly generate negative effects in overall activity abroad it is shown how under the chosen assumptions of wage rigidities the transmission of an expansion which occurs through the relative price effect may be decomposed into a an employment effect and b a terms of trade effect either of which may be positive or negative expansions resulting from i an increase in the money supply and ii increases in government expenditure on the importable and exportable commodity are discussed

tastes skills and local public goods abstract this paper analyzes optimal club configurations in an economy where different types of labor are complementary in the production of private goods extending the work of berglas journal of public economics 6 409 423 1976 the analysis shows that when labor types are nonessential in production a homogeneous club configuration may be optimal despite the presence of labor complementarity the assumption that inputs are essential precluded this outcome in berglas model it is shown that homogeneous clubs are optimal when complementarity is weak or when preferences are substantially different

monetary policy and multiple equilibria in a cash in advance economy abstract this article shows that whether active interest rate rules can generate equilibrium uniqueness or indeterminacy depends upon 1 the magnitude of the intertemporal elasticity of substitution and 2 the value of the steady state inflation rate in particular if the intertemporal elasticity is smaller than one then an active interest rate rule renders equilibrium indeterminate when the steady state inflation rate is sufficiently high and ensures uniqueness of equilibrium when it is sufficiently low

constitutional rules of exclusion in jurisdiction formation the rules under which jurisdictions nations provinces can deny immigration or expel residents are generally governed by a constitution but there do not exist either positive or normative analyses to suggest what types of exclusion rules are best we stylize this problem by suggesting four constitutional rules of admission free mobility admission by majority vote admission by unanimous consent admission by a demand threshold for public goods in a simple model we characterize the equilibria that result from these rules and provide a positive theory for which constitutional rules will be chosen

devaluation keynesian trade models and the monetary approach the role of nominal and real wage rigidity abstract labor market assumptions provide the crucial ingredients by which we distinguish between a keynesian and a classical monetary trade model monetary approach domestic and foreign goods are perfect substitutes and the law of one price holds this minimal model should be appreciated as an income cum price specie flow mechanism although the long run equilibrating process is not discussed in any detail the paper stresses the interplay between demand pull and cost push factors as a result of exchange rate changes

collective decisions and competitive markets in a general equilibrium model we allow for households with several typically heterogeneous members households that make efficient collective consumption decisions where different households may use different collective decision mechanisms yet households that operate within a competitive market environment the interaction of two allocation mechanisms collective decisions and competitive markets is investigated with a focus on the efficiency properties and decentralization possibilities of the dual allocation mechanism

equilibrium in a finite local public goods economy abstract this paper examines the existence of a noncooperative equilibrium in a finite local public goods economy where consumers have quasi linear preferences jurisdictions consist of consumers who chose the same public project and finance the cost of production of public goods through either a proportional income tax or a poll tax we show that under a proportional income tax scheme a nash equilibria may fail to exist under a poll tax scheme an equilibrium always exists but in general nash equilibria violate a very weak efficiency condition we conclude by commenting on the stabilizing effect of zoning policies journal of economic literatureclassification number c71

on price taking equilibria in club economies with nonanonymous crowding abstract competitive equilibrium in a coalition production economy or a club economy typically does not exist when there is free entry for two reasons first there may be an integer problem as is familiar from club theory with anonymous crowding second optimal groups may have different compositions from the population and then even if there is no integer problem it may be impossible to partition the population into optimal groups i define a notion of approximate equilibrium and show that such an equilibrium always exists in a sufficiently large economy i focus on the optimal size of the economy rather than of clubs

international effects of government expenditure in interdependent economies a dynamic analysis of the international transmission of government expenditure shocks under alternative methods of finance is presented the benchmark case of lump sum tax financing yields an expansion in both the short run and the long run levels of domestic activity while crowding out domestic consumption activity abroad declines in the short run and while it is stimulated during the transition long run activity abroad also declines with capital income tax financing the accompanying distortion outweighs the direct expenditure effects so that all these responses are reversed financing with a tax on labour produces ambiguous responses the welfare implications of these policies are also examined

competitive equilibrium and the core in club economies with anonymous crowding in club economies with anonymous crowding competitive equilibrium states of the economy are efficient and coincide with the core when there is only one private good anonymous admission prices permit consumers with different tastes to share facilities consumers might do so when their demands for facility size and crowding coincide in which case sharing is efficient thus similarity of demands is the relevant consideration for efficiently grouping consumers with different tastes

