the distribution of money and prices in search equilibrium this article considers a search theoretic model of monetary exchange agents bargain over both the amount of money and the quantity of goods to be exchanged in bilateral meetings determining endogenously the distributions of money and of prices i show that money is neutral if changes in the money supply are accomplished via proportional transfers however within the class of lump sum transfers an increase of the rate of monetary expansion tends to decrease the dispersion of wealth and prices and to improve welfare when inflation is low but when inflation is high enough the opposite effects occur

private food standards regulatory gaps and plantation agriculture social and environmental ir responsibility in the philippine export banana industry the expansion of retailer led food production standards over recent years has seen certification against such standards become a de facto condition of access to numerous supply chains globalg a p standards in particular have extended the traditional focus of retailer led standards beyond food safety to include compliance points addressing environmental protection and labour welfare this has stimulated considerable research on the implications of standards compliance for small producers however little attention has been paid either to the relationships between so called private standards and state based regulatory regimes or to the implications of standards compliance for corporate farms their employees and neighbouring communities this paper examines these relationships and implications in the context of plantation banana production in the philippines focussing in particular on gaps that emerge between the ideals of social and environmental responsibility embodied in private standards and actual practices of regulation it finds that while compliance with private standards is associated with comparatively favourable treatment of labour deference to poorly enforced national legislation conceals ongoing human rights and environmental concerns

heterogeneity redistribution and the friedman rule we study monetary models with nondegenerate stationary distributions of money holdings we find that the friedman rule does not typically maximize ex post social welfare an increase in the rate of growth of the money supply has two effects the standard distortionary or rate of return effect makes money a less desirable asset for all moneyholders a second redistributive effect creates a transfer from one type of agent to the other an increase in the rate of growth of money away from the friedman rule can produce a rate of return effect that dominates the standard effect

inflation and welfare in a monetary economy it is in everyone s private interest to try to get someone else to hold non interest bearing cash and reserves but someone has to hold it all so these efforts must simply cancel out all of us spend several hours per year in this effort and employ thousands of talented and highly trained people to help us these person hours are simply thrown away wasted on a task that should not have to be performed at all

the long run relationship between inflation and output in postwar economies abstract we investigate the relationship between inflation and real output in a large sample of postwar economies our methodology is to use a structural vector autoregression to estimate the response of the level of real output to permanent inflation shocks separately for each country we find that a permanent shock to inflation is not associated with a permanent movement in the level of real output for most countries in our sample the main exceptions are certain low inflation countries in which permanent inflation shocks permanently increase the level of output we also find that permanent inflation shocks do not permanently influence real output growth rates in our sample

a uniqueness proof for monetary steady state abstract the framework in lagos and wright 2005 20 combining decentralized and centralized markets is used extensively in monetary economics much is known about that model but there is a loose end only under special assumptions about bargaining power or decentralized market preferences has it been shown that the monetary steady state is unique for general decentralized market utility and bargaining i prove uniqueness for generic parameters with fiat money and for all parameters with commodity money as a corollary i get monotone comparative statics

a search theoretic approach to monetary economics the essential function of money is its role as a medium of exchange the authors formalize this idea using a search theoretic equilibrium model of the exchange process that captures the double coincidence of wants problem with pure barter one advantage of the framework described here is that it is very tractable the authors also show that the model can be used to addre ss some substantive issues in monetary economics including the potenti al welfare enhancing role of money the interaction between specializat ion and monetary exchange and the possibility of equilibria with multip le fiat currencies copyright 1993 by american economic association

the worth of a possum valuing species with the contingent valuation method the focus of this paper is on methods of assessing the value peopleplace on the conservation of species for use in policy making of principalinterest is the relatively new methodology of contingent valuation whichis a method for asking people directly about their preferences the paperpresents an application of the contingent valuation method to theconservation of an endangered species in the state of victoria australia the results emphasise the importance of careful survey design implementation and analysis as well as the precise definition of theenvironmental good being valued consequently the contingent valuationmethod does provide information relevant to decision making processesbased on monetary economic considerations thus in orthodox economicterms it makes sense to conserve species but there are other moral andethical grounds for conserving species as well

inflation and welfare a search approach this paper extends recent findings in the search theoretic literature on monetary exchange regarding the welfare costs of inflation we present first estimates of the welfare cost of inflation using the welfare triangle methodology of bailey 1958 and lucas 2000 we then derive a money demand function from the search theoretic model of lagos and wright 2005 and we estimate it from u s data over the period 1900 2000 we show that the welfare cost of inflation predicted by the model accords with the welfare triangle measure when pricing mechanisms are such that buyers appropriate the social marginal benefit of their real balances for other mechanisms welfare triangles underestimate the true welfare cost of inflation because of a rent sharing externality we also point out other inefficiencies associated with noncompetitive pricing which matter for estimating the cost of inflation we then illustrate how endogenous participation decisions can mitigate or exacerbate the cost of inflaion and we provide calibrated examples in which a deviation from the friedman rule is optimal finally we discuss distributional effects of inflation

