demand for money in open economies abstract the demand for real cash balances deduced from an underlying portfolio model of the financial market is shown to depend upon domestic variables and foreign monetary developments the model is estimated using quarterly postwar data for canada germany uk and us there is clear evidence that demand for money is affected not only by changes in domestic variables such as permanent income domestic interest rate and price expectations but also by fluctuations in exchange rate expectations and foreign interest rates the conclusion that domestic monetary policy is fairly ineffective and domestic financial markets are highly vulnerable to changes in foreign financial and monetary developments need to be modified in light of the results presented in this paper

money demand amid financial sector developments in malaysia both long and short run real money demand functions of malaysia with money variously defined as m0 m1 and m2 have been estimated using the johansen cointegration technique and the general to specific approach respectively the period under review is 1973q1 1991q4 while liberalization and innovation in the malaysian financial system have not ruled out the existence of stable long run money demand relationships as attested to by the presence of cointegrating vectors they have rendered short run relationships unstable hence it may not be appropriate for one to conclude that monetary policy efficacies have been sacrosanct to the financial liberalization and innovation process on the basis of cointegrating relationships this is especially true as monetary policy is essentially a short run stabilization policy aimed at ironing out undue macroeconomic fluctuations this prompted us to re estimate short run money demand functions over more recent periods in order to boost the policy relevance of the estimat

irs as loan shark tax compliance with borrowing constraints abstract this paper considers a simple dynamic model of tax compliance in which people may face binding borrowing constraints the model leads to much different conclusions and policy recommendations than static models in particular the government cannot generate full compliance by setting the expected value of cheating to be negative also it is possible for the government to set penalties in a way that will increase tax revenue over that of full compliance the government can increase welfare by playing the role of loan shark to people whose borrowing is constrained on the private market

collective action for market chain innovation in the andes the papa andina network employs collective action in two novel approaches for fostering market chain innovation the participatory market chain approach pmca and stakeholder platforms engage small potato producers together with market agents and agricultural service providers in group activities to identify common interests share market knowledge and develop new business opportunities these forms of collective action have generated commercial technological and institutional innovations and created new market niches for andean native potatoes grown by poor farmers in remote highland areas these innovations have benefited small farmers as well as other market chain actors this paper describes papa andina s experiences with collective action for market chain innovation it then discusses the implications of these experiences for the understanding of collective action and the policy implications for research and development organizations

collective action for small scale producers of agricultural biodiversity products the role of well functioning markets for development is now widely recognized however the challenge remains to make these markets benefit the poor and the environment increasing attention is being given to the potential role markets can play for agrobiodiversity conservation through product diversification and increasing competitiveness in niche and novelty markets several case studies were undertaken that explore the use of market based approaches to on farm agrobiodiversity management and livelihood improvement this paper explores how the theory of collective action can provide a more synthetic understanding of how market chains operate and the changes that could permit a more equitable distribution of benefits the case studies illustrate the need for improved trust mutual understanding of each actor s involvement and an agreed process of collective action with a high level of community participation the cases differ in their degree of collective action the level of market organization and the ways in which handling processing and innovative marketing add value to the agrobiodiversity products comparative analysis identified a range of situations in which market development can support agrobiodiversity conservation and livelihoods

real and nominal effective exchange rates for 22 ldcs 1971 1 1990 4 the international monetary fund constructs and publishes the real and nominal effective exchange rates mostly for developed but not less developed countries this paper employs a method of constructing real and nominal effective exchange rate from the literature to produce quarterly data over the 1971 1990 period for 22 developing nations as an application the stationarity of real effective exchange rates are determined to establish the empirical validity of the purchasing power parity theory ppp the results reveal that ppp fails to hold for most countries

cooperative membership and dairy performance among smallholders in ethiopia this study assesses the impact of cooperative membership among dairy producers in selale ethiopia we selected ten impact indicators proportion of dairy income to total household income total dairy income proportion of crossbreed cows to the total number of cows in the herd indicator of technological innovation amount of feed bought another indicator of technological innovation milk production milk productivity commercialization price per liter of milk price per kg of butter and the share of milk production that is processed at the household level in order to minimize the biases that may arise by simply comparing members and non members we employed a propensity score matching technique the empirical analysis shows that cooperatives are strong in facilitating technological transformations and commercialization but weak in offering better prices these findings suggest structural trade offs between different domains of cooperatives action overall our study concludes that cooperatives can be efficient business institutions to foster rural development and food security