interjurisdictional sorting and majority rule an empirical analysis the goal of this paper is to provide a comprehensive empirical analysis of majority rule and tiebout sorting within a system of local jurisdictions the idea behind the estimation procedure is to investigate whether observed levels of public expenditures satisfy necessary conditions implied by majority rule in a general equilibrium model of residential choice the estimator controls for observed and unobserved heterogeneity among households observed and unobserved characteristics of communities and the potential endogeneity of prices and expenditures as well as the self selection of households into communities of their choice we estimate the structural parameters of the model using data from the boston metropolitan area the empirical findings reject myopic voting models more sophisticated voting models based on utility taking provide a potential explanation of the main empirical regularities

clubs local public goods and transportation models a synthesis abstract clubs local public goods and transportation models are analyzed within a unified model the emphasis is on the derivation of optimal allocation pricing and the size of the sharing group we derive the conditions under which optimal prices will yield surplus or deficit as well as those under which competitive provision will be efficient given heterogeneous tastes we prove that segregation according to tastes is generally efficient although several cases where this result does not hold are also discussed we show that the existing literature is unnecessarily restrictive and that the unified approach suggested here considerably extends the existing analysis of clubs local public goods and the transportation problems

profit maximizing clubs abstract we study a nash equilibrium among profit maximizing clubs which choose facility size and admission price the number of clubs is endogenous entry is deterred whenever the symmetric nash equilibrium with one additional firm would yield negative profit equilibrium exists with positive profit the equilibrium price is higher than the congestion price and the equilibrium number of clubs is bounded below by one fewer than the efficient number in general there will be too much entry than too little one can choose an economy sufficiently large that the equilibrium price is within epsilon of the competitive price

the pure theory of public goods efficiency decentralization and the core the authors extend the findings of mas colell on valuation equilibria and the relationship of cost share equilibria with the core they allow for any finite number of private goods and a set of public projects without any structure the authors show the two welfare theorems for valuation equilibrium the inclusion of the set of cost share equilibria in the core and the nonequivalence of these two sets for an economy with a finite number of agents copyright 1996 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

two tier pricing of shared facilities in a free entry equilibrium we explore how well the market will provide shared facilities which are subject to congestion it is usually efficient to have multiple facilities because it is more efficient to spend resources on facilities than to endure crowding costs we assume firms can charge a membership price and a visit price we present a symmetric nash equilibrium in these two prices we show that ifthe number offirms is large the membership price will be small thus the membership price is a measure of market power when entry occurs in response to positive profit but such that entry is deterred by the prospect of negative profit in a symmetric nash equilibrium the endogenous number offirms is bounded below by one fewer than the efficient number thefees paid by a client converge to an appropriately defined competitive price as the economy is replicated

decentralization in replicated club economies with multiple private goods abstract we show that exhaustion of blocking opportunities is a sufficient condition such that every allocation in the core of a replicated club economy can be decentralized as a competitive equilibrium and that a related condition efficient scale is necessary and under an assumption on endowments sufficient such that competitive equilibrium exists and the core is nonempty these results do not require the euclidean structure and monotonicity assumed in lindahl equilibrium do not require convexity of preferences or costs and do not require the strong assumption that private goods are essential journal of economic literature classification numbers d46 d50 d61 h40

a critique of tiebout s theory of local public expenditures the last section of this paper presents a rigorous version of tiebout s theory of local public goods it is shown that equilibria exist and are pareto optimal this rigorous theory follows closely the more rigorous part of tiebout s work this rigorous theory makes a number of very special assumptions which make local public goods essentially private the body of this paper presents a series of examples which show that if one tries to generalize the rigorous version of tiebout s theory in a number of interesting directions then equilibria may no longer exist or may not be pareto optimal the conclusion is that tiebout s idea does not lead to a satisfactory general theory of local public goods the goal of this paper is to point out that tiebout s notion of equilibrium with local governments does not have the nice properties of general competitive equilibrium except under very restrictive assumptions tiebout 39 suggested that there are competitive forces which tend to make local governments allocate resources in a pareto optimal fashion consumers choose to live in those towns with the mix of taxes and public goods they prefer local governments choose this mix so as to attract inhabitants this idea may seem intriguing for it suggests that the invisible hand solves an important part of samuelson s perplexing public goods problem 32 tiebout in fact makes an argument which is nearly rigorous i give a rigorous version of his argument at the end of the paper however in this rigorous version so many restrictive assumptions are made that public goods become essentially private in the body of the paper i give a series of examples with which i try to convince the reader that one is forced to adopt tiebout s restrictive assumptions the idea is that if one changes any of his assumptions then either equilibria may not exist or may not be pareto optimal my examples are presented in the context of a general class of tiebout models i consider several subclasses one of which is the special case considered by tiebout in each of the subclasses except that considered by tiebout i give a counterexample either to the existence of equilibrium or to its pareto optimality the subclasses are so chosen that the difficulties they reveal would be shared by any reasonable tiebout model which differed from his special case i believe that my examples controvert tiebout s suggestion 39 last paragraph that his theory compares favorably with competitive equilibrium theory most of the examples in this paper have already appeared in the literature i cite related work as i go along what is new here is that i assemble the examples in a unified argument

