banking in computable general equilibrium economies abstract in this paper we develop a computable general equilibrium economy that models the banking sector explicitly banks intermediate between households and between the household sector and the government sector households borrow from banks to finance their purchases of houses and they lend to banks to save for retirement banks pool households savings and they purchase interest bearing government debt and non interest bearing reserves we use this structure to answer two sets of questions one normative in nature that evaluates the welfare costs of alternative monetary and tax policies and one positive in nature that studies the real effects of following a procyclical interest rate policy rule

penetration of industrial country markets by agricultural products from developing countries approximately 55 percent of food and 60 percent of non food agricultural exports of the developing countries are sold in industrial country markets market access is therefore important while the developing countries have been able to increase the market penetration of their manufactured exports in industrial countries at a remarkable rate of approximately 8 percent in the 1970s market penetration in agricultural commodities has generally been less successful from 1970 to 1980 the developing countries were able to increase their market penetration in processed agricultural commodities from 3 5 to 3 7 percent which amounts to an average annual increase of only 0 6 percent in basic agricultural products like sugar maize tomatoes and beef they even incurred losses in their market share that corresponded to an increase in the degree of self sufficiency of the industrial countries in particular the european community

real and money wages output and inflation in the semi industrialized world recent structuralist ideas about real and money wage changes are reviewed addressing six questions 1 in an economy closed to trade do real wage increases cause output to rise or fall 2 if output is at an upper bound what are the roles of real wage and wealth movements in macro adjustment 3 taking effective demand into account do money wage cuts stimulate employment 4 in an open economy does money wage reduction or devaluation make output rise 5 at an output bound what are the respective roles of wage reduction and monetary restraint in slowing inflation 6 if inflation is driven by cost with output below capacity how do wage dynamics affect stabilization programmes based on de indexation and price freezes institutional factors suggest that wage cutting may be a counterproductive answer to all these policy questions in semi industrialized economies

e ztax tax salience and tax rates this paper examines whether the salience of a tax system affects equilibrium tax rates i analyze how tolls change after toll facilities adopt electronic toll collection etc drivers are substantially less aware of tolls paid electronically i estimate that in steady state tolls are 20 to 40 percent higher than they would have been without etc consistent with a salience based explanation for this toll increase i find that under etc driving becomes less elastic with respect to the toll and toll setting becomes less sensitive to the electoral calendar alternative explanations appear unlikely to be able to explain the findings

applied general equilibrium models of taxation and international trade an introduction and survey we wish to acknowledge the help of three referees and of john pencavel on several earlier drafts as well as the assistance of the modelers whose work is referred to in the paper they corrected our lack of understanding of their work and provided many other helpful comments excellent research and bibliographical assistance have been provided by debbie fretz radwan shaban and janet stotsky helpful comments have been made by charles ballard michael boskin lans bovenberg sylvester damus harvey galper glenn harrison gordon lenjosek jack mutti serena ng t n srinivasan charles stuart and eric toder the authors also acknowledgefinancial support from the national bureau of economic research the national science foundation international business machines and the social sciences and humanities research council ottawa canada

can poor consumers pay for energy and water an affordability analysis for transition countries low income households spend a substantial share of their income on utility services such as electricity heating and water the difficulty of these socially vulnerable consumers to absorb further price increases is often used as an argument against tariff reform however detailed quantitative information on the affordability of tariff adjustments for low income consumers is actually quite scarce much of the available information is based on households this paper takes a more detailed look at the affordability of electricity district heating and water for low income consumers in transition countries while the available data are incomplete the paper finds that affordability is a problem for low income consumers in most countries in particular in the water sector and in the commonwealth of independent states cis the affordability consequences of tariff reform ultimately depend on the speed of tariff adjustments relative to the growth in household income the level of tariffs needed for cost recovery the level of effective tariffs at the outset tariffs adjusted for non payment and the demand response to the tariff increase the paper finds that delaying tariff reform by a few years makes little difference to affordability constraints and may therefore not be an effective way to mitigate the social impact of utility reform

the supply and demand for exports in israel abstract using annual data for israel over the period 1960 1989 we estimate an econometric model for the supply and demand for exports a novel feature is that domestic absorption crowds out export supply exports are imperfect substitutes in world markets for tradeables produced abroad the price elasticity of demand is about 1 3 while the price elasticity of supply is about 1 5 the model is simulated to calculate the effects of policy instruments and other exogenous variables on exports and export prices

macrodynamic adjustment mechanisms in india abstract the dynamic interplay among food prices manufacturing profitability and investments is investigated in a macrodynamic model of india the interaction between agriculture and the rest of the economy and the role of the income distribution are emphasized the dynamic mechanisms include investment response in agriculture and manufacturing and wage indexation the sixth five year plan is used to establish a trend growth reference path for the analysis policy experiments show trade offs among growth inflation and income distribution that should be taken into account when fiscal policies and investment strategies are decided

on the specification of price in studies of consumer demand under block price scheduling using a new model formulation and data from a sample of colorado utilities we investigated the price specification controversy marginal price versus average revenue when estimating residential water demand the improved statistical fit using average

inflation growth and wage policy a brazilian perspective abstract a growth inflation model based on recent brazilian experience is developed the paper focuses on brazilian compulsory wage policy in order to analyse current stabilization policy issues in this context it is argued that orthodox stabilization policies as exemplified by an autonomous reduction in the rate of monetary growth implies both a temporary and a permanent decrease in output growth if the wage formula as in brazil provides for lagged price indexation the idea of promoting stabilization through full wage indexation is also examined

automatic bill payment and salience effects evidence from electricity consumption abstract the introduction of automatic bill payment abp programs in 2005 eliminated the need for consumers to view recurring bills if those enrolled in abp programs offered by utilities and other service providers forgo inspection of their recurring bills then price salience declines prices perceived by boundedly rational agents fall and consumption increases this paper considers the impact of such programs on consumer demand and welfare and empirically tests whether enrollment in such programs increases demand results show abp enrollment increases residential electricity consumption by 4 0 and commercial electricity consumption by as much as 8 1 enrollment in programs designed to smooth seasonal variation in monthly utility bills of low income customers results in 6 7 greater electricity use