economic reforms and long run money demand in china implications for monetary policy although money demand equations have been estimated for many western countries only recently have researchers investigated the demand for money in centrally planned economies like china chow 7 who helped pioneer the analysis of chinese macro data estimates a simple money demand function derived from the quantity theory using annual data from 1952 through 1983 he concludes that the quantity theory provides a reasonable first approximation in explaining the demand for money in china 7 325 portes and santorum 27 use real and nominal adjustment specifications and test for the homogeneity of money demand with respect to the price level and real income feltenstein and farhadian 11 estimate a money demand function based on cagan s 3 work and blejer et al 1 estimate an error correction model using data for only the 1980s both studies find that the demand for real balances is explained by real income and an opportunity cost measure

exchange rate sensitivity of the demand for money in spain 1998 exchange rate sensitivity of the demand for money in spain applied economics vol 30 no 5 pp 607 612

common property institutions and sustainable governance of resources abstract the literature on common property based resource management comprises many important studies that seek to specify the conditions under which groups of users will self organize and sustainably govern resources upon which they depend using three of the more comprehensive such studies and with an extensive review of writings on the commons this paper demonstrates that the enterprise of generating lists of conditions under which commons are governed sustainably is a flawed and impossibly costly research task for a way out the paper examines the relative merits of statistical comparative and case study approaches to studying the commons it ends with a plea for careful research design and sample selection construction of causal mechanisms and a shift toward comparative and statistical rather than single case analyses such steps are necessary for a coherent empirically relevant theory of the commons

portfolio behaviour in a flow of funds model for the household sector in india we estimate a flow of funds model for the household sector in india within the almost ideal demand system aids framework and examine the demand for money and the substitution effects between money and other financial assets the restricted long run model obtained using cointegration techniques provides stable equilibrium relationship between i 1 variables and broadly satisfies the axioms of rational choice in consumer demand theory we find that financial sector reform exerts a significant impact on the interest rate structure and household portfolio preferences specifically there is strong substitutability among risk free assets and a possible speculative effect in the stock market while the exchange rate strongly influences the demand for money these findings all have important policy implications

plea bargaining with the irs abstract the purpose of this paper is to propose a new evasion counteracting policy and to prove its welfare improving property the new fatota policy allows a target group of businesses to choose between the following two options paying a fixed amount of taxes thus exempting themselves from tax audits or paying only the amount they choose to pay and subject to possible tax audits it is shown that fatota is very similar to the plea bargaining system of the u s criminal proceedings and our results can be treated as an extension of the grossman katz analysis to the crime of tax evasion

the impact of high value markets on smallholder productivity in the ecuadorean sierra a stochastic production frontier approach correcting for selectivity bias abstract this paper uses data from small scale potato farmers in ecuador to examine the impact of the program plataformas de concertacion on productivity growth using propensity score matching combined with a stochastic production frontier model that corrects for sample selection bias we disaggregate the yield growth attributable to the program into technological change tc and technical efficiency te while the results do not exhibit a clear indication of selection bias the analysis does show that on average beneficiaries exhibit higher yields than control farmers given the same input levels but lower te with respect to their own frontiers these results suggest that while the program raised the technology gap in favor of beneficiaries it had a negative effect on te in the short run the latter finding is consistent with the notion that beneficiaries enjoyed a significant change in production techniques but it is very likely that they were still in the learning by doing stages at the time the data was collected in fact the results suggest a fast recovery in te levels on the part of beneficiaries as time with project increased

tax evasion and labor markets abstract concern with revenue losses inequities and inefficiency that may result from tax evasion has produced a number of formal analyses of taxpayer dishonesty most of this work has concentrated on the behavior of individual evaders and has ignored the interaction between evasion and labor market equilibrium to remedy this our analysis uses a model with two labor markets which differ in the potential for evasion to examine how changes in various tax parameters affect evasion and labor market equilibrium we also simulate the effect of switching from a proportional to a progressive tax system in order to evaluate the well known claim that progressivity encourages evasion

an econometric analysis of income tax evasion and its detection this article presents an econometric analysis of income tax evasion and its detection based on individual level data drawn from the internal revenue service 1982 and 1985 taxpayer compliance measurement programs i specify a model consisting of two equations the first measures the extent of evasion the second the fraction of evasion detected the empirical analysis explores the effects of income the marginal tax rate and various socioeconomic characteristics on filer evasion behavior and it assesses the variability in detection rates among irs examiners finally i use the empirical estimates to construct new estimates of the income tax gap the new estimates are very close to the previous irs estimates

