commitment versus discretion in a political economy model of fiscal and monetary policy interaction abstract does price commitment result in lower welfare i pair an independent monetary authority controlling nominal bonds with a fiscal authority microfounded by the political economy model of battaglini and coate 2008 without price commitment time inconsistency is alleviated by interaction between the benevolent monetary authority and the politically distorted fiscal authority with price commitment nominal bonds will be used for wasteful spending by the politically distorted fiscal authority price commitment results in lower welfare because it eliminates monetary control over fiscal decisions

property tax limits local fiscal behavior and property values evidence from massachusetts under proposition abstract this paper examines the impact of a specific property tax limit proposition 2 1 2 in massachusetts on the fiscal behavior of cities and towns in massachusetts and the capitalization of that behavior into property values proposition 2 1 2 places a cap on the effective property tax rate at 2 5 and limits nominal annual growth in property tax revenues to 2 5 unless residents pass a referendum allowing a greater increase the study analyzes the 1990 1994 period a time when massachusetts municipalities faced significant fiscal stress because of a 30 cut in real state aid and a demographically driven increase in school enrollments the findings include the following 1 proposition 2 1 2 significantly constrained local spending in some communities with most of its impact on school spending 2 constrained communities realized gains in property values to the degree that they were able to increase school spending despite the limitation and 3 changes in non school spending had little impact on property values

moral duty warm glow or self interest a choice experiment study on motivations for domestic garbage sorting in italy abstract behavioural and mainstream environmental economics have proposed alternative explanations for individual motivations behind environmentally relevant activities leading to different recommendations for policymakers separate collection of different types of municipal waste represents a popular field of application in this paper we exploit the results of a choice experiment study conducted on a representative sample of 1010 italian households aimed at understanding the relative weights of economic and non economic motivations the results show that the mean willingness to pay for separate waste collection is 77 year per family which is an adequate empirical estimate of the warm glow effect of recycling however the four identified latent classes reveal individuals with fairly opposite motivations this finding can be interpreted as the fact that the two types of motivations economic and non economic do not add up but tend to cancel each other the concept of latent classes applied to environmental economics is novel and suggests distinct typologies of individuals more importantly these groups of individuals are likely to react differently to alternative policy instruments therefore instead of designing waste management policies based on the assumption that behavioural responses are stereotyped policymakers should adopt a more complex set of policy instruments that target different groups of individuals with appropriately chosen incentive schemes

human capital inequality and growth a local perspective abstract a recent body of work has demonstrated the crucial role played by local human capital externalities and local school funding in generating socio economic segregation persistent poverty and low aggregate income or productivity growth we present a simple model which captures the main insights from this literature and prove three general propositions first minor differences in education technologies preferences wealth or minor imperfections in capital markets can lead to a high degree of stratification second stratification makes inequality in education and income more persistent across generations the same is true for total wealth provided the rich succeed in capturing the rents created by their secession finally this polarization or urban areas can be very inefficient especially in the long run

estimating consumer willingness to supply and willingness to pay for curbside recycling we estimate the willingness to pay for curbside recycling based on a contingent valuation survey of 600 residents of a large southeastern united states city the best estimate of willingness to pay for curbside recycling is 2 29 month after adjustment for hypothetical bias we also report the results of a field experiment designed to test the effectiveness of explicit monetary incentives and communication appeals to influence the decision to recycle and the quantity of materials to recycle while households respond to the monetary cost of recycling the effects of the token ex ante incentives and appeals appear to be small jel d61 q21

duopoly locations and optimal zoning in a small open city abstract this paper analyzes a duopoly location model with an asymmetric zoning that prohibits firms from locating to a specific interval in a small open linear city it is shown that the maximum differentiation principle presented in d aspremont et al econometrica 47 1979 1145 is still valid under area zoning regulation moreover a zoning regulation can be seen as a policy instrument to limit firms excess profits and a proper regulation may even reduce the distortion in total transportation costs therefore enhancing social welfare specifically the optimal zoning is about 29 5 percent of the city with no amenity effect finally all the land rents raised by zoning are eventually confiscated by the absentee landowner