optimal monetary and fiscal policies in a search theoretic model of monetary exchange abstract search models of monetary exchange commonly assume that terms of trade in anonymous markets are determined via nash bargaining which generally causes monetary equilibrium to be inefficient bargaining frictions add to the classical intertemporal distortion present in most monetary models whereby agents work today to obtain cash that can be used only in future transactions in this paper we study the properties of optimal fiscal and monetary policy within the framework of lagos and wright 2005 we show that fiscal policy can be implemented to alleviate underproduction while money is still essential if lump sum monetary transfers are available a production subsidy can restore the efficiency of monetary equilibria the friedman rule belongs to the optimal policy set but higher inflation rates are also possible when lump sum monetary transfers are not available equilibrium allocations are generally not first best nevertheless fiscal policy still results in substantial welfare gains money can be extracted from circulation via a sales tax on decentralized market activities and the friedman rule is only optimal if the buyer has relatively low bargaining power

optimal monetary policy what we know and what we don t know in this article i examine the current state of knowledge about optimal monetary policy i distinguish between two literatures basic and applied the basic literature is explicit about the frictions that generate a positive value for money and make it socially beneficial the applied literature is not i describe the recent lessons about monetary policy that we have learned from each literature and discuss how the two distinct approaches may be usefully combined

money bargaining and risk sharing we investigate the dual role of money as a self insurance device and a means of payment when perfect risk sharing is not possible and when the two roles of money are disentangled we use a variant of lagos wright 2005 where agents face a risk in the centralized market cm in the decentralized market dm money s main role is as a means of payment while in the cm it is as a self insurance device we show that state contingent inflation rates can improve agents ability to self insure in the cm thereby improving the terms of trade in the dm we then characterize the optimal monetary policy

ex ante willingness to pay with supply and demand uncertainty implications for valuing a sea turtle protection programme it is argued that ex antewillingness to pay is appropriately measured as a function of subjective supply and demand probabilities an exploratory case study of a loggerhead sea turtle protection programme is used to show how estimates of these probabilities can be obtained from a sample survey and how a change in probabilities determines contingent choice empirical results confirm that subjective probabilities are important when explaining ex antewillingness to pay attempts to estimate the determinants of ex antewillingness to pay without controlling for subjective probabilities will result in specification bias it is important that subjective probability information is gleaned from contingent valuation survey respondents and included in empirical models of contingent choice

use of dichotomous choice nonmarket methods to value the whooping crane resource market prices for endangered wildlife species rarely exist when prices do exist they arc not likely to reflect accurately individual preferences both consumptive uses such as hunting fishing and trapping boyle and bishop 1985 stou and johnson brookshire eubanks and randall and more esoteric benefits such as viewing and existence values must be considered this article is addressed to the valuation of whooping cranes grus americana a prominent endangered species the purpose of this article is to present a methodology for estimating nonconsumptive benefits associated with the existence of an endangered species a dichotomous choice form of contingent valuation is applied to quantify individuals economic surplus associated with preservation of the whooping crane resource specific issues and limitations of the empirical approach are discussed some of which have been previously examined by bishop and heberlein 1979 and hanemann the present paper expands upon earlier work in several ways fit in addition to discussing the above issues a unique application of the approach to an endangered species is presented second three model specifications are examined two of which arc consistent with utility theory and one which is not hanemann ti again following hanemann economic surplus is estimated at the sample median as well as the mean the dii cussion of the last two issues sheds sit on their implications for estimation of economic surplus throughout the article the suitability of alternative estimation techniques for dichom mous choice or referendum style data is examined the methodological and empirical results are relevant to a number of cumnt issues regarding model specification choice of binary response model and choice of estimator for equivalent surplus hanemann boyle and bishop 1984 sellar chavas and stoll

optimal fiscal and monetary policy some recent results this paper studies the quantitative properties of fiscal and monetary policy in business cycle models in terms of fiscal policy optimal labor tax rates are virtually constant and optimal capital income tax rates are close to zero on average in terms of monetary policy the friedman rule is optimal nominal interest rates are zero and optimal monetary policy is activist in the sense that it responds to shocks to the economy

optimal fiscal and monetary policy in an economy without capital abstract this paper is concerned with the structure and time consistency of optimal fiscal and monetary policy in an economy without capital in a dynamic context optimal taxation means distributing tax distortions over time in a welfare maximizing way for a barter economy our main finding is that with debt commitments of sufficiently rich maturity structure an optimal policy if one exists is time consistent in a monetary economy the idea of optimal taxation must be broadened to include an inflation tax and we find that time consistency does not carry over an optimal inflation tax requires commitment by rules in a sense that has no counterpart in the dynamic theory of ordinary excise taxes the reason time consistency fails in a monetary economy is that nominal assets should from a welfare maximizing point of view always be taxed away via an immediate inflation in a kind of capital levy this emerges as a new possibility when money is introduced into an economy without capital