individual morality and reputation costs as deterrents to tax evasion abstract empirical evidence suggests some taxpayers never evade evasion increases with the tax rate and evasion decisions are interdependent these findings are not easily explained by the existing theory which models evasion as an independently made amoral gamble this paper uses nonpecuniary costs of evasion to reconcile theory with evidence once individuals are assumed to differ by an honesty characteristic taxpayers dichotomise into groups the more honest of which responds to a tax change as the evidence suggests a further extension is to introduce an endogenous reputation cost this suggests a positive relationship between the number of evaders and the tax rate

tax evasion and the optimum general income tax abstract this paper incorporates tax evasion into an optimum general income tax problem with endogenous labor supply it posits a two group model with high and low wage individuals to investigate the properties of optimal audit and tax structures the following main results are obtained first high wage persons are never audited while low wage persons are audited with a probability strictly less than one secondly high wage persons should face a zero marginal tax rate thirdly low wage individuals who have been audited and found innocent should pay a lower tax than those who are not audited fourthly there are two possible tax regimes low wage persons face a positive marginal tax rate under one regime and a zero rate under the other fifthly even if honesty cannot be rewarded the other results of the paper continue to hold

stability of the money demand function in asian developing countries previous studies that estimated the money demand function in asian developing countries either employed traditional estimation techniques or recently popularized cointegration technique while the first group suffers from spurious regression problems the second group interpreted their finding of cointegration as a sign of stability of estimated parameters this study after incorporating the cusum and cusumsq tests into cointegration analysis shows that in some asian countries even though real m1 or m2 monetary aggregates are cointegrated with their determinants the estimated parameters are unstable

hierarchical design and enforcement of income tax policies abstract a hierarchical model of tax compliance is studied in which the government selects a tax policy and then delegates the responsibility to collect taxes to the irs there is a fixed distribution of income in the economy individuals differ by their income which is known niether to the government nor to the irs we completely characterize the solution to the irs s revenue maximizing problem when taxpayers are risk neutral the optimal auditing policy divides the reported incomes into at most three groups we show that the government provides a smaller budget to the irs than the irs would wish

the demand for tax return preparation services in this paper we focus on taxpayer choices of return preparation services using aggregate nested logit techniques we find that the demand for third party preparation responds to many factors age education employment status federal auditing and tax return characteristics perhaps most important among these is federal auditing higher federal audit rates increase the demand for tax practitioner services but do not affect the demand for other modes of third party assistance more generally as the tax burden increases or as uncertainty about true tax liability increases the demand for all modes of third party assistance increases

information and ira participation the influence of tax preparers abstract the steep drop off in the number of individual retirement account ira contributors after 1986 has led to suggestions that taxpayers misunderstood and over reacted to the restrictions on deductible contributions imposed by the tax reform act of 1986 tax panel data is used to investigate the role of taxpayer misunderstanding in the drop off in ira contributors after 1986 the hiring of a tax preparer is the transmission mechanism for knowledge of the deductibility rules after 1986 the results suggest that more information and promotion of iras would have increased the probability of contributing to an ira in 1987 for high income taxpayers but would have decreased this probability for middle income taxpayers taxpayer confusion over the deductibility restrictions appears to have been resolved by 1988 therefore taxpayer misunderstanding did not play a major role in the steep drop off in the number of ira contributors after 1986

pareto efficient income taxation under costly monitoring abstract this paper studies the problem of pareto efficient fiscal policies when labour supply is elastic and the government has no a priori information on income earned the model is a two class economy with an official and an unofficial labour market official income is taxed non linearly while unofficial income is only observable after a costly audit upon which it is taxed at an exogenous penalty rate after characterisation of the pareto efficient audit and tax policies it is verified how these policies react to a higher government revenue requirement an increase in the penalty rate a stronger ambition to redistribute in the two last scenarios the effect on the marginal tax and the audit rate is shown to decompose into a government revenue effect and a substitution effect a numerical example shows that the substitution effects are of minor importance suggesting that first intuition about the best way for a government to cope with increased evasion opportunities substituting auditing effort for high marginal tax rates sketches only part of the picture