china s membership in the world trade organization wto and the exports of the developing economies of east asia a computable general equilibrium approach there is a general perception particularly among the developing countries of east asia that china s wto membership would spell bad news for their exports the asean countries in particular are quite concerned about its likely negative impact on their export and growth potentials in this light the main objective of this paper is to empirically assess the trade implications of china s wto membership for these countries only few studies using a computable general equilibrium cge approach have addressed the issue of china s wto membership trade implications further these studies have not adequately addressed the issue from the perspective of the developing countries of east asia particularly the asean countries using the latest version of the global trade analysis project gtap model and based on the latest tariff reduction commitments by china the results showed that contrary to the current perception and previous studies almost all of the developing countries of east asia are likely to benefi

infrastructure quality and the subsidy trap abstract electricity and water are often subsidized in developing countries to increase their affordability for low income households ideally such subsidies would create sufficient demand in poor neighborhoods to encourage private investment in their infrastructure instead many regions receiving large subsidies have precarious distribution networks supplying users who never pay using a structural model of household electricity demand in colombia i predict the change in consumption and profits from upgrading low quality electricity connections i show that the existing subsidies which provide greater transfers to areas with unreliable supply deter investment to modernize infrastructure finally i analyze alternative programs with stronger investment incentives jel h23 h54 l94 l98 o12 o13

is there an energy efficiency gap many analysts have argued that energy efficiency investments offer an enormous win win opportunity to both reduce negative externalities and save money this overview paper presents a simple model of investment in energy using capital stock with two types of market failures first uninternalized externalities from energy consumption and second forces such as imperfect information that cause consumers and firms not to exploit privately profitable energy efficiency investments the model clarifies that only if the second type of market failure cannot be addressed directly through mechanisms such as information provision energy efficiency subsidies and standards may be merited this chapter therefore reviews the empirical work on the magnitude of profitable unexploited energy efficiency investments a literature which frequently does not meet modern standards for credibly estimating the net present value of energy cost savings and often leaves other benefits and costs unmeasured these problems notwithstanding recent empirical work in a variety of contexts implies that on average the magnitude of profitable unexploited investment opportunities is much smaller than engineering accounting studies suggest finally there is tremendous opportunity and need for policy relevant research that utilizes randomized controlled trials and quasi experimental techniques to estimate the returns to energy efficiency investments and the welfare effects of energy efficiency programs

computable general equilibrium models and monetary policy advice this paper argues that variations of extant general equilibrium monetary models are capable of generating real time economic forecasts comparable in accuracy to those generated under the standard federal reserve board staff methodology specifically we argue that over the 1984 1990 period forecasts generated by versions of the limited participation models developed by fuerst 1992 and christian0 and eichenbaum 1992a 1992b compare favorably with those contained in the board staff s greenbook briefing documents we conclude that further development of these models holds promise for fully integrating the forecasting and policy analysis elements of the federal reserve s monetary policy advice process

how natural gas tariff increases can influence poverty results measurement constraints and bias abstract energy tariff increases are generally essential to address environmental and fiscal concerns but they can also push households into poverty this paper estimates the expected poverty and distributional effects of a significant natural gas tariff reform in the context of armenia that increased the country s residential tariff by about 40 it is the first paper in the literature on energy tariff reforms to simultaneously try and control for substitution between all major energy sources not just some to take into account the seasonality of consumption over the full annual cycle and to apply different methods to assess changes in household consumption on natural gas and shifts in natural gas between main and supplementary heating sources existing papers thus generally overestimate the potential effects of energy price increases on household welfare the results here which face like any statistical study a set of important methodological constraints suggest nonetheless that this significant tariff increase led to an estimated 8 of households shifting away from gas mainly towards wood as their heating source it consequently resulted in an estimated 2 8 of households falling below the national poverty line while likely also influencing non monetary human welfare that cannot be well captured econometrically finally methodological assumptions and limitations in assessing these relationships as well as potential policy implications are outlined

residential consumption of gas and electricity in the u s the role of prices and income abstract we study the residential demand for electricity and gas working with nationwide household level data that cover recent years namely 1997 2007 our dataset is a mixed panel multi year cross sections of dwellings households in the 50 largest metropolitan areas in the united states as of 2008 we estimate static and dynamic models of electricity and gas demand we find strong household response to energy prices both in the short and long term from the static models we get estimates of the own price elasticity of electricity demand in the 0 860 to 0 667 range while the own price elasticity of gas demand is 0 693 to 0 566 these results are robust to a variety of checks contrary to earlier literature metcalf and hassett 1999 reiss and white 2005 we find no evidence of significantly different elasticities across households with electric and gas heat the price elasticity of electricity demand declines with income but the magnitude of this effect is small these results are in sharp contrast to much of the literature on residential energy consumption in the united states and with the figures used in current government agency practice our results suggest that there might be greater potential for policies which affect energy price than may have been previously appreciated

inertial inflation and the cruzado plan abstract on 28 january 1986 the brazilian goverment decided to freeze all prices this article examines the heterodox shock and the development by brazilian economist of the theory of inertial inflation which served as a theoretical basis for the shock

measuring the energy savings from home improvement investments evidence from monthly billing data an important factor driving energy policy over the past two decades has been the energy paradox the perception that consumers apply unreasonably high hurdle rates to energy saving investments we explore one possible explanation for this apparent puzzle that realized returns fall short of the returns promised by engineers and product manufacturers using a unique data set we find that the realized return to attic insulation is statistically significant but the median estimate 9 7 is almost identical to a discount rate for this investment implied by a capm analysis we conclude that the case for the energy paradox is weaker than has previously been believed

