the effect of initial inequality on meritocracy a voting experiment on tax redistribution abstract according to alesina and angeletos 2005 societies are less redistributive but more efficient when the median voter believes that effort and talent are much more important than luck in determining income we test these results through a lab experiment in which participants vote over the tax rate and their pre tax income is determined according to their performance in a real effort task with leisure time subjects receive either a high or a low wage and this condition is either obtained through their talent in a tournament or randomly assigned we compare subjects decisions in these two different scenarios taking into consideration different levels of wage inequality in our framework this initial income inequality turns out to be crucial to support the theoretical hypothesis of alesina and angeletos 2005 overall we find that only if the wage inequality is high subjects choose a lower level of income redistribution and provide a higher effort level in the scenario in which high wage subjects are selected based on their talent through a tournament than when it is randomly assigned thus we confirm almost all theoretical results in alesina and angeletos 2005 when the wage inequality is high enough the big exception is for efficiency measured as the sum of total payoffs since theoretical results are not significant for both wage inequality scenarios

environmental efficiency evaluation of industry in china based on a new fixed sum undesirable output data envelopment analysis national natural science funds of china for innovative research groups 70821001 national natural science funds of china 70901069 71222106 71203186 research fund for the doctoral program of higher education of china 20133402110028 fundamental research funds for the central universities wk 2040150007 china scholarship council

a comprehensive eco efficiency model and dynamics of regional eco efficiency in china abstract in order to have a comprehensive eco efficiency measure which can incorporate productivity resource efficiency environmental efficiency and inter temporal comparability and circularity the paper proposes an extended data envelopment analysis model named gb us sbm model which combines global benchmark technology undesirable output super efficiency and slacks based measure using the gb us sbm model this paper investigates the dynamics of regional eco efficiency in china from 2000 to 2010 the empirical results show that the movement of average eco efficiency of china presents a v shape from 2000 to 2010 with the trough occurred in 2005 but there are big differences of eco efficiency among the regions for the growth of eco efficiency technological progress contributes 56 87 58 21 18 27 62 19 scale efficiency contributes 40 01 61 14 167 43 39 12 efficiency change contributes 3 82 19 99 63 40 2 16 to the eastern middle western and northeastern regions of china respectively these imply that there is a big space for western region to enhance its technological progress and huge space for the whole country to promote its management ability

a glimpse through the veil of ignorance equality of opportunity and support for redistribution abstract this study is an experimental investigation into preference for redistribution of income it had been hypothesized that belief in equality of opportunity in a society diminishes support for the welfare state this could potentially explain the low taxes and social benefits in the united states vis a vis europe to verify this hypothesis participants in an experiment were assigned different probabilities of winning and matched in groups of four next before finding out who would actually win they selected preferred transfers to be paid by the winners to the group as a whole it was found that the average transfers were about 20 lower in the sessions in which winning was determined by performance in a task rather than by sheer luck this difference cannot be explained by overconfidence in predicting own score it corroborates the conjecture that perceived determinants of success i e whether poverty results from laziness or bad luck affect the support for redistribution on the other hand greater inequality of opportunity measured simply by dispersion of probabilities of winning within a group did not lead to higher transfers

fairness in public good provision an investigation of preferences for equality and proportionality a binary public good voting mechanism is designed to test for preferences for income equality and cost benefit proportionality the voting design isolates preferences for equality from those for proportionality and controls for alternative external preferences such as altruism envy and the rawlsian difference principle individuals choose between greater income or fairness in these demand revealing votes treatments vary whether the positions of voters are earned or random whether votes are hypothetical or real and whether they are over gains or losses significant deviations from self interested voting are observed in all treatments testing for equality and in some treatments testing for proportionality

what have we learned from three decades of research on the productivity of public capital the last three decades have witnessed a great deal of research effort devoted to measuring the private output elasticity of public capital the wide range of available estimates have precluded any consensus so far however this paper reconciles the empirical findings of the literature by quantitatively analyzing a sample of 578 estimates collected from 68 studies for the 1983 2008 period using meta regression analysis we show how study design characteristics and publication bias can explain a large fraction of the variation across estimates we find a short run output elasticity of public capital supplied at the central government level of 0 083 which increases to 0 122 in the long run if in addition only core infrastructure at a regional local level of government is considered these estimates are almost doubled the average output elasticity of public capital amounts to 0 106 our results suggest that public capital is undersupplied in oecd economies

