real exchange rates and relative prices an empirical investigation abstract this paper uncovers a striking empirical regularity the consumer price of a good relative to a different good within a country tends to be much less variable than the price of that good relative to a similar good in another country this fact seems to hold for all goods except very simple homogeneous products models of real exchange rates are likely to have predictions regarding this relation so this fact may provide a useful gauge for discriminating among models

exchange rate exchange rate volatility and foreign direct investment in the light of the importance of foreign direct investment fdi for the promotion of economic development this paper examines the impact of the changes in the real exchange rate and its volatility on fdi examining japan s fdi by industries we found that the depreciation of the currency of the host country attracted fdi while the high volatility of the exchange rate discouraged fdi our results suggest the need to avoid over valuation of the exchange rate and to maintain stable but flexible exchange rate in order to attract fdi

designing optimal disability insurance a case for asset testing we analyze an implementation of an optimal disability insurance system as a competitive equilibrium with taxes an optimum is implemented by an asset tested disability system in which a disability transfer is paid only if an agent has assets below a specified maximum the logic behind this result is that an agent who plans to falsely claim disability a finds doing so unattractive if he does not adjust his savings and b cannot collect disability insurance if he does adjust his savings in the desired direction upward for a calibrated economy we find that welfare gains from asset testing are significant

monopoly provision of product quality and warranties an exploration in the theory of multi dimensional screening we address the monopoly problem of designing and pricing a product line of goods distinguished by different quality and warranty levels consumers vary in their evaluations of these attributes so that the problem is one of screening it is sufficiently complex that the local approach commonly used does not work instead we use new techniques for dealing with incentive constraints between nonadjacent consumer types these techniques allow us to characterize optimal allocations that may not be monotonic in particular although the more eager types of buyer do pay higher prices and yield the monopoly higher profit they may receive lower quality or lower warranty coverage we find preference restrictions that restore monotonicity concave risk tolerance implies that warranty coverage increases in type and constant absolute risk aversion implies that quality increases in type

exchange rate and chinese outward fdi abstractdid the exchange rate er regime change that was announced by the chinese government in 2005 lead to an increased sensitivity of chinese multinational companies mncs to er fluctuations to answer this question our article considers the effect of er level volatility and expectation on the chinese outward foreign direct investment ofdi activities in 119 countries for a period of 2003 2013 we find striking evidence that chinese renminbi appreciation has a negative impact on chinese outward fdi flows and both higher er volatility and expected depreciation encourage chinese outward fdi flows we introduce two complementary effects that explain these findings repatriation effect and mercantilist effect in view of the recent debate about the growing importance of chinese renminbi in the international transactions we believe that our research results shed light on the possible impact of er policies on chinese mncs behaviour and global fdi distribution

pareto efficient income taxation with stochastic abilities abstract this paper studies pareto efficient income taxation in an economy with finitely lived individuals whose income generating abilities evolve according to a two state markov process the study yields three main results first when individuals are risk neutral in any period the only individuals whose earnings are distorted are those who currently are and have always been low ability in addition the degree to which these perpetual low ability types have their earnings distorted decreases over time converging to zero if the time horizon is long enough second the earnings distortions are continuous with respect to the degree of risk aversion at the risk neutral solution third pareto efficient income tax systems can be time consistent even when the degree of correlation in ability types is large the condition for time consistency suggests a novel theoretical reason why the classic equity efficiency trade off may be steeper in a dynamic environment than previously thought

optimal incentives for labor force participation abstract optimal taxation is analyzed under a rawlsian criterion in an economy where the only decision of the agents is to participate or not to the labor force the model allows for heterogeneity both in the agent s productivities and aversions to work at a first best optimal schedule the marginal agent who decides to work pockets all of her productivity while being just compensated for her work aversion when the planner does not observe work aversion financial compensation for work is lower than productivity theory puts little restrictions on the shape of the optimal tax schedules the usual first order conditions involving the elasticities of participation only apply for sufficiently regular economies we qualitatively show how the optimal incentive schemes depend on the underlying structure of the preferences 100 marginal tax rates or subsidies to work are related to specific features of the economies