poverty and growth impacts of high oil prices evidence from sri lanka the sharp rise in oil and food prices in 2007 and 2008 caused negative impacts on poverty and economic growth in many oil and food importing developing countries some analysts believe that these countries are under stress again due to a rise in crude oil prices to a two and a half year high in march 2011 which has also been partly responsible for higher food prices in recent months however there is a limited body of empirical evidence available from developing countries on the impact of high oil prices on growth in general and household poverty in particular in this study sri lanka is used as a case study and a computable general equilibrium cge approach is adopted as an analytical framework to explore the growth and poverty impacts of high oil prices the results suggest that urban low income households are the group most adversely affected by high global oil prices followed by low income rural households in contrast estate low income households are the least affected out of all low income households the energy intensive manufacturing sector and services sector are affected most compared to the agricultural sector

mainstreaming green product innovation why and how companies integrate environmental sustainability green product innovation has been recognized as one of the key factors to achieve growth environmental sustainability and a better quality of life understanding green product innovation as a result of interaction between innovation and sustainability has become a strategic priority for theory and practice this article investigates green product innovation by means of a multiple case study analysis of 12 small to medium size manufacturing companies based in italy and canada first we propose a conceptual framework that presents three key environmental dimensions of green product innovation such as energy minimization materials reduction and pollution prevention as identified in the life cycle phases of products based on insights gained from in depth interviews we discuss firms motivations to develop green products environmental policies and targets for products different dimensions of green product innovation and challenges faced during developing and marketing of green products results from the study are then synthesized and integrated in a toolbox that sheds light on various aspects of green product innovation and provides solutions to challenges and risks that are faced by firms finally implications for managers academia and public policy makers are discussed

evaluating tourism s economic effects new and old approaches abstract techniques such as multiplier analysis and input output analysis are still very commonly used to make estimates of the economic impact of changes in tourism expenditure these techniques have serious limitations and as a result alternative techniques have been developed to address the problems computable general equilibrium cge models are now extensively used especially in australia the uk the us and canada to estimate economic impacts of a wide variety of changes and policies across most sectors cge techniques have been used in the tourism context but so far not extensively economic evaluation in tourism thus fails to achieve best practice the paper presents arguments in support of cge modelling as the preferred technique in analysing the economic impacts of tourism and discusses its potential to drive future research in this area that is more relevant to real world tourism destinations

oil prices and rural migration the dutch disease goes south abstract we construct a two period general equilibrium model to evaluate policies affecting agricultural migration and exports the model is applied to mexico for the period 1986 1987 to obtain certain qualitative policy conclusions related to the dutch disease brought about by oil price increases dutch disease phenomena can be brought about both as the result of real exchange rate changes as well as price changes caused by migration out of agriculture in the short run it may be possible to use fiscal policy such as value added subsidies to agriculture to at least partially negate the effects of an oil price increase on agricultural exports jel f31 f41

do you need a receipt exploring consumer participation in consumption tax evasion as an ethical dilemma the paper focuses on the consumer side of consumption tax evasion cte a subcategory of the shadow economy the ethical dimensions of tax evasion have been effectively captured by the existent literature on tax morale yet it fails to address the role consumers can play in cte further there is a shortage of tax morale studies that explore ethical decision making as a process composed of multiple steps and determinants to bridge these gaps we turned to the consumer ethics literature and jones issue contingent model of ethical decision making we developed the conceptual model of consumer ethical decision making for cte by incorporating four key elements from the issue contingent model i e moral recognition moral judgement moral intention and moral intensity while personal moral philosophies were introduced as an antecedent to the consumer ethical decision making process the study was conducted on a sample of consumers from slovenia where cte is a widespread phenomenon the findings confirm that consumers recognition of cte as a moral issue is influenced by their moral philosophy and perceptions regarding the magnitude of cte s consequences their visibility probability and temporal immediacy these perceptions also play an important role in determining consumers moral judgements and intentions regarding cte moreover through the process of moral recognition and moral judgement consumers form intentions to participate in or avoid cte the study holds important implications for public policy makers who are trying to reduce the tax gap in times of economic instability and fiscal crisis

demand for india s manufactured exports abstract surprisingly few estimates exist of disaggregated world demand functions for ldc exports despite the obvious policy importance of the inherent price elasticities time series simultaneous equation estimates are herein presented of world demand for 23 categories of manufactured exports from india tests for homotheticity separability whether price elasticity of demand differs during world recession and for effects of foreign learning about india s exports are reported estimated price elasticities range from below unity to infinity revealing important variations masked by aggregate studies these results raise considerable doubts about policy design from a uniform small country assumption

constructive consumer choice processes consumer decision making has been a focal interest in consumer research and consideration of current marketplace trends e g technological change an information explosion indicates that this topic will continue to be critically important we argue that consumer choice is inherently constructive due to limited processing capacity consumers often do not have well defined existing preferences but construct them using a variety of strategies contingent on task demands after describing constructive choice consumer decision tasks and decision strategies we provide an integrative framework for understanding constructive choice review evidence for constructive consumer choice in light of that framework and identify knowledge gaps that suggest opportunities for additional research

a computational general equilibrium model with endogenous unemployment an analysis of the 1980 fiscal reform in mexico abstract in this paper we develop a general equilibrium model of the mexican economy in which unemployment and government deficits play important roles the unemployment rate depends on a downwardly rigid real wage in the urban sector the government runs a deficit simply by selling bonds that consumers consider perfect substitutes for physical capital as savings instruments the model is used to analyze the impact of the 1980 fiscal reform the presence of the rigid real wage and alternative specifications of government policies regarding the size of the deficit are found to have significant effects on the comparative statics results whether or not the reform improves the welfare of rural households compared to urban households for example depends on whether government policy is to keep the deficit constant or keep expenditures constant in response to changes in tax revenues