the distribution of abilities and the progressive income tax abstract this paper develops a model of endogenous labor supply where agents are uncertain about their future wages assuming risk aversion some redistributive taxation is thus warranted it is shown that for a particular parameterization of the tax system an optimally progressive income tax exists comparative ststics analysis demonstrates how this tax system is effected by changes in the wage distribution the paper ends with a discussion of whether an optimally progressive income tax can be politically sustained it is shown that generally this is not the case in a political system with majority voting

sustainability and technical progress a rigorous model connects together the following three basic concepts 1 sustainability meaning the generalized future power of an economy to consume over time 2 green nnp meaning a current measure of national income that subtracts off from gnp not just depreciation of capital but also more generally depletion of environmental assets evaluated at current efficiency prices 3 technological progress meaning a projection onto the future of the so called solow residual a simple general formula is derived some crude calculations suggest a possibly strong effect of the residual which hints that our best present estimates of long term sustainability may be largely driven by predictions of future technological progress

marginal tax rates and income new time series evidence this paper estimates the dynamic effects of marginal tax rate changes on income reported on tax returns in the united states over the 1950 2010 period after isolating exogenous variation in average marginal tax rates in structural vector autoregressions using a narrative identification approach i find large positive effects of tax cuts in the top 1 of the income distribution in contrast to earlier findings based on tax return data i also find large effects in other income percentile brackets a hypothetical tax reform cutting marginal rates only for the top 1 leads to sizeable increases in top 1 incomes and has a positive effect on real gdp there are also spillover effects to incomes outside of the top 1 but top marginal rate cuts lead to greater inequality in pre tax incomes

the composition of government spending and the multiplier at the zero lower bound we investigate the size of the multiplier at the zlb in a new keynesian model it ranges from around 0 25 to 1 5 depending on the extent to which the government spending is productive substitutable or not for private consumption

household expenditure and the income tax rebates of 2001 using questions expressly added to the consumer expenditure survey we estimate the change in consumption expenditures caused by the 2001 federal income tax rebates and test the permanent income hypothesis we exploit the unique randomized timing of rebate receipt across households households spent 20 to 40 percent of their rebates on nondurable goods during the three month period in which their rebates arrived and roughly two thirds of their rebates cumulatively during this period and the subsequent three month period the implied effects on aggregate consumption demand are substantial consistent with liquidity constraints responses are larger for households with low liquid wealth or low income

just luck an experimental study of risk taking and fairness choices involving risk significantly affect the distribution of income and wealth in society this paper reports the results of the first experiment to our knowledge to study fairness views about risk taking specifically whether such views are based chiefly on ex ante opportunities or on ex post outcomes we find that even though many participants focus exclusively on ex ante opportunities most favor some redistribution ex post many participants also make a distinction between ex post inequalities that reflect differences in luck and ex post inequalities that reflect differences in choices these findings apply to both stakeholders and impartial spectators

the marginal cost of raising tax revenue and redistributing income we present analytic formulas for calculating marginal welfare costs when taxes are levied against the wages of a heterogeneous population of households and marginal tax revenue finances either the supply of a public good or lump sum transfers the formulas are applied to explain the wide discrepancy between estimates of marginal welfare costs for redistribution previously obtained through computer simulation procedures our calculations reveal that these procedures introduced lump sum transfers that were not specified as part of the reforms to be simulated but explain most of the differences between their estimates we also show that welfare cost estimates are quite sensitive to the elasticity of labor supply with respect to exhaustive public spending

indivisible labor lotteries and equilibrium abstract this paper considers an economy where labor is indivisible and agents are identical although the discontinuity in labor supply at the individual level disappears as a result of aggregation it is shown that indivisible labor has strong consequences for the aggregate bahavior of the economy it is also shown that optimal allocations involve lotteries over employment and consumption

heterogeneity and aggregation implications for labor market fluctuations we demonstrate that aggregate employment and consumption can increase without a corresponding movement in productivity in a model with heterogeneous agents where the only aggregate disturbance is a productivity shock the interaction between incomplete capital markets and indivisible labor results in a low employment productivity correlation and creates a time varying wedge between the marginal rate of substitution for commodity consumption and hours and productivity our results caution against viewing the measured wedge as an inefficiency due to a failure of labor market clearing or as a fundamental driving force behind business cycles jel d31 e32 j22 j24 j31