are real exchange rates nonstationary evidence from a panel data test it is well documented that real exchange rates between the united states and many industrialized countries in the post bretton woods period are integrated this result implies that purchasing power parity ppp does not hold even as a long run relationship this paper demonstrates that the failure to reject the unit root hypothesis may result from the low power of existing univariate test procedures i test for unit roots in real exchange rates by employing a more powerful panel based procedure using both cpi and wpi real dollar exchange rate data i strongly reject the null hypothesis of a unit root my results provide overwhelming support for the long run ppp under the current float copyright 1996 by ohio state university press

foreign direct investment exchange rate variability and demand uncertainty variable real exchange rates influence the location of production facilities chosen by a multinational with risk averse investors and fixed productive factors parent companies should not be indifferent to production location even with identical expected costs of production across countries if a nonnegative correlation exists between export demand and exchange rate shocks the multinational optimally locates some productive capacity abroad the capacity share abroad increases as exchange rate volatility rises and becomes more correlated with export demand shocks these results are confirmed using quarterly u s bilateral foreign direct investment flows with canada japan and the united kingdom copyright 1995 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

welfare work requirements with paternalistic government preferences work requirements in means tested transfer programmes have grown in importance in the us and in some other countries the theoretical literature which considers their possible optimality generally operates within a traditional welfarist framework where some function of the utility of the poor is maximised here we consider a case where society instead has preferences over the actual work allocations of welfare recipients optimality of work requirements is shown to be possible but depends on the accuracy of the screening mechanism which assigns work requirements numerical simulations show that accuracy must be high for optimality earnings subsidies may also be optimal work requirements in means tested or welfare programmes have seen a resurgence in the last twenty years in the us and in a few european countries these requirements generally stipulate that benefit recipients must work or engage in some work like activity for some minimum number of hours each week most economists who have studied the

taxes and employment subsidies in optimal redistribution programs this paper explores how to optimally set taxes and transfers when taxation authorities 1 are uninformed about individuals value of time in both market and non market activities and 2 can observe both market income and time allocated to market employment we show that optimal redistribution in this environment involves distorting market employment upwards for low wage individuals through decreasing wage contingent employment subsidies and distorting employment downwards for high wage individuals through positive and increasing marginal income tax rates in particular we show that whether a person is taxed or subsidized depends primarily on his wage with the optimal program involving a cut off wage whereby workers above the cutoff are taxed as they increase their income while workers earning a wage below the cutoff receive an income supplement as they increase their income finally we show that the optimal program transfers zero income to individuals who choose not to work

entry by foreign firms in the united states under exchange rate uncertainty this paper tests the effects that real exchange rate fluctuations had on foreign direct investment into the united states during the 1980s using a sample of foreign investments in sixty one four digit sic u s wholesale industries this paper finds exchange rate volatility to be negatively correlated with the number of foreign investments that occur in these industries this negative effect is most pronounced for industries where sunk investments in physical and intangible assets are relatively high although exchange rate volatility deters investment from all countries its effect was most significant for investments by japanese companies copyright 1993 by mit press

fair income tax fairness is a key concept in redistribution issues in this paper we study how particular requirements of fairness can shed light on the design of the optimal income tax schedule we consider a population of heterogeneous individuals or households who differ in two respects first they have unequal skills and therefore unequal earning abilities second they differ in terms of their preferences about consumption and leisure and as a consequence typically make different labour time choices both kinds of differences generate income inequalities we study how to justify and compute a redistribution income tax in this context redistribution through an income tax usually entails distortions of incentives but the resulting efficiency loss has to be weighed against potential improvements in the fairness of the distribution of resources we address this efficiency equity trade off here by constructing social preferences which obey the standard pareto principle in addition to fairness conditions