effects of norms and opportunity cost of time on household recycling social and moral norms and the opportunity cost of time will affect household recycling efforts a model is developed to describe how norms affect the recycling decision through feelings of self respect guilty conscience and warm glow as well as respect in and sanctions from the community we find that the opportunity cost of time has a significant negative effect on household recycling all indicators of warm glow social and moral norms increase household recycling efforts we find no evidence of crowding out neither when recycling is perceived as mandatory nor when economic incentives are introduced in the form of a differentiated garbage fee

why do we have nominal government debt abstract we study the choice between nominal and indexed debt in a stochastic macroeconomic model with discretionary monetary and fiscal policy with distortionary taxes nominal debt provides valuable insurance against the budgetary effects of economic fluctuations we show that a welfare maximizing government always issues some nominal debt even though nominal debt increases inflation along the time consistent path of the economy the result is fairly robust with respect to changes in assumptions about policy constraints and about the macroeconomic setting

the time consistency of optimal monetary and fiscal policies we show that optimal monetary and fiscal policies are time consistent for a class of economies often used in applied work economies appealing because they are consistent with the growth facts we establish our results in two steps we first show that for this class of economies the friedman rule of setting nominal interest rates to zero is optimal under commitment we then show that optimal policies are time consistent if the friedman rule is optimal for our benchmark economy in which the time consistency problem is most severe the converse also holds if optimal policies are time consistent then the friedman rule is optimal

central bank independence and the monetary instrument problem we study the monetary instrument problem in a dynamic noncooperative game between separate discretionary fiscal and monetary policy makers we show that monetary instruments are equivalent only if the policy makers objectives are perfectly aligned otherwise an instrument problem exists when the central bank is benevolent while the fiscal authority is short sighted relative to the private sector excessive public spending and debt emerge under a money growth policy but not under an interest rate policy despite this property the interest rate is not necessarily the optimal instrument

the determinants of household recycling social influence public policies and environmental preferences abstractour article aims at understanding the determinants of households selective waste sorting behaviours based on data from an original survey of 694 individuals in the french provence alpes cote d azur region the applied literature focuses mainly on countries with high recycling rates we focus on a region with the lowest recycling rate in france a country that recycles less than the european country average we first apply polychoric principal components analysis to reduce the number of explanatory variables to a set of six factors in a second step we use a probit model to estimate the probability of waste sorting as a function of these factors this model tests several hypotheses emerging from the recent literature on behavioural economics applied to households selective sorting this literature pays particular attention to the social influence on recycling behaviour which has been studied mostly by sociologists and psychologists the results of our empirical analysis confirm some of the fin

hedonic markets and sorting equilibria bid function envelopes for public services and neighborhood amenities abstract hedonic regressions with house value as the dependent variable are widely used to study public services and neighborhood amenities this paper builds on the theory of household bidding and sorting across communities to derive bid function envelopes which provide a form for these regressions this approach allows for household heterogeneity and multiple amenities yields estimates of the price elasticity of amenity demand directly from the hedonic without a rosen two step procedure and provides tests of hypotheses about sorting an application to cleveland area data from 2000 yields price elasticities for school quality and neighborhood ethnic composition and supports the sorting hypotheses

one without the other behavioural and incentive policies for household waste management this paper provides a review of economic studies that analyses the use of multiple policies to cope with waste management problems we discuss the factors that influence selective sorting behaviour and the most appropriate policies for their promotion based on the works analysed our survey shows the original features of waste as an environmental problem requiring regulation the traditional approach in which decisions respond to rational behaviour particularly cost savings has some limits although not all public policies seem justified we argue that there might be a need for specific policies to promote recycling preferably based on the provision of information to consumers or on behavioural instruments indeed personal factors specific to each individual such as emotions and the influence of social interaction should be taken into account in the development of public policies we review the literature related to different rationales and identify some avenues for future research

promoting recycling private values social norms and economic incentives individual behaviors that benefit the environment are potentially influenced by personal values of environmental quality social norms that encourage proenvironmental actions and economic incentives economic incentives often loom particularly large including those that result from environmental policies less well understood are the respective roles of private values and social norms do people undertake proenvironmental actions more out of their per sonal valuations of the environment that might be characterized as warm glow effects or from the social norms that reinforce proenvironmental behaviors the least explored component of these deter minants of proenvironmental behavior is that of social norms we characterize social norms in terms of what is normatively appropriate rather than what is the conventional mode of behavior there is a burgeoning economics literature modeling social norms but not a commensurate empirical investigation of their practical impor tance if norms do matter what is the respective role of personal norms that a person imposes on others compared with the external norms that people perceive are imposed on them by others to what extent are these social norms the result of legal regimes and regulatory policies that establish standards for behavior our empirical analysis estimates the role of these influences the empirical case study for this article is based on an analysis of recycling of plastic water bottles recycling policies are becoming