social mobility and redistributive politics just like economists voters have conflicting views about redistributive taxation because they estimate its incentive costs differently we model rational agents as trying to learn from their dynastic income mobility experience the relative importance of effort and predetermined factors in the generation of income inequality and therefore the magnitude of these incentive costs in the long run left wing dynasties believing less in individual effort and voting for more redistribution coexist with right wing dynasties this allows us to explain why individual mobility experience and not only current income matters for political attiitudes and how persistent differences in perceptions about social mobility can generate persistent differences in redistribution across countries

the heterogeneous responses of consumption between poor and rich to government spending shocks government spending shocks have substantially different effects on consumers across the income distribution consumption increases for the poor whereas it decreases for the rich in response to a rise in government expenditure i shed light on this issue by incorporating a progressive tax scheme and productive public expenditure into a heterogeneous agent model economy with indivisible labor the model economy is able to successfully match aggregate and disaggregate effects of government spending shocks on consumption when the government increases its spending and accompanies it by a rise in tax progressivity the poor are employed and increase their consumption since after tax wage rates increase while the rich decrease their consumption because of a fall in after tax wage rates

self fulfilling beliefs about social status abstract human beings care a lot about being viewed as smart this paper defines social status as the public beliefs about one s smartness inferred from one s publicly observed social mobility experience this status motive can easily generate multiple equilibria based upon self fulfilling beliefs it also tends to amplify the inequality of economic success between agents with different social origins this theory of persistent inequality is compared with other theories of inequality based upon self fulfilling beliefs such as the model of statistical discrimination and the model of learning about one s chances of mobility in the absence of a status motive as well the sociological theories of merton boudon and bourdieu

when is inequality fair an experiment on the effect of procedural justice and agency abstract we investigate how the perceived fairness of an income distribution depends on the beliefs about the process that generates the inequality specifically we examine how two crucial features of this process affect fairness views 1 procedural justice equal treatment of all 2 agency one s ability to determine his her income we do this in a lab experiment by differentially varying subjects ability to influence their earnings comparison of ex post redistribution decisions of total earnings under different conditions indicate both agency and procedural justice to matter for fairness highlighting the importance of agency we observe lower redistribution of unequal earnings resulting from risk when risk is chosen freely highlighting the importance of procedural justice we find introduction of inequality of opportunity to significantly increase redistribution despite this increase under inequality of opportunity the share of subjects redistributing none remain close to the share of subjects redistributing fully revealing an underlying heterogeneity in the population about how fairness views should account for inequality of opportunity

individual preferences for political redistribution what drives people s support of governmental reduction of income inequality we employ data from a large international survey in order to evaluate the explanatory power of three competing forces referred to as the homo oeconomicus effect the public values effect and the social rivalry effect the empirical analysis reveals that at the aggregate level all three effects play a significant role in shaping individual preferences for political redistribution attitudes of citizens in formerly socialist countries turn out to differ from those of western citizens in a systematic way 2002 elsevier science b v all rights reserved

indivisible labor and the business cycle abstract a growth model with shocks to technology is studied labor is indivisible so all variability in hours worked is due to fluctuations in the number employed we find that unlike previous equilibrium models of the business cycle this economy displays large fluctuations in hours worked and relatively small fluctuations in productivity this finding is independent of individuals willingness to substitute leisure across time this and other findings are the result of studying and comparing summary statistics describing this economy an economy with divisible labor and post war u s time series

macroeconomic effects from government purchases and taxes for u s annual data that include world war ii the estimated multiplier for temporary defense spending is 0 4 0 5 contemporaneously and 0 6 0 7 over 2 years if the change in defense spending is permanent gauged by ramey s defense news variable the multipliers are higher by 0 1 0 2 since all estimated multipliers are significantly less than 1 greater spending crowds out other components of gdp particularly investment the lack of good instruments prevents estimation of reliable multipliers for nondefense purchases multipliers in the literature of two or more likely reflect reverse causation from gdp to nondefense purchases increases in average marginal income tax rates measured by a newly constructed time series have significantly negative effects on gdp when interpreted as a tax multiplier the magnitude is around 1 1 the combination of the estimated spending and tax multipliers implies that the balanced budget multiplier for defense spending is negative we have some evidence that tax changes affect gdp mainly through substitution effects rather than wealth effects