the design of optimal education policies this paper studies the education policy chosen by a utilitarian government in the model households differ in their income and in their children s ability income is observed by the government but ability is private information households can use private education but cannot borrow to finance it the government can finance education with income tax but at the cost of blunting the individuals incentive to exert labour market effort the optimal education policy we derive is elitist it increases the spread between the educational achievement of the bright and the less bright individuals compared to private provision it is also such that the education received by less bright individuals depends positively on their parental income finally the optimal education policy is input regressive in the sense of arrow 1971 quarterly journal of economics 38 175 208 households with higher income and brighter children contribute less in tuition fees towards the cost of the education system than households with lower income and less bright children

workfare versus transfers in rural india abstract prevailing methods for evaluating workfare schemes are inconsistent with the arguments made for workfare in poor rural economies those arguments emphasize the existence of higher involuntary underemployment among the poor and the fact that the type of work provided by these schemes gives disutility deterring non poor households from participating to include these features the consumption based welfare metric used in past assessments of workfare schemes in underemployed developing countries is generalized to incorporate a welfare loss from casual manual work while allowing the government to independently value the work done for other reasons using data for india s national rural employment guarantee scheme nregs the paper shows that the policy ranking switches in favor of a basic income guarantee big over workfare allowing for a welfare loss from casual manual labor implies a more poor poor targeting performance but this is not sufficient to compensate for the direct welfare loss from the work requirement for plausible parameter values a big dominates nregs for a given total outlay on workfare wages

optimal non linear income taxation for the alleviation of income poverty there has been much discussion recently of structuring tax and transfer programs to ensure that resources go to the poor with minimal leaks to the nonpoor the poor have no incentive to earn income with 100 percent marginal tax rates but how high or low the marginal rate of taxation should be and how they should vary with income is a complex issue and opinions vary social security schemes that withdraw benefits represent an extremely high effective marginal tax rate other schemes call for relatively low marginal tax rates at the bottom of the income distribution which tax transfer schedule does most to reduce poverty the issue is one of optimal nonlinear income taxation the authors show that one of the key theoretical results of the welfarist literature is overturned if it is desirable for everybody to work the optimal marginal tax rate on the very poorest individuals is strictly negative they argue that the nonwelfarist perspective points toward lower marginal tax rates in the lower part of the income distribution than does the welfarist perspective but numerical simulations suggest that the effect is of limited quantitative significance using conventional functional forms and parameter values optimal marginal tax rates on the poor are in the 60 70 percent range

public economics as if time matters climate change and the dynamics of policy abstract tony atkinson played a crucial role in shaping modern public economics but throughout his life challenged whether we were making the right assumptions and were building models which captured the essence of the issues under examination this paper examines questions discussed with tony concerning public policy to foster change where the pace and nature of change are critical to any serious policy assessment the primary example is climate change the paper argues that subjects such as the dynamics of innovation of potentially immense and destabilising risks and of political economy together with technicalities around non linearities and dynamic increasing returns all of which are at the heart of the challenge of climate change will require a series of focused models for their investigation attempts to build integrated assessment models iams for the analysis of climate change have been largely misplaced and omit key effects and questions of the above kind intertemporal issues and values are at the core of policy towards climate change and the paper shows that much of the intertemporal economic analysis of the issues around climate change has been misguided and has ridden roughshod over the analytical underpinnings and the underlying ethics of discounting where major decline is possible discounting is fiercely endogenous and where capital markets are imperfect and risk intense discount rates cannot be read off from markets notwithstanding the modelling difficulties and the challenging research agenda the paper argues that the urgency of the problem for example world infrastructure will double in the next 15 20 years and there are major dangers of lock in of dirty and damaging capital require strong action and we know enough about policy to begin travelling down the path of an attractive low carbon transition