plea bargaining with the irs extensions and further results abstract chu journal of public economics 41 1990 319 333 proposes a tax scheme called fatota under which taxpayers are given the choice between paying a fixed amount of taxes and thus being exempted from tax audit or paying only what taxpayers claim they owe and being subject to tax audits for possible evasion in this paper we extend chu s finding with regard to the pareto improving property of fatota to a more general setting including nonlinear tax penalty schedules complicated audit rules and endogenous labor supply we also show that any tax system in which the highest income taxpayer faces audit risk and or tax distortion can be pareto improved upon by the introduction of fatota we relate this result to seade s journal of public economics 7 1977 203 235 celebrated finding in the optimal taxation literature that any income tax schedule with a positive marginal tax rate at the top of the scale can be replaced by another tax schedule which is strictly pareto improving

long run income and interest elasticities of money demand in the united states econometric techniques designed to accommodate nonstationary data are used to reexamine the stability of interest and income elasticities of money demand in the united states estimates based on postwar monthly data reveal a stable relationship between m1 velocity and various measures of interest rates that proxy the opportunity cost of holding money balances tests for the existence of cointegration and methods used to estimate the income and interest elasticities are based on procedures prescribed by soren johansen 1988 corresponding error correction estimates offer insight as to the dynamics of the process that maintains the equilibrium relation between velocity and interest rates copyright 1991 by mit press

optimal auditing with heterogeneous income sources the optimal enforcement policy when households are heterogeneous with respect to both income level and to income source leads to more intense income auditing for easy to monitor sources we obtain the common result that within each income source any taxpayer reporting less than a predetermined cut off level will be audited while taxpayers reporting at least this level will never be audited however this audit policy leads to very different reporting behavior depending on the income source the internal revenue service does not audit only honest taxpayers and an increase in the audit budget may lead to a larger segment of full evaders

optimal linear income tax with random revenue abstract this paper introduces the concept of risk attitudes a government may take toward random revenue in the design of a linear income tax it shows that the familiar trade off formula between equity and efficiency can be derived either by assuming a risk neutral government attitude toward random revenue or by assuming no randomness of revenue we provide numerical analysis to demonstrate that optimum tax schedules for a non risk neutral government can significantly deviate from those for a risk neutral government

randomness in tax enforcement abstract when there is tax evasion increased randomness about how much taxable income an auditor would assess generally leads to higher reported income and more revenue when reducing randomness is costly optimality requires some randomness in assessed taxable income even if reducing randomness is costless taxpayers may prefer some randomness when the increased revenue can be rebated so that the government s revenue stays fixed

why not hang them all the virtues of inefficient punishment replacing a criminal punishment with another that both is more severe and has a lower ratio of punishment cost to amount of punishment while reducing the probability of conviction to maintain the same level of deterrence lowers both punishment cost and enforcement cost hence imprisonment is always dominated by execution and both are dominated by fines and other alternatives moden legal systems do not fit that pattern one possible explanation is that the ability enforces to profit by convictions and produce costly rent seeking examples include product liability litigation civil forfeiture and fraudulent prosecution motivated by rewards in eighteenth0 century england the problem was avoided by the use of infficient punishments in the legal system of saga period iceland and the private norms of shasta county california execution while not directly profitable for enforcers facilitates rent seeking through threats leading to out of court settlements

taxation with representation abstract in this paper a framework is developed for the joint analysis of tax preparation mode and tax non compliance estimation is performed using micro level audit data from the internal revenue service although tha availability of tax practitioners undoubtedly reduces many of the informational and computational barriers to tax compliance the results indicate that their use particularly the use of cpas and attorneys is associated with increased tax non compliance which may have negative implications for both tax equity and tax efficiency

honesty and evasion in the tax compliance game conventional models of tax compliance emphasize that taxpayers make strategic tax reports underreporting income to the extent that this behavior is functionally rewarded in contrast to this view considerable empirical evidence suggests that many taxpayers are inherently honest reporting truthfully regardless of the incentive to cheat in this article we build a game theoretic model of tax compliance that includes both honest and potentially dishonest taxpayers we show that including honest taxpayers significantly alters the model leading to much improved empirical predictions and somewhat different and novel policy implications