accounting for the u s earnings and wealth inequality we show that a theory of earnings and wealth inequality based on the optimal choices of ex ante identical households that face uninsured idiosyncratic shocks to their endowments of efficiency labor units accounts for the u s earnings and wealth inequality almost exactly

heterogeneous consumers and fiscal policy shocks this paper studies empirical facts regarding the effects of unexpected changes in aggregate macroeconomic fiscal policies on consumers that are allowed to di er depending on their individual characteristics we use data from the consumption expenditure survey cex to estimate individual level impulse responses as well as multipliers for government spending the main empirical finding of this paper is that unexpected fiscal shocks have substantially different effects on consumers depending on their income and age levels in particular the wealthiest individuals tend to behave according to the predictions of standard rbc models whereas the poorest individuals tend to behave according to standard is lm non ricardian models most likely due to credit constraints furthermore government spending policy shocks tend to decrease consumption inequality forthcoming in journal of money credit and banking

belief in a just world and redistributive politics international surveys reveal wide differences between the views held in different countries concerning the causes of wealth or poverty and the extent to which people are responsible for their own fate at the same time social ethnographies and experiments by psychologists demonstrate individuals recurrent struggle with cognitive dissonance as they seek to maintain and pass on to their children a view of the world where effort ultimately pays off and everyone gets their just deserts this paper offers a model that helps explain i why most people feel such a need to believe in a just world ii why this need and therefore the prevalence of the belief varies considerably across countries iii the implications of this phenomenon for international differences in political ideology levels of redistribution labor supply aggregate income and popular perceptions of the poor the model shows in particular how complementarities arise endogenously between individuals desired beliefs or ideological choices resulting in two equilibria a first american equilibrium is characterized by a high prevalence of just world beliefs among the population and relatively laissez faire policies the other european equilibrium is characterized by more pessimism about the role of effort in economic outcomes and a more extensive welfare state more generally the paper develops a theory of collective beliefs and motivated cognitions including those concerning money consumption and happiness as well as religion

is consumption growth consistent with intertemporal optimization evidence from the consumer expenditure survey in this paper we show that some of the predictions of models of consumer intertemporal optimization are in line with the patterns of nondurable expenditure observed in u s household level data we propose a flexible specification of preferences that allows multiple commodities and yields empirically tractable equations we estimate preference parameters using the only u s micro data set with complete consumption information we show that previous rejections can be explained by the simplifying assumptions made in previous studies we also show that results obtained using good consumption or aggregate data can be misleading

deadweight costs and the size of government abstract we provide a model for analyzing effects of the tax system and spending programs on the determination of government spending and taxpayer welfare an improvement in the efficiency of either taxes or spending would reduce political pressure for suppressing the growth of government and thereby increase total tax revenue and spending we demonstrate the similarity of the political responses to revenue shocks spending shocks changes in tax efficiency and changes in spending program efficiency empirical analysis of oil shocks intergovernmental grants and other autonomous changes in taxes or spending indicates that cause and effect is not only from spending to tax structures

government investment and fiscal stimulus effects of government investment are studied in an estimated neoclassical growth model the analysis focuses on two dimensions that are critical for understanding government investment as a fiscal stimulus implementation delays for building public capital and expected fiscal adjustments to deficit financed spending implementation delays can produce small or even negative labor and output responses to increases in government investment in the short run anticipated fiscal adjustments matter both quantitatively and qualitatively for long run growth effects when public capital is insufficiently productive distorting financing can make government investment contractionary at longer horizons

is increasing inequality harmful experimental evidence abstract increasing inequality is commonly associated with social unrest and conflict between social classes this paper reports the results of a laboratory experiment to study the implications of greater inequality on the tendency to burn others income the experiment considers an environment where higher earnings in a real effort task are typically associated with higher effort and varies how fair and transparent this relationship is the findings indicate that greater inequality does not lead to more money burning itself rather it depends on whether the increase in inequality can be unequivocally attributed to exerted effort i e the fairness of the income generating process only if greater inequality can be the result of morally questionable activities subjects engage in substantially more money burning while most income burning aims at reducing inequality the fairness of inequality only plays a role in the extent of money burning but not so much for the qualitative burning patterns

luck choice and responsibility an experimental study of fairness views this is a pre copyedited author produced pdf of an article accepted for publication in journal of public economics following peer review