targeting of food aid in rural ethiopia chronic need or inertia abstract this paper quantifies the factors underlying the allocations of food aid by the ethiopian government together with local and international non governmental organizations ngos both across rural regions and to households within regions we focus on reduced form specifications in which as little structure as possible is put on the decision rules because so little is known about these rules and their implementation nationally representative rural household data from ethiopia collected in 1996 are used the paper determines the extent to which food aid both free distribution and food for work is targeted to poor households and communities we also demonstrate that food aid allocations display a large degree of spatial continuity over time and are concentrated in areas that at least during the time of the survey are not the poorest the paper attempts to disentangle two competing explanations for the apparent spatial rigidity of food aid allocations that the recipient areas are chronically needy or that needs shift geographically from 1 year to the next but that fixed costs in setting up operations and in the process of identifying needs lead to a degree of inertia in the location of food aid programs over time we conclude that the evidence best fits the inertia explanation

optimal income transfer programs intensive versus extensive labor supply responses this paper analyzes optimal income transfers for low incomes labor supply responses are modeled along the intensive margin intensity of work on the job and along the extensive margin participation into the labor force when behavioral responses are concentrated along the intensive margin the optimal transfer program is a classical negative income tax program with a substantial guaranteed income support and a large phasing out tax rate however when behavioral responses are concentrated along the extensive margin the optimal transfer program is similar to the earned income tax credit with negative marginal tax rates at low income levels and a small guaranteed income carefully calibrated numerical simulations are provided

time varying international stock market interaction and the identification of volatility signals abstract this paper investigates the dependency of international stock market interaction on financial volatility we show in a stylized economic model that volatility dependent cross market spillovers can be interpreted in two different ways as indicating information flow or uncertainty if higher volatility in one market leads to higher lower reactions in another market volatility reflects information uncertainty we apply a simultaneous time varying coefficient model where structural arch type variances serve two purposes governing the time variation of spillovers and ensuring statistical identification we analyze data of us and further stock markets indeed we find strong nonlinear volatility dependent spillovers

haircuts or hysteresis sources of movements in real exchange rates abstract we empirically assess the importance of two sources of real exchange rate movements in models where ppp holds only among traded goods real exchange rate variation results from relative price movements within countries an alternative explanation relies on hysteretic price setting and nominal exchange rate changes using disaggregated price data from 11 oecd nations we find some support for the non traded goods models for example prices of haircuts in canada and the united states are unrelated in the long run we find stronger evidence to support models that emphasize sticky prices transportation costs or other impediments to frictionless trade

poverty alleviation and tax policy abstract this paper examines public good provision and tax policy optimal non linear income taxation and linear commodity taxation when the government departs from purely welfarist objective function and seeks to minimise poverty this assumption reflects much policy discussion and may help understand some divergences of practical tax policy from lessons in optimal tax analysis in contrast to atkinson and stiglitz j public econom 6 1976 55 it may be optimal to use differentiated commodity tax rates including the taxation of savings even if preferences are separable in goods and leisure the optimal effective marginal tax rate at the bottom of the distribution may be negative suggesting that wage subsidy schemes can be optimal finally optimal provision of a public good is analysed under poverty minimisation

a complete solution to a class of principal agent problems with an application to the control of a self managed firm this paper considers a class of principal agent problems which have the following features 1 there is adverse selection because the principal ignores the value of one parameter of the agent s true characteristics 2 leaving aside the information parameter the principal s welfare as well as the agent s welfare depend on two types of variables observable to both of them the first ones possibly multidimensional are called action variable s and the second one which is one dimensional has in general the meaning of a money transfer 3 the principal is a stackelberg leader of the two person game he can commit himself to decision rules which are admissible on informational grounds he optimizes within the adequate class taking into account besides the agent s reaction one constraint which has generally the meaning of an individual rationality constraint and sometimes of a feasibility constraint the optimization is limited to the class of non stochastic mechanisms 4 the problem can also receive an alternative interpretation the principal faces a continuum of agents of unknown characteristics the distribution being known however stylized principal agent problems of this type have often been considered in the economic literature in particular the reader will later be able to recognize that the standard income tax model a la mirrlees 1971 the quality or quantity choice model of the monopolist a la mussa and rosen 1978 or maskin and riley 1982 and the model of government regulation of the private monopolist of baron and myerson 1982 all belong to