clubs and the market large finite economies abstract this paper builds a general equilibrium model of finite economies with exchange and club formation agents trade multiple private goods widely in the market can belong to several clubs and care about the characteristics of other club members because club memberships are indivisible and choices of club memberships must be coordinated across the population the core of such an economy may be empty and equilibrium may not exist however for large finite club economies an approximate core is not empty and states in this approximate core can be approximately decentralized by prices for private goods and for club memberships the arguments use convexification tools familiar from the literature on private goods economies and a new tool of some independent interest that addresses the special problems created by the nature of club memberships journal of economic literature classification numbers d2 d5 h4

interest rate rules and transitional dynamics in an endogenously growing open economy abstract this paper sets up an endogenous growth model of an open economy in which the monetary authority implements a gradualist interest rate rule with targets for both inflation and economic growth we show that under a passive rule a monetary equilibrium exists and is unique moreover the equilibrium is locally determinate by contrast an active rule implies either two equilibria one high growth and one low growth or none in the case of two equilibria the high growth equilibrium is locally determinate while the low growth equilibrium is a source besides the stabilization and growth effects of alternative target policies are also explored in this study moreover in departing from the existing literature we turn to focus on the analysis of transition with a particular emphasis on the case of imperfect credibility

nominal income targeting versus money growth targeting in an endogenously growing economy abstract we find that local indeterminacy more easily emerges under a regime of nominal income targeting both targeting regimes are equally effective in influencing economic growth and inflation the results thus favor money growth over nominal income as a nominal anchor

macroeconomic in stability under real interest rate targeting we show that in a one sector monetary endogenous growth model under real interest rate targeting the local stability properties of the economy s balanced growth path depend crucially on the exact formulation of the cash in advance constraint and the degree of productive externalities in particular when a positive fraction including 100 of gross investment is subject to the liquidity constraint the model exhibits indeterminacy and sunspots if and only if the equilibrium wage hours locus is positively sloped and steeper than the labor supply curve on the other hand when real money balances are required only for the household s consumption purchases the economy always displays saddle path stability and equilibrium uniqueness regardless of the strength of productive externalities

the international transmission of economic shocks in a three country world under mixed exchange rates the international transmission of economic disturbances is analysed in a three country world where two countries have no macroeconomic impact on a third country but are large enough to influence each other under a system of mixed exchange rates a system that combines the fixed exchange rates fers among two ec member countries germany and france and the flexible exchange rates flers towards a third country the rest of the world usa we find that a positive output demand shock originating in germany or france has a positive effect on domestic output but due to a special third country effect is likely to produce a contractionary impact on foreign output negative transmission while the total effect on the world economy is expansionary money supply shocks in either germany or france have identical effects on the output of the two countries the fler component of the mer regime serves as an important tool for dampening the impact of us shocks on the output of the ec

equivalence of the core and competitive equilibrium in a tiebout economy with crowding types abstract we propose a new model of a local public goods economy with differentiated crowding the new feature is that taste and crowding characteristics of agents are distinguished from one another we prove that if the economy satisfies strict small group effectiveness then the core is equivalent to the set of tiebout equilibrium outcomes equilibrium prices are defined to depend solely on crowding characteristics this implies that only publicly observable information and not private information such as preferences is needed to induce agents to sort themselves into efficient jurisdictions thus our model allows us to satisfy bewley s 6 anonymity requirement on taxes in his well known criticism of the tiebout hypothesis