financial intermediation and monetary policy in a general equilibrium banking model the process by which monetary policy affects the level of financial intermediation or the credit chahnel has been the focus of a great deal of research recently see for example the survey paper by hubbard 1994 an important issue which is a focus of this paper is when does expansionary monetary policy result in an increase in lending and when does the policy simply lead to more inflation while there are many types of financial intermediaries i focus on intermediation through a traditional banking system in which banks are subject to reserve requirements banks act as an intermediary between households and the government and between savers and producers borrowers banks are able to raise funds by holding demand deposits and by issuing equity capital monetary policy is implemented by open market operations and changes in nominal reserves the policies are linked through the government s budget constraint by developing a model with a traditional banking sector the effects of monetary policy on the balance sheet of the bank can be explored monetary policy can lead to a substitution among a bank s assets which affects nominal lending and possibly real output it can also lead to a change in the size of the bank s balance sheet by changing demand deposits and equity capital the model has the feature that there is an optimal deposit equity capital ratio the real value of deposits and equity capital is equal to real savings in the economy prices adjust so that the real savings just equals the real value of the assets in the banking sector monetary policy may have real effects because it determines the amount of real wealth transferred between

empirical estimates of the direct rebound effect a review beginning with william stanley jevons in 1865 a number of authors have claimed that economically justified energy efficiency improvements will increase rather than reduce energy consumption jevons paradox is extremely difficult to test empirically but could have profound implications for energy and climate policy this paper summarises and critiques the arguments and evidence that have been cited in support of jevons paradox focusing in particular on the work of len brookes and harry saunders it identifies some empirical and theoretical weaknesses in these arguments highlights the questions they raise for economic orthodoxy and points to some interesting parallels between these arguments and those used by the biophysical school of ecological economics while the evidence in favour of jevons paradox is far from conclusive it does suggest that economy wide rebound effects are larger than is conventionally assumed and that energy plays a more important role in driving productivity improvements and economic growth than is conventionally assumed 2008 elsevier ltd all rights reserved

a short run general equilibrium model for a small open economy abstract this paper introduces some features observed in developing countries into a cge model in particular quantitative restrictions on exports and imports are incorporated and quota derived rents are included as a source of income the economy is assumed to be small only on the import side such that export prices are endogenous a distinction between traded and treadeable goods is introduced together with the possibility of water in the tariff thus the law of one price need not hold another key feature is the modelling of supply with unutilized capacity thus excess demands clear by price changes output adjustments or imports depending on the degree of capacity utilization the tradeability of the good and the trade regime an empirical application of the model shows that in a ge context import quotas can worsen the trade balance while lowering real income and the real wage rate

terms of trade and class conflict in a computable general equilibrium model for mexico a computable general equilibrium model for mexico is constructed in which class conflict over the distribution of the surplus is the principal determinant of the terms of trade the model consists of seven social classes and eight productive sectors classes are distinguished as fundamental or subsumed according to whether their incomes are primarily determined by conscious class struggle or by the resulting system of relative prices flexible prices are assumed to clear markets for which non produced means of production such as agricultural land limit supply while output in the remaining sectors is determined by the level of effective demand for the latter sectors two theories of price formation are compared and are seen to differ radically in their implicit conception of the nature of class conflict a keynes kalecki closure is considered in which prices are determined by a fixed mark up on costs this enables capitalists to protect themselves from incursions on the rate of profit due to labou

computable general equilibrium models for development policy analysis in ldcs abstract the use of cge models has gained much popularity among policy analysts in ldcs and there is a fast growing body of literature on this area of economics in this survey the advantages of general equilibrium approach over partial equilibrium approach in analysing a wide range of policy issues are highlighted the evolution of cge modelling is discussed and more than 60 cge applications related to different policy issues in ldcs are surveyed this comprehensive survey shows that the cge models have become quite popular analytical tools among policy analysts in ldcs over the last decade or so the debate in the economic profession regarding the value and appropriateness of using cge models for policy analysis is examined in the final section of this paper some of the criticisms levelled at cge models are discussed and it is argued that despite this criticism such models are capable of providing insight into important policy problems

short run rigidities and long run adjustments in a computable general equilibrium model of income distribution and development this paper summarizes the structure of a a computable general equilibrium model which incorporates short run disequilibrium mechanisms stemming from natural rigidities of the economic system illustrative simulations based on the venezuelan economy are reported the model seems a priori to offer a more satisfactory representation of the sequence of short run effects leading to a structural modification of the economy after some exogenous shock the adjustment is more progressive than with a pure general equilibrium model and involves quantity variables as well as price variables with the rather realistic macroeconomic specifications selected for these experiments however this double adjustment process has spillover effects that would not be found so explicitly in pure models the paper which is mainly theoretical shows simply that generalizing the available computable general equilibrium models to disequilibrium situations and price quantity adjustment mechanisms is quite possible although not easy

who buys overpackaged grocery products and why understanding consumers reactions to overpackaging in the food sector while most studies dealing with waste reduction at the consumer level focus on recycling this paper rather concentrates on precycling strategies and purchasing behaviors in order to understand how to promote waste reduction at the source more specifically the purpose of this work is to grasp consumers perceptions of overpackaging and understand the mechanisms underlying their choice of overpackaged versus non overpackaged food products based on the different themes that emerged from a qualitative study study 1 n 11 a quantitative research was conducted among french interviewees study 2 n 327 in order to identify relevant groups of consumers five profiles emerged from the cluster analysis the supporters the self sacrificing the detractors the indifferent and the self centered finally an experiment was conducted study 3 n 808 that highlights the influence of range positioning and salience of non overpackaging on consumer choice implications for public policy makers and companies are discussed

revisiting the inertial inflation hypothesis for brazil abstract inflation has been a major problem of the brazilian economy in the early eighties the inertial inflation approach became very influential in brazil according to this approach the inflation rate has a path determined by its own past it is persistent shocks aside today s inflation equals last period s rate of inflation the purpose of this paper is to reevaluate the inertial inflation hypothesis from an empirical perspective after briefly mentioning the theoretical ideas behind the inertial approach the inflationary persistence inertia is empirically evaluated using time series techniques the results show that there is inertia however its importance is not large similar analyses are also carried out for argentina and germany the argentinean results are analogous to those found for brazil while the inflationary persistence found for germany is almost nil