on fiscal multipliers estimates from a medium scale dsge model this paper contributes to the debate on fiscal multipliers in the context of a structural model i estimate a micro founded dynamic stochastic general equilibrium model that features a rich fiscal policy block and a transmission mechanism for government spending shocks using bayesian techniques for us data

social mobility and the demand for redistribution the poum hypothesis this paper examines the often stated idea that the poor do not support high levels of redistribution because of the hope that they or their offspring may make it up the income ladder this prospect of upward mobility poum hypothesis is shown to be fully compatible with rational expectations and fundamentally linked to concavity in the mobility process a steady state majority could even be simultaneously poorer than average in terms of current income and richer than average in terms of expected future incomes a e rst empirical assessment suggests on the other hand that in recent u s data the poum effect is probably dominated by the demand for social insurance in the future everyone will be world famous for e fteen minutes andy warhol 1968

income and wealth heterogeneity in the macroeconomy how do movements in the distribution of income and wealth affect the macroeconomy we analyze this question using a calibrated version of the stochastic growth model with partially uninsurable idiosyncratic risk and movements in aggregate productivity our main finding is that in the stationary stochastic equilibrium the behavior of the macroeconomic aggregates can be almost perfectly described using only the mean of the wealth distribution this result is robust to substantial changes in both parameter values and model specification our benchmark model whose only difference from the representative agent framework is the existence of uninsurable idiosyncratic risk displays far less cross sectional dispersion and skewness in wealth than u s data however an extension that relies on a small amount of heterogeneity in thrift does succeed in replicating the key features of the wealth data furthermore this extension features aggregate time series that depart significantly from permanent income behavior

consumer choice on ecologically efficient water heaters marketing strategy and policy implications in japan abstract this study examines how consumers select ecologically efficient water heaters in japan energy conservation in household water heating is increasingly important for reducing an amount of co 2 emission because the share of water heating in household energy consumption is approximately 30 recently japanese households have widely used ecologically efficient electric heat pump water heaters eco cute or gas fired water heaters eco jozu the total number of such efficient water heaters sold in japan was more than 2 5 million at the end of 2008 this study investigates various factors and impacts of marketing strategy for promoting the appliances in japan we apply mixed and nested logit models to a disaggregated choice data on water heaters from 2004 to 2008 this study considers retail energy prices a government financial support and marketing activities as important factors for appliance selection in addition we consider consumers housing attributes such as floor space and age of building this empirical study finds two business implications one of the two implications is that an increase in an energy price may enhance a choice probability of eco cute and eco jozu because a price increase invites consumer s consciousness on energy conservation so that a cost reduction on energy consumption becomes essential in a use of the efficient appliances the other implication is that marketing activities especially by recommendations from sales representatives and or housing suppliers are important for consumer behaviors the other important findings are discussed in this study this business experience in japan is useful to the other countries where ecologically efficient water heaters are not popular at the current moment

tax and education policy in a heterogeneous agent economy what levels of redistribution maximize growth and efficiency this paper studies the effects of progressive income taxes and education finance in a dynamic heterogeneous agent economy such redistributive policies entail distortions to labor supply and savings but also serve as partial substitutes for missing credit and insurance markets the resulting tradeoffs for growth and efficiency are explored both theoretically and quantitatively in a model that yields complete analytical solutions progressive education finance always leads to higher income growth than taxes and transfers but at the cost of lower insurance overall efficiency is assessed using a new measure that properly reflects aggregate resources and idiosyncratic risks but unlike a standard social welfare function does not reward equality per se simulations using empirical parameter estimates show that the efficiency costs and benefits of redistribution are generally of the same order of magnitude resulting in plausible values for the optimal rates aggregate income and aggregate welfare provide only crude lower and upper bounds around the true efficiency tradeoff

what are the effects of fiscal policy shocks we propose and apply a new approach for analyzing the effects of fiscal policy using vector autoregressions specifically we use sign restrictions to identify a government revenue shock as well as a government spending shock while controlling for a generic business cycle shock and a monetary policy shock we explicitly allow for the possibility of announcement effects i e that a current fiscal policy shock changes fiscal policy variables in the future but not at present we construct the impulse responses to three linear combinations of these fiscal shocks corresponding to the three scenarios of deficit spending deficit financed tax cuts and a balanced budget spending expansion we apply the method to us quarterly data from 1955 to 2000 we find that deficit financed tax cuts work best among these three scenarios to improve gdp with a maximal present value multiplier of five dollars of total additional gdp per each dollar of the total cut in government revenue 5 years after the shock copyright 2009 john wiley sons ltd