reasonable doubt and the optimal magnitude of fines should the penalty fit the crime models of the enforcement compliance relationship have assumed that both the probability and magnitude of fines are independent choice variables of policy makers these models indicate that it may be optimal to monitor with lowfrequency but to inflict uniformly maximal penalties for all infractions detected this article shows that if the judicial system is built on the reasonable doubt test then the penalty and the probability of conviction are not independent in particular as the penalty increases the probability of conviction falls as a result uniformly maximal penalties may actually encourage crime rather than deter it this article shows that optimal fines should rise with the severity of the infraction that is the penalty should fit the crime models of the enforcement compliance relationship generally treat both the probability and magnitude of fines as independent choice variables of the government this approach has led becker 1968 and others to conclude that it is optimal to set uniformly maximal penalties for all crimes and to set the probability of conviction at the minimum level necessary to enforce compliance with the law while this normative prescription is natural and intuitive there still remains a larger positive question of why in most nations of the world penalties are not uniformly high but rather rise with the severity of the crime one possible resolution of the positive and normative questions may lie in the fact that penalties and probabilities of conviction are not generally independent convictions are typically determined by judges or jurors who are instructed to convict only if the evidence convinces them beyond a reasonable doubt that the accused is guilty psychologists however have found that a juror s willingness to convict may be influenced by more than just the evidence jurors are very sensitive to the potential penalties that defendants may pay

who profits from taxpayer confusion abstract when taxpayers are uncertain of true taxable income they must decide whether to resolve their uncertainty by seeking tax advice and then decide how much taxable income to report since tax advisors must sign their advisees tax returns the audit policy can depend on whether tax advice was sought in the optimal audit policy some taxpayers will not resolve their uncertainty and the optimal policy yields higher net revenue with uncertainty than without

income tax compliance in a principal agent framework previous analyses have modeled income tax evasion as a portfolio problem deriving the optimal consumption of the risky asset unreported income under the assumption of a fixed probability of detection the purpose of this paper is to examine some of these issues in tax compliance starting from a different set of assumptions in particular we compare alternative audit policies to the standard random audit policy we focus on an audit cutoff policy in which an agent triggers an audit if his or her reported income is too low and is not audited if reported income is sufficiently high this paper establishes two major results first random audit rules are weakly dominated by audit cutoff rules it can be shown given lump sum taxes and fines that these audit cutoff rules are the least cost policies which induce truthful reporting of income second the dominance of audit cutoff rules over random audit rules holds for lump sum as well as proportional taxation in fact the equilibrium consequences of the two are equivalent

cointegration real exchange rate and modelling the demand for broad money in japan the literature on the demand for the japan s broad money addresses two controversial issues the form log level or log difference in which variables enter the money demand function and the question of whether financial innovation and deregulation caused shift s in the money demand relationship log level specifications of the money demand function have been shown to exhibit large shifts whereas log first differences and error correction specifications do not our paper demonstrates that the appropriate specification for the japanese money demand function is that which uses cointegration and error correction procedures

the demand for money in argentina 1978 1987 before and after the austral program in this study a monthly money demand function for argentina is estimated for a period that ends one month before the austral program may 1985 the performance of the traditional econometric approach is compared with the new cointegration approach to time series econometrics the comparison is carried out by a postsample forecast of the demand for money for a period of two years after the stabilization until july 1987 the cointegration approach is found superior to the traditional approach the first produces a relatively stable money demand whereas the second yields an unstable one

discretion in tax enforcement this paper deals with the issue of whether the revenue service rs should be allowed or even encouraged to negotiate settlement agreements with taxpayers subject to examination we consider the case in which the rs enjoys discretion at the settlement stage its stance being guided by officers professional judgment we show that discretionary settlements serve a desirable function as they allow the rs to better exploit taxpayer specific information and to take advantage of the bargaining power it can wield at the negotiation stage

income tax evasion labour supply and the equity efficiency tradeoff abstract this paper is an attempt to incorporate tax evasion into the analysis of optimum income taxation a model of variable labour supply with tax evasion is used to derive supply functions for labour in regular and irregular markets given taxpayer behaviour the government chooses tax rates penalties and the probability of detection to maximize a utilitarian social welfare function the results consist in the derivation of a formula for the optimum marginal tax rate and a characterization of the factors determining the choice between the penalty rate and the probability of detection as instruments for the control of tax evasion

testing for the stability of money demand in italy has the euro influenced the monetary transmission mechanism stability of money demand is a crucial issue for the efficacy of monetary policy this is particularly true in the presence of significant exogenous shocks to the monetary system by implementing the most recent econometric testing procedures this article intends to investigate the consistency of the stability of money demand in italy one of the larger european monetary union emu countries before and after the emu among others the objective is indeed to ascertain the effect of a change in the currency regime on the monetary aggregates and to provide a valid empirical model which is a viable tool for policy performance