optimal workfare with voluntary and involuntary unemployment this paper addresses the welfare implications of introducing workfare into unemployment benefit policy we consider a population composed of employed and unemployed workers and of individuals who do not seek employment job search behavior is unobservable which means that voluntarily unemployed individuals can claim unemployment insurance ui benefits intended for unemployed workers as a consequence pecuniary benefit schemes underinsure workers against unemployment we show that requiring unproductive activities workfare in exchange for ui benefits may generate a pareto improvement by facilitating better unemployment insurance for workers and we characterize the situations where this is the case

macro determinants of fdi inflows to japan an analysis of source country characteristics this paper examines the source country determinants of fdi into japan the paper highlights certain methodological and theoretical weaknesses in the previous literature and offers some explanations for hitherto ambiguous results specifically the paper highlights the importance of panel data analysis and the identification of fixed effects in the analysis rather than simply pooling the data indeed we argue that many of the results reported elsewhere are a feature of this mis specification to this end pooled fixed effects and random effects estimates are compared the results suggest that fdi into japan is inversely related to trade flows such that trade and fdi are substitutes moreover the results also suggest that fdi increases with home country political and economic stability the paper also shows that previously reported results regarding the importance of exchange rates relative borrowing costs and labour costs in explaining fdi flows are sensitive to the econometric specification and estimation approach the paper also discusses the importance of these results within a policy context in recent years japan has sought to attract fdi though many firms still complain of barriers to inward investment penetration in japan the results show that cultural and geographic distance are only of marginal importance in explaining fdi and that the results are consistent with the market seeking explanation of fdi as such the attitude to risk in the source country is strongly related to the size of fdi flows to japan 2007 the authors journal compilation 2007 blackwell publishing ltd

the real exchange rate and foreign direct investment in the united states relative wealth vs relative wage effects abstract there has been a significant correlation between u s inward foreign direct investment and the united states real exchange rate since the 1970s in this paper we examine the determinants of four measures of inward foreign direct investment to the united states from seven industrial countries over the period 1979 1991 we find strong evidence that relative wealth significantly affects u s inward foreign direct investment we find no evidence that relative wages have a significant impact on the determination of u s foreign direct investment

presidential address innovation in retrospect and prospect this paper asks whether innovation has slowed in recent decades while there has been dramatic progress in information and communications technology the recent record of innovation in the crucially important agriculture energy transportation and health care sectors is cause for concern the paper also considers whether the pace of innovation is sufficient to improve or even maintain living standards in the face of still rapidly growing population global warming and other challenges i review the major market failures that lead to under provision of innovation and question whether current innovation policy particularly patent policy is effective in promoting innovation ce memoire se demande si l innovation a ralenti au cours des dernieres decennies alors qu il y a eu progres dramatique dans les technologies de l information et des communications le dossier des innovations recentes dans des secteurs aussi importants que l agriculture l energie le transport et la sante a de quoi nous donner du souci le texte se demande aussi quel rythme d innovation pourrait suffire pour ameliorer ou maintenir notre niveau de vie face a une population qui croit rapidement aux changements climatiques et aux autres defis on passe en revue les principales faillites du marche qui ont pu engendrer une offre insuffisante d innovation et on se demande si la politique d innovation en particulier pour ce qui est de la politique des brevets est efficace pour promouvoir l innovation

international charity under asymmetric information abstract international charity is often subject to moral hazard and adverse selection problems we show that the burden of informational asymmetries are borne by the most needy countries even when charities design incentive contracts which limit the rents that some countries can extract

do sovereign rating announcements affect emerging market exchange rate correlations a multivariate dcc garch approach abstractthis article investigates the effects of sovereign credit rating announcements on time varying exchange rate return correlations for a sample of 11 emerging market countries over the period 2002 2015 the data set covers daily exchange rates and long term foreign currency sovereign ratings outlooks and watch list the pairwise time varying correlations are derived by corrected dynamic conditional correlation cdcc modelling which is a member of multivariate generalized autoregressive conditional heteroskedasticity garch models family furthermore to capture the global factor effect a dynamic weighted index is created by using dynamic principal component dpc analysis findings suggest that some of the emerging market exchange rate co movements are affected by rating announcements upgrades of moody s and downgrades of fitch lead to spillovers main source of these spillovers are sovereign credit rating changes of european countries especially czech republic and turkey countries with high