thinking outside the packaging box should brands consider store shelf context when eliminating overpackaging governmental policies are encouraging companies to reduce the environmental impact of their packaging and particularly overpackaging which raises a broad range of ethical considerations however experiments comparing an overpackaged product with a non overpackaged product have shown that eliminating overpackaging may have a negative influence on brand image and consumer purchase intention in this paper we draw on attribution theory to examine the influence of the absence vs presence of overpackaging on consumers response depending on their environmental consciousness and the absence vs presence of overpackaging on the competing product an experiment conducted on 218 consumers demonstrates that non overpackaging for a target product only adversely affects purchase intention among non environmentally conscious consumers when competing products are overpackaged these results lead to optimistic recommendations for marketing managers and public policy makers to help them solve the ethical dilemma linked to overpackaging

a general equilibrium model of structural change and economic growth with application to south korea abstract this paper presents a computable general equilibrium model for south korea it is a dynamic input output model solved by assuming equal sectoral growth rates its solution gives output and price relatives which measure the structural distance of the economy from the turnpike comparisons of these model solutions with actual output proportions and relative prices provide insights into the south korean industrialization process however the model s strict assumptions limit its applicability and provide problems of interpretation especially in open economies

the value of scarce water measuring the inefficiency of municipal regulations abstract rather than allowing urban water prices to reflect scarcity rents during periods of drought induced excess demand policy makers have mandated command and control approaches primarily rationing the use of water outdoors while such policies are ubiquitous and likely inefficient economists have not had access to sufficient data to estimate their economic impact using unique panel data on residential end uses of water in 11 north american cities we examine the welfare implications of urban water rationing in response to drought using estimates of expected marginal prices that vary both across and within markets we estimate price elasticities specific to indoor and outdoor water use our results suggest that current policies do target water uses that households themselves are most willing to forgo nevertheless we find that rationing outdoor water in cities has costly welfare implications primarily due to household heterogeneity in willingness to pay for scarce water we find that replacing rationing policies with a market clearing drought price would result in welfare gains of more than 29 of what households in the sample spend each year on water

restructuring and privatizing electricity industries in the commonwealth of independent states abstract this paper discusses the problems of restructuring electric power sectors in the countries of the commonwealth of independent states cis and examines in detail electric utility privatization in armenia privatization of electric power is expected to provide needed foreign investment increase efficiency and rationalize resource allocation progress in utility commercialization and industry and market restructuring in the cis is compared with that in central and eastern europe this paper presents the argument that throughout the cis little progress has been made because the investment needs of the electricity industry are not great compared with the strategic and political benefits that can be had by not privatizing and because the political and strategic dimensions of electrical power in the region create large risks for potential investors risk of investment is amplified by the large amount of spare generating capacity and continuing operation of significant government operated capacity armenia is found to provide a striking example of conditions and trends in the cis countries prospects for the future of restructuring are considered and specific measures that could be taken to improve those prospects are suggested

high growth and low consumption in east asia how to improve welfare while avoiding financial failures this paper analyzes certain policies that are typical of a number of rapidly growing east asian countries in which a fixed exchange rate combined with a surplus labor market has made domestic assets relatively inexpensive generating high rates of fdi as well as domestic capital formation this investment hunger can lead to unanticipated declines in the returns to investment and resulting financial insolvencies private consumption remains low and there are concerns that high savings rates cannot be sustained we construct a dynamic general equilibrium model and apply it to a stylized asian economy loosely based upon china we calibrate a benchmark equilibrium and carry out various counterfactual simulations to analyze alternative policies in particular tax cuts and exchange rate revaluations as instruments in increasing private consumption while avoiding bank failures

inflationary rigidities and orthodox stabilization policies lessons from latin america orthodox stabilization programs in latin american countries have been notoriously unsuccessful in combating inflation despite the imposition of stringent cuts in government deficits in most cases inflation came down only slowly and temporarily with concomitant declines in growth and employment the bolivian program one of the only latin american successes is contrasted with those of argentina brazil chile and mexico the problems of dealing with chronic inflation are compared with those of hyperinflationary countries and the influence of price and wage rigidities expectations and credibility is explored the study shows that fiscal restraint is a necessary but not sufficient condition for success and that sound management of nominal variables the exchange rate and money supply are also necessary the critical role of credibility is linked with price and wage rigidities in the chronic inflation countries whereas the unsuitability of hyperinflation is seen to increase the credibility of and thus the potential for successful stabilization programs

a stagnationist model of economic growth in an economy subject to persistent excess capacity demand related factors will play a key role in determining patterns of secular change this thesis has a long history in econ omics sometimes in the underworld and occasionally at the height of fashion as recounted by rowthorn 1982 recent manifestations in the first world are the theories of monopoly capitalism of baran and sweezy 1966 and steindl 1952 who in turn follow kalecki 1971 hobson 1902 luxemburg 1951 and the marx of realisation crises and reproduction schemes in volume ii of capital other radicals such as boddy and crotty 1975 add a profit squeeze explanation of the cycle which underlays the dynamics of the growth model specified here in developing countries difficulties in both realisation and sectoral proportions are emphasised as obstacles to growth witness lustig s 1980 review of latin american structuralist theory and dutt s 1984 model which formalises an ongoing controversy in india about how income redistribution might affect prospects for industrialisation all these authors are stagnationist in assuming that both the growth rate and the level of capacity utilisation can be different under different conditions of income distribution and or macroeconomic policy their preferred policies will presumably lead to greater equality increase utilisation or step up growth they typically ask two analytical ques tions how does output respond in the short run to shifts in the income distribution how do output adjustments feed back into distributional dynamics especially under conditions when price and wage inflation rates may be influenced by employment levels productivity changes and conflicting income claims in what follows we set out a simple model to address these questions and explore the implications for macroeconomic policy of the answers that arise since the approach is not familiar to economists with a standard training a verbal description of the growth model is given first those who wish to jump directly into a formal presentation can proceed to section 1 output x is assumed to meet demand in an instantaneous short run we measure activity as the ratio of firms net cash inflow to the value of capital stock i e the rate of profit r during the short run the price level p is fixed by a mark up rule p 1 x wb where r is the mark up rate w the money wage and b the labor output ratio with this rule the share of profits or mark up income in the value of output is r l t let u stand for the output capital ratio or capacity utilization xik by simple identity