on the joint determination of fiscal and monetary policy abstract the conduct of fiscal and monetary policy absent commitment depends on the interaction between the objective of smoothing distortions intertemporally and a time consistency problem when net nominal government obligations are positive both fiscal and monetary policies are distortionary and the choice of debt depends on how the anticipated response in future monetary policy affects the current demand for money and bonds there exists a unique steady state with positive net nominal government obligations which is stable and time consistent for any initial level of debt the welfare loss due to lack of commitment is small

subsidies as sorting devices abstract the divergence between tax payments and the cost of providing public services that arise from financing local public services provides an incentive for higher income communities to deter the entry of lower income households into their community here we demonstrate that higher income households to insure that low income households do not enter their community or reduce the number that do enter subsidize goods consumed by higher income households more than by lower income households this strategy will make the rich community less attractive to the poor deterring their entry to the community

dynamic monetary fiscal interactions and the role of monetary conservatism assuming that macroeconomic policies are directed by distinct monetary and fiscal policy makers who cannot commit to future actions we reassess the implications of monetary conservatism and fiscal impatience in a setting with nominal government debt for environments where a non negative steady state level of government debt assets emerges in the absence of conservatism and impatience monetary conservatism induces accumulation of a higher stock of liabilities assets and has adverse positive welfare implications this result obtains irrespectively of the degree of fiscal impatience and questions the unambiguous desirability of monetary conservatism traditionally found in the literature

efficiency equilibrium and exclusion when the poor chase the rich using a simple adverse selection model we characterize equilibrium when the rich chase the poor if communities are established by competitive entrepreneurs the equilibrium exists is unique and is efficient it involves either complete separation or complete pooling different income groups may rank these qualitative outcomes differently we show how restrictions imposed by a central government may alter the nature of equilibrium such restrictions may be explained as the choice of a low income majority altering the equilibrium to the pooling outcome which they prefer

neighbourhood composition and residential land prices does exclusion raise or lower values hedonic price models are used to explore the degree to which land use and racial composition used as outcome proxies for local zoning practices influence residential land values in santa clara county california fiscal pressures have prompted many california communities to zone on the basis of tax yield potential especially in fast growing settings like santa clara county controlling for variables related to job accessibility as well as proximity to regional transport infrastructure the analysis shows that indicators of land use diversity and jobs housing balance generally correlate with high residential land prices while the fiscal instincts of californian municipalities is to shun housing in favour of commercial development and thus to create imbalanced land development patterns this research suggests these fiscal advantages are partly offset by lower land values and thus lower property tax intake racial diversity on the other hand lowered residential property values even when controlling fo

edge versus center finding common ground in the capitalization debate abstract a continuing debate questions whether capitalization of taxes and public services into house price occurs the current study argues for an inverse relationship between housing supply elasticity and capitalization rates a sample is split into houses on the interior and edge of the urban area capitalization of schooling and crime occurs everywhere but it is weaker toward the edge of an urban area where housing supply elasticities and developer activity are greater tax results are less robust but the capitalization rates of crime and school quality are roughly twice as strong on the interior than on the urban fringe

heterogeneous preferences for community recycling programs this paper examines household preferences for community recycling programs which have both public and private good dimensions the data come from a survey conducted in seattle wa which elicited stated preference contingent ratings for different recycling programs relative to status quo with experimental variation in the overall community recycling rate achieved and expected household cost the recycling rate is interpreted as capturing the public benefits of recycling programs and constitutes the most common measure used by policy agencies for setting waste management objectives and evaluating policy initiatives the analysis begins with fixed parameter models that explore different ways of handling rating data and mixed logit estimations that capture household preference heterogeneity both within and across different recycling programs this analysis yields unique estimates of willingness to pay for an increase in the community recycling rate predicted individual specific utility parameters are then regressed on household background information to explicitly examine the nature of preference heterogeneity overall this paper generates interpretable policy relevant insights into the public and private good dimensions of community recycling programs