linking smallholders to the new agricultural economy the case of the plataformas de concertacion in ecuador abstract this article examines the challenges of linking smallholders to high value food markets by looking at the experience of the plataformas programme in the ecuadorian sierra multiple evaluation methods are employed to ensure identification of program impact the findings suggest that the programme successfully improved the welfare of beneficiary farmers as measured by yields and gross margins these benefits are achieved through improving the efficiency of agricultural production and through selling at higher prices no significant secondary health or environmental effects were found overall the programme provides clear evidence that combining production support with facilitating market access can be successful

cointegration tests of a long run relation between money demand and the effective exchange rate abstract for the period starting with the floating of the us dollar we find evidence that long run stationarity of the demand function for m2 but not m1 requires inclusion of the effective exchange rate these results lend some support to mckinnon s hypothesis that nonstationarity in the demand for money can be resolved by inclusion of the exchange rate jel f41 e41

exchange rate sensitivity of demand for money and effectiveness of fiscal and monetary policies one of the arguments between proponents and opponents of floating exchange rates centres around the relative effectiveness of fiscal and monetary policy while proponents of floating rates argue that monetary policy is more effective under floating rates its opponents contend that fiscal policy is more effective under fixed rates however economic theory suggests that there is room for both policies under both types of exchange rate system depending upon degree of sterlization concentrating on the floating rates mundell 1963 has argued that the relative effectiveness of monetary and fiscal policies would also depend upon sensitivity of money demand to exchange rate more precisely he has conjectured that the demand for money is likely to depend upon the exchange rate in addition to the interest rate and the level of income this would slightly reduce the effectiveness of a given change in the quantity of money and slightly increase the effectiveness of fiscal policy on income and employment under

the demand for money in the united states evidence from cointegration tests this paper uses recent cointegration test procedures to investigate the underlying economic relationship between real money balances real income and interest rates for the united states unlike recent studies of money demand the authors analysis uses quarterly data spanning the period 1915 88 thus providing a sample encompassing a wide variety of economic experiences the evidence presented indicates that the broader m2 measure of money is the preferable measure with which to consider the long run effects of monetary policy copyright 1991 by ohio state university press

constrained efficient fine cum tax rate structures the case of constant relative risk aversion this paper explores the possibility that fines and tax rates impose different welfare costs on different types of taxpayer so that the government may want to apply different fine tax rate treatments to different types of taxpayer under the assumption that taxpayers exhibit constant relative risk aversion we characterize the constrained pareto efficient fine tax rate structure showing that i the co existence of compliers the above ground economy and evaders the underground economy is typical at the pareto optimum and ii pareto efficiency requires compliers to face tax rates no higher and fines no lower than those faced by evaders

why research partnerships really matter innovation theory institutional arrangements and implications for developing new technology for the poor abstract this paper explores the conceptual basis for existing and emergent institutional patterns in the context of partnership approaches to technology development drawing examples from recent studies of private enterprise activity in india smallholder horticulture it suggests that agricultural innovation as a process involves a wider range of organizational types than the conventional policy focus on public sector research organizations would tend to suggest it uses the concept of a national innovation system to argue that a partnership approach is adopted as a core methodology for engaging science and technology development with the livelihood demands of the poor

taxation with little administration abstract this paper proposes a tax scheme in the vein of the implementation literature under complete information the tax scheme virtually obviates the need for tax administration besides little tax administration three desirable properties characterize our proposed tax scheme first complementing the regular tax system with our scheme can be pareto improving second our scheme eliminates the so called excess burden of tax evasion as defined by yitzhaki yitzhaki s 1987 on the excess burden of tax evasion public finance quarterly 15 123 137 third our scheme eliminates the usual excess burden of tax distortion caveats about our proposed scheme are also discussed

policy uncertainty and the demand for money in the united kingdom limited studies that have assessed the impact of economic uncertainty on the demand for money have concentrated on using a volatility measure of money supply and output certainly other factors such as regulation taxes budget deficits national debt etc can contribute to an uncertain environment this new measure of uncertainty which is called policy uncertainty is now constructed for several countries and published we investigate the impact of this new measure on the demand for money in the uk and find that it has a negative and significant short run effect but not any log run effects