a shoven whalley model of a small open economy an illustration with philippine tariffs abstract this paper describes an applied general equilibrium model of a price taking economy in both imports and exports sector specific factors are incorporated to avoid complete specialization problems a hicksian composite traded good market is used for achieving trade balance in the model foreign and domestic goods are assumed perfect substitutes for illustration philippine tariffs and export taxes are analyzed using the model

how much do electricity tariff increases in ukraine hurt the poor abstract increasing the electricity tariffs for private consumers to cost covering levels has been a very sensitive issue for all transition countries the likely negative social consequences are the central argument why the necessary tariff corrections have not yet been implemented in ukraine by the political decision makers since official data is not available there is insufficient knowledge regarding the electricity consumption behaviour of private households this makes it difficult to counter the official arguments with hard evidence a survey was carried out by the authors giving a more detailed picture basic data of the survey was used in evaluating the impact of possible tariff increases on the household expenditures of different income groups using both the compensating cv and the equivalent variation ev methods the findings confirm that an electricity tariff increase up to the level which would cover officially measured costs as defined by the ukrainian electricity regulatory authority would not cause severe social problems however further increases up to a level which would cover the true costs i e up to a level comparable to the average oecd level should only be realised in steps

garment industry in sri lanka and the removal of gsp plus by eu the ready made garment industry plays an important role in sri lanka both in terms of export earnings and poverty alleviation through employment generation following the removal of gsp plus by eu in 2010 on the basis of alleged human right violations by the sri lankan government during the last stage of the civil war in 2009 and after it currently faces serious challenges in exporting to the eu its major market given the important role of the ready made garment industry in poverty alleviation through employment generation the impact of removal of gsp plus on the poor is examined in this paper the empirical results of this study demonstrate that poverty and income inequality are expected to be exacerbated in sri lanka as a result of the removal of gsp plus by the eu using non economic reasons such as human rights violation the results are also relevant for the renewed emphasis on trade preferences as a potential instrument for the millennium development goals and the debate on how trade preferences are to be designed to maximise their effectiveness in stimulating a manufacturing supply response

comparing residential water demand estimates under decreasing and increasing block rates using household data using a new model formulation and data from a sample of colorado utilities we investigated the price specification controversy marginal price versus average revenue when estimating residential water demand the improved statistical fit using average

the impact of labor contracts evidence from brazil i introduction underlying the keynesian approach to macroeconomics is the assumption of inefficiencies or as they are sometimes called frictions the precise sort of friction to be introduced into the model however is controversial a traditional friction uses sticky nominal wages 1 one common explanation for sticky nominal wages is labor market contracts that is contracts that fix the nominal wage workers receive and then allow firms to determine the level of employment 2 fischer 1977 phelps and taylor 1977 and taylor 1979 present typical models which assume that contracts make nominal wages rigid to some degree and that the level of employment is adjusted in accord with the firm s labor demand schedule nominal wage contracts also are common when developing the textbook is lm and ad as models at the professional level fischer 1987 has argued strongly in favor of the is lm model and gali 1992 suggests that this model fits the postwar u s experience reasonably well the standard view of the effects from nominal wage contracts has been challenged barro 1977 pointed out that even though a labor contract may fix the nominal wage firms and workers can equate the marginal product of labor to the marginal value of workers time over all states of nature and thus jointly insure that employment does not deviate from its efficient auction market level hall 1980 extended barro s insight by arguing that labor relationships are long tenn so that each side has an incentive to deal fairly with the other by not taking advantage of changes in the price level essentially barro and hall show that a contract allowing employment to be determined solely by a firm s labor demand curve is inefficient indeed the barro hall conclusion that fixed nominal wages may co exist with efficient levels of labor employment is an important justification for the implicit assumption in most real business cycle models that employment is determined in an auction like labor market some economists such as ahmed 1987 card 1990 and keane 1993 have directly studied the importance of labor contracts the results from these papers are mixed ahmed investigates the importance of contracts that fix the nominal wage by testing whether the responses of employment and output to changes in the money supply are sensitive to the degree of wage indexation the basic idea is that if nominal wage contracting matters the less flexible that is the less indexed is the wage the greater the impact of a monetary shock on employment and output using canadian manufacturing industries which employ a variety of indexing schemes ahmed fails to find any relationship between the degree of contracting and the extent to which a monetary shock affects real variables keane uses data on individuals from the national longitudinal survey of young men to study the response of real wages to unanticipated inflation and monetary growth to the extent that contracts fix the nominal wage workers are paid unexpectedly higher inflation should lower the real wage keane however finds no evidence in support of this proposition finally card who also used canadian data asserts that it is the unexpected fall in the real wage namely unanticipated price rises along with the degree of indexation that should generate positive employment responses 3 he thus constructs measures of unexpected inflation and real wage changes contrary to ahmed and keane card s results support a role for surprise inflation in raising employment levels via end of contract real wage levels card concludes that nominal contracts are instrumental in determining labor and output reactions in this paper we follow ahmed card and keane by providing some additional evidence on the real effects from nominal wage contracting we use brazilian data and exploit the fact that brazilian firms were required by law to adjust workers salaries at specified intervals to keep pace with inflation which was very high and productivity

the short run impact of fluctuating primary commodity prices on three developing economies columbia ivory coast and kenya abstract computable general equilibrium models are used to study the short run impact of fluctuating primary commodity prices on the economies of columbia ivory coast and kenya the results indicate that these economies are destabilized by primary commodity price fluctuations unless governments act to hold real domestic absorption constant to achieve this however would require foreign exchange reserves in excess of the level normally available to these governments for the purpose of stabilizing domestic economic activity

the equity and efficiency of two part tariffs in u s natural gas markets abstractresidential natural gas customers in the united states face volumetric charges that average about 30 percent more than the marginal cost of gas this inefficient departure from marginal cost pricing allows gas utilities to cover their fixed infrastructure and operating costs proposals for recovering these costs instead through fixed monthly fees are often opposed because of a widespread belief that current rate schedules have desirable distributional consequences using nationally representative household level data we show that the correlation between household income and natural gas consumption is indeed positive but surprisingly weak so current rate schedules are only mildly progressive in part we argue that this is because poor households tend to have larger families and less energy efficient homes we calculate bill impacts under a variety of scenarios and show that even a modest energy assistance program would more than offset the distributional impact of tariff rebalancing for most low