fiscal policy with heterogeneous agents and incomplete markets i undertake a quantitative investigation into the short run effects of changes in the timing of proportional income taxes for model economies in which heterogeneous households face a borrowing constraint temporary tax changes are found to have large real effects in the benchmark model a temporary tax cut increases aggregate consumption on impact by around 29 cents for every dollar of tax revenue lost comparing the benchmark incomplete markets model to a complete markets economy income tax cuts provide a larger boost to consumption and a smaller investment stimulus when asset markets are incomplete copyright 2005 wiley blackwell

the effects of health wealth and wages on labour supply and retirement behaviour this paper estimates a life cycle model of labour supply retirement and savings behaviour in which future health status and wages are uncertain individuals face a fixed cost of work and cannot borrow against future labour pension or social security income the method of simulated moments is used to match the life cycle profiles of labour force participation hours worked and assets that are estimated from the data to those that are generated by the model the model establishes that the tax structure of the social security system and pensions are key determinants of the high observed job exit rates at ages 62 and 65 removing the tax wedge embedded in the social security earnings test for individuals aged 65 and older would delay job exit by almost one year by contrast social security benefit levels health and borrowing constraints are less important determinants of job exit at older ages for example reducing social security benefits by 20 would cause workers to delay exit from the labour force by only three months

data envelopment analysis for unified efficiency evaluation an assessment of regional industries in china abstract data envelopment analysis has recently gained popularity and attention in operational and environmental assessment a common feature of previous studies is decreasing an input vector to decrease the vector of undesirable outputs which is referred to as natural disposability however little research has considered how to increase the amount of capital input for clean production technology to decrease the amount of undesirable outputs in a data envelopment analysis framework which is referred to as managerial disposability thus this paper proposes an improved approach that considers measuring unified operational and environmental efficiency for managerial disposability and compares this approach with the one for natural disposability the proposed approach provides a positive strategy to reduce undesirable outputs and improve unified efficiency through increasing capital investment in clean production technology a case study of regional industries in china in 2006 2010 utilizing this approach is also presented the empirical study shows that the unified efficiencies of regional industries in china have relatively high scores for managerial disposability and increasing capital investment is vital to achieve sustainable development in clean production technology

preferences for redistribution in the land of opportunities this paper explores how individual preferences for redistribution depend on future income prospects in addition to estimating the impact of individuals socioeconomic background and of their subjective perceptions of future mobility we employ panel data to construct dobjectivet measures of expected gains and losses from redistribution for different categories of individuals we find that such measures have considerable explanatory power and perform better than dgeneral mobilityt indexes we also find that preferences for redistribution respond to individual beliefs on what determines one s position in the social ladder ceteris paribus people who believe that the american society offers equal opportunities are more averse to redistribution d 2004 published by elsevier b v

fiscal policy in general equilibrium this paper studies four classic fiscal policy experiments within a quantitatively restricted neoclassical model the authors main findings are as follows 1 permanent changes in government purchases can lead to short run and long run output multipliers that exceed one 2 permanent changes in government purchases induce larger effects than temporary changes 3 the financing decision is quantitatively more important than the resource cost of changes in government purchases and 4 public investment has dramatic effects on private output and investment these findings stem from important dynamic interactions of capital and labor absent in earlier equilibrium analyses of fiscal policy copyright 1993 by american economic association

racism and redistribution in the united states a solution to the problem of american exceptionalism abstract the two main political parties in the united states in the period 1976 1992 put forth policies on redistribution and on issues pertaining directly to race we argue that redistributive politics in the us can be fully understood only by taking account of the interconnection between these issues in political competition we identify two mechanisms through which racism among american voters decreases the degree of redistribution that would otherwise obtain in common with others we suggest that voter racism decreases the degree of redistribution due to an anti solidarity effect that some voters oppose government transfer payments to minorities whom they view as undeserving we suggest a second effect as well that some voters who desire redistribution nevertheless vote for the anti redistributive republican party because its position on the race issue is more consonant with their own and this too decreases the degree of redistribution in political equilibrium this we name the policy bundle effect we propose a formal model of multi dimensional political competition that enables us to estimate the magnitude of these two effects and estimate the model for the period in question we compute that voter racism reduced the income tax rate by 11 18 points the total effect decomposes about equally into the two sub effects we also find that the democratic vote share is 5 38 points lower than it would have been absent racism the magnitude of this effect would seem to explain the difference between the sizes of the public sector in the us and northern european countries