real exchange rate risk expectations and the level of direct investment four models of direct investment are analyzed assuming various relationships between foreign and domestic production the direct effect of risk adjusted expected real foreign currency appreciation is to lower foreign capital cost thus stimulating direct investment however when costs of other inputs are also affected induced productivity changes or output price changes may offset the direct effect reducing direct investment pooled estimation results for u s annual bilateral direct investment flows to five industrialized countries show significant reductions associated with expected appreciation of real foreign currency and significant increases associated with risk these results are consistent with the model where in response to risk the multinational firm reduces exports to the foreign country but offsets this somewhat by increasing foreign capital input and production

exchange rate volatility before and after the float this paper provides a descriptive analysis of broad features of major exchange rates since the early 1970s and compares these features with those of the 1960s the analysis is then extended to investigate whether these features are manifested in interest rates and in commodity prices the results indicate that while the exchange rates have become more volatile during the current floating rate regime the moments are comparable with those for interest rates and commodity prices

sympathy for the diligent and the demand for workfare abstract we study the role of fairness concerns in the demand for redistribution through workfare in the first part of the paper we present new evidence from a survey we show that individuals are more generous towards poor people whom they perceive to be diligent workers relative to poor people whom they perceive to be non diligent a social preference that we label sympathy for the diligent this preference is much stronger than preferences regarding other characteristics of the poor such as race nationality and disability more important we show that subjects with higher sympathy for the diligent have a stronger preference for workfare programs in the second part of the paper we incorporate our empirical findings into a model of income redistribution we consider the case of a benevolent government with fairness concerns that prioritizes the well being of individuals who exert the most effort we characterize the optimal conditions under which the government introduces work requirements even if wasteful work requirements can be optimal because they allow for a better distinction between individuals who exert great effort and individuals who do not however if the government lacks commitment power the availability of screening through work requirements leads to a lower equilibrium effort and possibly a pareto dominated allocation

the political economy of fiscal consolidations in the context of recent research in political economy this paper addresses the policy problem of fiscal consolidation in terms of three types of issues i the macroeconomic effects of alternative strategies to consolidate ii the institutional setups conducive to a consolidation and iii the best strategy for implementing a consolidation in order to maximize its political feasibility one methodological feature of this survey is an emphasis on policy feasibility one methodological feature of this survey is an emphasis on policy issues in order to bridge the gap between the level of abstraction of politico economic models of fiscal policy and the issues faced by a policymaker when attempting a fiscal consolidation

the design of income maintenance programmes this paper provides a comprehensive treatment of a basic income maintenance problem for a group of individuals who differ in their income generating abilities it stresses the impact that imperfect information about such abilities has on programme design the analysis serves two purposes first we are able to unify the theoretical literature on the income maintenance problem second we examine the impact of allowing the government to impose workfare on recipients of income support in addition to being of policy interest this is a theoretically challenging problem since it requires solving a multi dimensional screening problem the solution that we find is strikingly simple it separates the poor into two categories with the lower income groups subject to workfare while facing a 100 marginal tax rate on earnings the second group does no public work and is offered a benefit schedule which taxes earnings at a lower rate