rational inattention and energy efficiency abstractthis paper argues that it will often be rational for consumers to pay limited attention to energy efficiency when choosing among energy consuming durable goods like automobiles or home appliances the reason is that the proper valuation of energy efficiency requires time and effort but differences in efficiency across products will rarely be pivotal to choice when consumers have strong preferences regarding other product attributes the paper first explains why proper valuation of efficiency is difficult even in the presence of government energy labels it next develops a model that shows how to value additional information about energy efficiency in a discrete choice context it then uses data on automobiles to show that consumers experience only small welfare losses when forced to choose a car without detailed information about fuel costs finally the paper discusses the implications of rational inattention for both economic research and public policy

sensitivity of price elasticity of demand to aggregation unobserved heterogeneity price trends and price endogeneity evidence from u s data abstract price elasticity estimates of residential electricity demand vary widely across the energy economics and policy literature in this paper we seek to explain these findings using three nationwide datasets from the u s the american housing survey forms eia 861 and the residential energy consumption survey we examine the role of the sample period level of aggregation use of panel data use of instrumental variables and inclusion of housing characteristics and capital stock our findings suggest that price elasticities have remained relatively constant over time upon splitting our panel datasets into annual cross sections we do observe a negative relationship between price elasticities and the average price whether prices are rising or falling appears to have little effect on our estimates we also find that aggregating our data can result in both higher and lower price elasticity estimates depending on the dataset used and that controlling for unit level fixed effects with panel data generally results in more inelastic demand functions addressing the endogeneity of price and or measurement error in price with instrumental variables has a small but noticeable effect on the price elasticities finally controlling for housing characteristics and capital stock produces a lower price elasticity

inflation and the poor using polling data for 31 869 households in 38 countries and allowing for country effects the authors show that the poor are more likely than the rich to mention inflation as a top national concern this result survives several robustness checks also direct measures of improvements in well being for the poor the change in their share of national income the percentage decline in poverty and the percentage change in the real minimum wage are negatively correlated with inflation in pooled cross country samples high inflation tends to lower the share of the bottom quintile and the real minimum wage and tends to increase poverty

macroeconomic adjustment and income distribution alternative models applied to two economies abstract to analyze the impact of alternative macroeconomic adjustment mechanisms on the distribution of income in developing countries we construct a cge model that is general enough to incorporate neoclassical neo keynesian and a variety of structuralist macro closure rules the model is applied to two economies brazil and korea with alternative macro closures both for savings investment and for the balance of trade we find that 1 the size distribution of income is largely insensitive to macro closure rules 2 the functional distribution is very sensitive to macro closure rules and 3 the balance of trade closure is at least as important in determining distributional outcomes as the savings investment closure

export subsidies and the balance of trade abstract we analyze the relationship between export subsidies and the balance of trade in a semi small ldc type economy facing fixed world prices for imports but negatively sloped demand curves for exports the paper examines the dual role of export subsidies as a mechanism to increase the competitiveness of exports and thus reduce the trade deficit and as a net injection of government spending which will enlarge the trade deficit the key finding are i export subsidies by themselves will reduce the trade deficit only if the export price elasticity is very high and domestic prices are constant ii for a lower price elasticity and or changing domestic prices because say a sector is at full capacity export subsidies will worsen the trade deficit iii when however export subsidies are accompanied by a reduction of government spending equal to the cost of the subsidies the trade deficit will decrease while at the same time real gnp will increase

stabilisation strategies in primary commodity exporting countries a case study of chile abstract a range of stabilisation options are considered to enable the chilean economy to accomodate a reduction in world copper prices these include macroeconomic wage and trade devaluation protection export subsidies policies using a multisectoral model the paper checks the ability of these option to reach employment and current account targets while quantifying their implications for other macroeconomic and structural variables each option is efficient in some degree in meeting one target while violating the other external and internal equilibrium cannot however be simultaneously achieved without cuts in both money wages and real absorption trade policies in themselves are insufficient

exogenous shocks contagion and bank soundness a macroeconomic framework abstract in a model where all banks are initially solvent an exogenous shock affects confidence causing a flight from deposits into domestic and foreign currency real interest rates increase unexpectedly affecting firms and raising the share of the banks nonperforming assets this contagion causes a bank run simulations show that compensatory monetary policy mitigates the bank run but causes macroeconomic imbalances combining compensatory monetary policy with tight fiscal policies slows the bank run and mitigates insolvency a devaluation combined with compensatory monetary policy reduces insolvencies and increases the growth of real income but at the cost of increased inflation

the welfare analysis of a free trade zone intermediate goods and the asian tigers we analyse trade reform among the asean countries which recently began removing all mutual trade barriers the standard method to avoid complete specialisation in traded goods is to distinguish goods both by physical type and place of origin the so called armington assumption this methodology is not suitable for the sort of intermediate goods produced by the asean countries we develop a computational approach in the context of a non armington dynamic general equilibrium model analysing the results of a calibrated version of the model we find that trade liberalisation is generally welfare improving for the asean countries

evidence on the specification of price in the study of domestic water demand the development of lakefront property in northern wisconsin has prompted in several towns minimum frontage zoning stricter than the state standard such zoning generates an economic loss by constraining development development effect and an economic

wage indexation turnover and nominal wage changes in brazilian manufacturing 1966 1976 abstract this paper estimates the short run impact of wage indexation on monthly nominal wage changes in two brazilian manufacturing industries between 1966 and 1976 a policy and market force wage determination model is estimated the model includes variables that capture the effects of the annual collective wage adjustment the regional minimum wage demand and inflation monthly data allow identification of the month of impact of the indexation coefficients results suggest that indexation does not fully set wages and support the hypothesis that wages rise between formal adjustments in response to economic forces intra period wage drift is possible because of turnover and recontracting in the labor market