labor market heterogeneity aggregation and policy in variance of dsge model parameters data from a heterogeneous agents economy with incomplete asset markets and indivisible labor supply are simulated under various fiscal policy regimes and an approximating representative agent model is estimated preference and technology parameter estimates of the representative agent model are not invariant to policy changes and the bias in the representative agent model s policy predictions is large compared to predictive intervals that reflect parameter uncertainty since it is not always feasible to account for heterogeneity explicitly it is important to recognize the possibility that the parameters of a highly aggregated model may not be invariant with respect to policy changes

industrial energy efficiency with co2 emissions in china a nonparametric analysis abstract global awareness on energy security and climate change has created much interest in assessing economy wide energy efficiency performance a number of previous studies have contributed to evaluate energy efficiency performance using different analytical techniques among which data envelopment analysis dea has recently received increasing attention most of dea related energy efficiency studies do not consider undesirable outputs such as co 2 emissions in their modeling framework which may lead to biased energy efficiency values within a joint production framework of desirable and undesirable outputs in this paper we construct both static and dynamic energy efficiency performance indexes for measuring industrial energy efficiency performance by using several environmental dea models with co 2 emissions the dynamic energy efficiency performance indexes have further been decomposed into two contributing components we finally apply the indexes proposed to assess the industrial energy efficiency performance of different provinces in china over time our empirical study shows that the energy efficiency improvement in china s industrial sector was mainly driven by technological improvement

the risk free rate in heterogeneous agent incomplete insurance economies abstract why has the average real risk free interest rate been less than one percent the question is motivated by the failure of a class of calibrated representative agent economies to explain the average return to equity and risk free debt i construct an economy where agents experience uninsurable idiosyncratic endowment shocks and smooth consumption by holding a risk free asset i calibrate the economy and characterize equilibria computationally with a borrowing constraint of one year s income the resulting risk free rate is more than one percent below the rate in the comparable representative agent economy

social preferences self interest and the demand for redistribution preferences for redistribution may be influenced by values and beliefs about distributive justice as well as by self interest people may prefer more redistribution to the poor if they believe that poverty is caused by circumstances beyond individual control therefore beliefs about the causes of income may affect demand for redistribution alternatively the effect of these beliefs on redistributive preferences may be spurious if they are correlated with income and self interest is not properly controlled for they may also measure incentive cost concerns using social survey data i find that self interest cannot explain the effect of these beliefs on redistributive preferences 2001 elsevier science b v all rights reserved

the composition of government expenditure and its consequences for macroeconomic performance abstract this paper employs the intertemporal optimizing market clearing framework to compare the effects of government consumption expenditure and government infrastructure expenditure on macroeconomic adjustment and performance particular attention is focused on the time path of the capital stock and its adjustment to both permanent and temporary changes in government expenditure are considered we show how the effects of both forms of government expenditure on economic welfare can be broken down into 1 i a direct crowding out effect and 2 ii a second component which describes the intertemporal tradeoffs between the short run rate of capital accumulation and the resulting change in the capital stock

dea approach for unified efficiency measurement assessment of japanese fossil fuel power generation this study discusses a new dea data envelopment analysis approach to measure the unified operational and environmental efficiency of energy firms it is widely known that they produce not only desirable good outputs e g electricity but also undesirable bad outputs e g co2 as a result of their plant operations the proposed approach incorporates an output separation desirable and undesirable outputs for the performance evaluation of energy firms in addition to the output separation this study separates inputs into energy and non energy inputs consequently the proposed approach incorporates not only the output separation but also the input separation within a computational framework of dea non radial measurement this study compares the proposed approach with other previous dea approaches used for the performance evaluation of energy firms after the methodological comparison this study applies the proposed approach for measuring the unified efficiency of japanese fossil fuel power generation this empirical study confirms that the implementation of kyoto protocol 2005 has not been effective on the unified efficiency of japanese fossil fuel power generation during the observed period 2004 2008 although the empirical result is inconsistent with the current japanese environmental policy under kyoto protocol it contains policy implications for guiding the future direction of japanese environmental policy on the electric power industry