international charity for the poor i introduction charities transfer billions of dollars annually to help people in other countries survive famines and other hardships due to natural and man made disasters such as droughts and civil wars in this article we address the difficulties charities have ensuring the survival of the life threatened poor overseas without exacerbating income inequality encouraging free riding or undermining recipient countries incentives to invest in the kinds of public works that could reduce their needs international charitable activities are subject to moral hazard principal agent and adverse selection problems due to information asymmetries thus too little charity can go to the truly needy and too much to countries that exaggerate their needs and or shirk indeed the empirical literature is rich with evidence of these effects for example lele and jain 1991 ruttan 1993 kanbur et al 1994 maren 1997 and the world bank 1998 document the disincentive effects of aid alesina and weder 1999 show that more aid goes to countries that are more corrupt cashel cordo and craig 1997 provide empirical evidence that the more aid a country receives the less it taxes cashel cordo and craig 1997 found statistically significant evidence of an inverse relationship between the amount of soft aid grants received and the amount of tax revenues subsequently collected by recipient governments in addition to this evidence of shirking they also found significant evidence of fungibility in which the recipient government spends released funds on other nontargeted budget items furthermore they show that donors appear to be complicit in this fungibility larger soft aid is associated with higher institutional spending such as for public administrators salaries inflows of hard aid loans targeted explicitly to economic development or public works projects show up in expanded spending on social services not expanded investment in public works alesina and weder 1999 found statistically significant evidence of a positive relationship between the share of aid in a government s budget and corruption they argued that high corruption may imply that domestically raised public resources are low and that a higher fraction of public resources are covered by foreign aid 14 also according to tornell and lane s 1999 voracity effect when power over redistributive mechanisms is highly concentrated aid encourages shirking by recipient governments thus in this article we model charities that expect recipients to reallocate revenues but not to reduce tax collections or spending on public works to formally analyze this international income transfer problem we apply the mechanism design techniques of laffont and tirole 1986 that have proven very useful in the design of domestic income maintenance programs there is a long tradition of optimal tax income maintenance program design literature about how aid encourages personal choices that are socially inefficient or self enriching see for example mirlees 1971 besley and coate 1992 or crane 1996 the key issue is that participants may reduce work effort or migrate to qualify for more benefits the impacts of information asymmetries on domestic program costs and implementation are also well known as in besley and coate 1991 1995 but with the exception of besley and coate 1998 the emphasis in that literature is on the design of domestic policies with respect to the incentives of individuals in this article we focus on charity with respect to the incentives of national governments our work on this problem is motivated by the desire to design programs that can address acute life threatening poverty defined as the inability to acquire the level of consumption goods necessary for life as in sen 1985 or ravaillon 1997 we assume that the charitable objective is that everyone has at least a minimum income

accounting for u s real exchange rate changes this study measures the proportion of u s real exchange rate movements that can be accounted for by movements in the relative prices of nontraded goods the decomposition is done at all possible h

the role of workfare in striking a balance between incentives and insurance in the labour market unemployment insurance tends to distort incentives in the labour market affecting job search and wage formation adversely we show in a search matching model that this moral hazard problem can be reduced by attaching a workfare requirement to the eligibility conditions for claiming unemployment benefits even when workfare has no effects on human capital or productivity it is possible to improve labour market performance to create more jobs and lower unemployment by the introduction of workfare and also to improve welfare hence the incentive structure in the labour market can be improved by workfare policies rather than benefit reductions

international investment location decisions abstract in international location tournaments governments compete for foreign investment with tax and other short run incentives such tournaments can be won if agglomeration economies are sufficiently powerful to overcome investors desire to spread investments as a hedge against risk we focus on manufacturing investments by u s multinationals in the 1980s our econometric results suggest that agglomeration economies are indeed the dominant influence on investor calculations paradoxically short run incentives have limited apparent impact on location choice we conclude that high cost tournament play is unnecessary for countries with good infrastructure development specialized input suppliers and an expanding domestic market

improving incentives in unemployment insurance a review of recent research abstract this paper provides a review of the recent literature on how incentives in unemployment insurance can be improved we are particularly concerned with three instruments i e the duration of benefit payments or more generally the time sequencing of benefits monitoring in conjunction with sanctions and workfare our reading of the theoretical literature is that the case for imposing a penalty on less active job search is fairly solid a growing number of empirical studies including randomized experiments are in line with this conclusion

the impact of ofdi on the performance of chinese firms along the belt and road using feasible generalized least squares fgls and ordinary least square ols estimations on a dataset of 1208 outward foreign direct investment ofdi events by chinese listed firms from 2004 to