communicating environmental information are marketing claims on packaging misleading the increased usage of questionable environmental marketing claims has become an issue of concern for academics policy makers and consumers much of the research to date has focused on the accuracy of environmental claims in advertisements with the information on product packaging being largely ignored this study uses a content analysis to examine the environmental information on packaging more specifically it examines the packaging of the population of dishwashing liquid bottles available in grocery stores in a large city in australia evaluation criteria are developed to classify the various types of information and the degree to which the information is misleading seven different informational categories and four accuracy categories are developed these criteria are developed based on the existing environmental advertising literature and environmental marketing regulations in the u s and australia it was found that a majority of the packaging information can be classified as being not accurate

responsiveness to energy price changes when salience is high residential natural gas demand in ukraine abstract despite its importance for policy purposes evidence about the price elasticity of natural gas demand in the residential sector is very limited and based on inference from situations with modest variation in prices we focus on a locale and time when price changes were extreme and salient to consumers namely ukraine between 2013 and 2017 we exploit the tariff reforms and detailed micro level household consumption records to assess whether consumers adjust their consumption in response to the rate changes and estimate the price elasticity of the demand for natural gas to isolate behavior attention is restricted to those households that made no structural energy efficiency upgrades to their homes thus keeping the stock of gas using capital fixed we find that households are capable of reducing consumption even without installing insulation or making any other structural modifications to their homes the price elasticity is about 0 16 wealthier households people living in multifamily buildings and heavy users have more inelastic demands households reduced consumption even when they received government assistance this and the fact the demand is inelastic especially for wealthier households bode well for tariffs or energy tax schemes where wealthier households subsidize the consumption of the poorer ones

interactions between trade policies and domestic distortions in a small open developing country abstract this paper reports results from a price taking open economy numerical general equilibrium model of the philippines whose purpose is to explore the ways in which trade policies and other domestic distortions interact in a small open developing economy the trade policies featured in the model include tariffs export taxes and import quotas while the domestic distortions considered are rent seeking and harris todaro labour market dualism results clearly indicate that interactions between trade policies and other domestic distortions are significant and need to be more fully considered in numerical economic policy analyses for developing countries

bank failures and fiscal austerity policy prescriptions for a developing country abstract this work employs a dynamic general equilibrium model to evaluate the causes and implications of bank insolvencies we apply the model to stylized data from bangladesh a country whose banking system is currently suffering from large stocks of non performing assets the model is used to derive positive conclusions about alternative policy instruments designed to alleviate the impact of these insolvencies a benchmark case is simulated using historical exogenous parameters we then generate a bank failure by assuming that firms cannot service their debt if their interest obligations rise above their anticipated return on capital the public withdraws deposits from the banking system in reaction to worries about defaulting bank assets if banks optimize by restricting credit to risky borrowers these failures can be partially avoided such bank behavior is often prohibited in developing countries so we investigate an active monetary policy that compensates banks for withdrawn deposits the resulting outcome indicates that such a policy can slow the pace of bank failures although at the cost of certain macro imbalances our final simulation imposes a reduction in public spending in order to tighten fiscal policy and thereby reduce budgetary pressure the resulting decline in interest rates eliminates all investor defaults and bank failures we conclude that the combination of compensating monetary policy and restrictive fiscal policy may offer the best way of responding to a bank crisis

trade preferences for developing countries a survey of results empirical studies of the trade and development effects of the major preferential trading schemes between the industrialised countries and the developing countries are surveyed most studies find the agreements to be trade creating improving welfare for the donor though general equilibrium analysis indicates that terms of trade deterioration offsets efficiency gains there is some evidence that trade preferences stimulate ldc exports of preferred products but total exports are not significantly affected due to limited product coverage the existing literature does not provide evidence on the degree of infant industry protection or on economic diversification of the beneficiaries

analysis of india s policy reforms he process of major economic reforms undertaken in the indian economy has now completed six years of implementation the economy has entered into a new phase of development directed towards becoming globally competitive through opening up to trade foreign investment and technology inflows the unilateral reforms of the trade and domestic policies of india along with reforms of the tax regime since 1991 represent a significant departure from the policy framework of the previous four decades and are important to the future course of the indian economy there is an ongoing debate in india regarding the likely impacts of sectoral reforms on output employment and other variables that affect the economic wellbeing of the country s population it thus becomes important to evaluate the effects of such policy reforms on factor prices output and trade along with inter sectoral movement of resources viz land labour and capital to address these issues we use a 34 sector computable general equilibrium cge model for india though such ex ante analysis may not be replicated ex post due to various macroeconomic and other factors that our model does not capture the positive results nevertheless go a long way in establishing the credibility of the reforms process we hope therefore that our analysis will provide a more solid underpinning for the ongoing policy debate the paper proceeds as follows the policy relevance of our research is outlined in section 2 in section 3 we elaborate briefly the essential features of the india cge model the various policy scenarios are discussed in section 4 and the results are presented in section 5 in section 6 we report on the sensitivity of the model to changes in some of its essential parameters our findings are summarised in section 7

macroeconomic issues for latin america abstract recent macroeconomic issues in latin america are reviewed with an emphasis on theory topics covered include multiple equilibria from hysteresis or increasing returns exchange rate management and the output and asset market effects of devaluation speculation interest rate management and financial reform government behavior income distribution and growth inertial inflation and heterodox policy shocks and disequilibrium theories

trade strategy in medium term adjustment abstract trade strategy is prominent in current discussions of stabilization and adjustment the orientation of trade strategy can be categorized according to revealed trade performance or characteristics of incentive structures or the nature of the main policy instruments the record of trade stratedy in developing countries has been richer and more complex than currently fashionable dichotomous categorizations in terms of inward or outward orientation suggest many trade strategy and policy issues remain unsettled these include the effects and optimal timing of import liberalization the appropriate instruments for export promotion trade policy concomitants of productivity change and interactions with microeconomic experience and policies among others more country specific and industry specific empirical research is necessary