sequencing and nesting in contingent valuation surveys abstract the term embedding is ill defined and has been applied to distinct phenomena some predicted by economic theory and others not this paper lays out a theoretical framework for looking at these phenomena and provides a set of well defined terms included is a discussion of survey design problems which may induce spurious evidence in favor of the hypothesis that respondents are insensitive to the scope of the good being valued an empirical example of the component sensitivity is provided this test rejects the hypothesis that respondents are insensitive to the scope of the good being valued

bargaining and the value of money abstract search models of monetary exchange have typically relied on nash 1950 the bargaining problem econometrica 18 155 162 bargaining or strategic games that yield an equivalent outcome to determine the terms of trade by considering alternative axiomatic bargaining solutions in a search model with divisible money we show that the properties of the bargaining solutions do matter both qualitatively and quantitatively for questions of first degree importance in monetary economics such as i the efficiency of monetary equilibrium ii the optimality of the friedman rule and iii the welfare cost of inflation

expanding contingent value sample estimates to aggregate benefit estimates current practices and proposed solutions a mail survey was administered to a panel of colorado consumers to obtain estimates of willingness to pay wtp for preserving union park detailed socioeconomic data for all surveyed individuals was available a priori we develop and employ the multiple

a unified framework for monetary theory and policy analysis search theoretic models of monetary exchange are based on explicit descriptions of the frictions that make money essential however tractable versions of these models typically make strong assumptions that render them ill suited for monetary policy analysis we propose a new framework based on explicit micro foundations within which macro policy can be studied the framework is analytically tractable and easily quantifiable we calibrate the model to standard observations and use it to measure the cost of inflation we find that going from 10 percent to 0 percent inflation is worth between 3 and 5 percent of consumption much higher than previous estimates

a contribution to the pure theory of money abstract this article analyzes a general equilibrium model with search frictions and differentiated commodities because of the many differentiated commodities barter is difficult in that it requires a double coincidence of wants and this provides a medium of exchange role for fiat currency we prove the existence of equilibrium with valued fiat money and show it is robust to certain changes in the environment rate of return dominance liquidity and the welfare implications of fiat money are discussed

savings asset scarcity and monetary policy abstract this paper analyzes optimal monetary policy regarding asset markets in a model where money and savings are essential and asset markets matter the model is able to explain why different regimes for the correlation of real interest rates and stock price dividend ratios exist and offers two explanations why the correlation vanished after 2007 a decrease in inflation or changes in the supply of risky and safe assets the results on optimal policy show that away from the friedman rule fiscal policy can improve welfare by increasing the amount of outstanding government debt if the fiscal authority is not willing or able to increase debt the monetary authority can improve welfare of current generations by reacting procyclically to asset return shocks

optimal fiscal and monetary policy under sticky prices this paper studies optimal fiscal and monetary policy under sticky product prices the theoretical framework is a stochastic production economy without capital the government finances an exogenous stream of purchases by levying distortionary income taxes printing money and issuing one period nominally risk free bonds the main findings of the paper are first for a miniscule degree of price stickiness i e many times below available empirical estimates the optimal volatility of inflation is near zero this result stands in stark contrast with the high volatility of inflation implied by the ramsey allocation when prices are flexible the finding is in line with a recent body of work on optimal monetary policy under nominal rigidities that ignores the role of optimal fiscal policy second even small deviations from full price flexibility induce near random walk behavior in government debt and tax rates third sluggish price adjustment raises the average nominal interest rate above the one called for by the friedman rule finally an interest rate feedback rule whereby the nominal interest rate depends on inflation and output fits well the data emanating from the ramsey economy however the fitted rule is not of the taylor type for the implied inflation coefficient is less than one and close to zero and the output coefficient is negative jel classification e52 e61 e63

tax incidence with bargaining abstract the paper investigates tax incidence in a two person bargaining model where one party is taxed the condition under which the non taxed party shares the burden of taxes or benefit of subsidies is characterized sufficient conditions for the tax burden to fall entirely on the taxed party are given also a sufficient condition for the non taxed party actually to benefit from taxation is given

economics and the debate about preservation of species crop varieties and genetic diversity the paper reviews and outlines criteria that have been suggested for determining whether or not to save a species for extinction priorities as set out in the world conservation strategy cost benefit analysis and the safe minimum standard approach are given particular consideration the different criteria also are compared assuming that there is an absolute upper constraint on the amount of resources available for the conservation of species there is some discussion of whether the reduction in available crop varieties is adding to or reducing the instability of crop yields it is claimed that relative variability appears to be falling but there may be an increasing risk of non sustainability the importance of the burden of proof in the conservation versus non conservation debate is stressed and it is suggested that recent economic thought has swung more towards the view that the burden of proof should rest on those seeking to carry out activities which may extinguish a species

measuring the existence value of wildlife what do cvm estimates really show two research programs are brought together to contribute to the growing body of work on alternatives to standard welfare based approaches to environmental valuation and policy the first is the theoretical literature undermining the new welfare