estimates of effective marginal tax rates on factor incomes this chapter describes a method of calculating summary measures of effective factor income tax rates in the united states using readily available data the numbers resulting from application of this method in a study are reported in the chapter and some of their possible uses are discussed the estimated factor income tax rates behave over time in a manner quite consistent with the behavior of other broad measures of federal tax policy the postwar movement in the tax rate on income from labor relative to that on income from capital or more accurately the relevant components of these tax rates provides suggestive support for the miller scholes hypothesis that the federal personal income tax has been moving in the direction of a pure consumption tax the tax rates reported in the chapter are consistent with other studies that show a decrease since the 1950s in rates of taxation at the corporate level of income from corporate held capital they are also consistent with the view that rates of taxation of such income at the noncorporate level have risen but not quite sufficiently to offset the decline in the corporate tax burden

how do learning externalities influence the evaluation of ontario s renewables support policies abstract support programs for renewable electricity generation in ontario have been in place since 2005 including feed in tariffs and a competitive procurement process these programs have been criticized on a number of fronts in particular critics claim the level of support was excessive and creating surplus supply however prior studies have ignored one potential benefit of renewable energy support that it can help to promote cost reductions in new technologies through learning by doing this paper uses a recursive dynamic computable general equilibrium cge model featuring learning by doing effects to assess the renewable support programs provided in ontario our results in line with previous studies do not justify the high support rates paid in ontario given our core range of assumptions but our modeling approach allows us to identify the combination of key parameter values relating to learning effects and environmental damages that justify the observed rates these parameters are hard to measure empirically and our modeling approach introduces a new tool for examining the impact of variations in these parameters on policy analysis

modeling overlapping generations in a complementarity format abstract this paper provides an introduction to numerical simulation of overlapping generations models with perfect foresight and finite lifetimes the exposition presents the fundamental characteristics of this class of problems and gams programs illustrate how models can be formulated in applied research using the complementarity framework issues addressed in the paper include how to calibrate to baseyear data and how to represent international trade bequests government tax and expenditure policies and a labor leisure choice with endogenous retirement

some nonlinear tax effects on asset values and investment decisions under uncertainty abstract tax system nonlinearities are often ignored but with uncertainty may have important implications for the magnitude and direction of tax effects this paper studies a particular nonlinear tax rule the policy subsidizes asset values but may discourage some investments and encourage earlier shutdown of some projects the marginal effective tax rate varies with project risk furthermore a corporate cash flow tax can encourage investment due to interactions with the nonlinear policy the paper also presents a general statement of the stochastic equilibrium valuation method which can be used to analyze other nonlinear taxes numerical examples demonstrate computational feasibility

tax distortions and global climate policy abstract we consider the efficiency implications of policies to reduce global carbon emissions in a world with pre existing tax distortions we first note that the weak double dividend the proposition that the welfare improvement from a tax reform where environmental taxes are used to lower distorting taxes must be greater than the welfare improvement from a reform where the environmental taxes are returned in a lump sum fashion need not hold in a world with multiple distortions we then present a large scale computable general equilibrium model of the world economy with distortionary taxation we use this model to evaluate a number of policies to reduce carbon emissions we find that the weak double dividend is not obtained in a number of european countries results also demonstrate the point that the interplay between carbon policies and pre existing taxes can differ markedly across countries thus one must be cautious in extrapolating the results from a country specific analysis to other countries

the prospects for coal to liquid conversion a general equilibrium analysis we investigate the economics of coal to liquid ctl conversion a polygeneration technology that produces liquid fuels chemicals and electricity by coal gasification and fischer tropsch process ctl is more expensive than extant technologies when producing the same bundle of output in addition the significant carbon footprint of ctl may raise environmental concerns however as petroleum prices rise this technology becomes more attractive especially in coal abundant countries such as the u s and china furthermore including a carbon capture and storage ccs option could greatly reduce its co2 emissions at an added cost to assess the prospects for ctl we incorporate the engineering data for ctl from the u s department of energy doe into the mit emissions prediction and policy analysis eppa model a computable general equilibrium model of the global economy based on doe s plant design that focuses mainly on liquid fuels production we find that without climate policy ctl has the potential to account for up to a third of the global liquid fuels supply by 2050 and at that level would supply about 4 6 of global electricity demand a tight global climate policy on the other hand severely limits the potential role of the ctl even with the ccs option especially if low carbon biofuels are available under such a policy world demand for petroleum products is greatly reduced depletion of conventional petroleum is slowed and so the price increase in crude oil is less making ctl much less competitive

neutral taxation under uncertainty abstract the analogs under uncertainty of two well known certainty results are derived first if there are timing differences between tax payments and accruals neutrality is preserved if the resulting tax credits or liabilities are carried forward at the risk free interest rate provided that tax credits and liabilities are sure to be redeemed eventually second the invariance of asset valuations with respect to the rate of income tax at a given pre tax interest rate proved by johansson and samuelson under certainty can be extended to cover the case of uncertainty given analogous ceteris paribus conditions

irreversible investment and endogenous financing abstract we evaluate the effects of corporate taxation on firms investment and financing choices we focus on how the asymmetry of the corporate tax imperfect loss carry overs endogenous financing with credit constraints and different degrees of investment irreversibility affect both incremental investment and entry decisions we find that as long as capital can be financed with debt at the margin the tax distortions on the marginal investment decision are small this is particularly so if the technology is flexible in contrast the tax distortions on the entry decision are substantial the ability of firms to carry over their losses and choose their financial structure endogenously are important for reducing both types of distortions

agrifood supply chain private sector standards and farmers health evidence from kenya this article evaluates the impact of adoption of european union eu private sector standards on farmers health in rural kenya the study utilizes cross sectional farm household level data collected in 2006 from a randomly selected sample of 439 small scale export farmers we estimate the casual impact by utilizing a two stage poisson regression model two stage standard treatment effect model as well as by regression based on propensity score to assess the robustness of the results using these techniques we demonstrate that the pesticide ascribed incidence of acute illness symptoms and the associated cost of illness significantly decrease with the adoption of standards ceteris paribus farmers who adopt standards experience 70 lesser incidence of acute illness and spent about 50 60 less on restoring their health than nonadopters although standards can potentially prevent resource poor smallholders from maintaining their position in lucrative export markets they can also result in positive changes in the health of those farmers who do adopt them as shown by these results this implies that if adopted on a large scale standards may reduce production externalities corroborating the view that they may serve as a catalyst to transform production systems in developing countries

approximating infinite horizon models in a complementarity format a primer in dynamic general equilibrium analysis abstract we demonstrate the advantages of the complementarity formulation for approximating infinite horizon equilibria in neoclassical growth models as compared with techniques originally developed for optimal planning models the complementarity approach does not require an ex ante specification of the growth rate in the terminal period and is therefore suitable for models with endogenous growth or short time horizons we also consider approximation issues in models with multiple infinitely lived agents changes in net indebtedness over a finite period are estimated as part of the model to obtain a precise approximation of the infinite horizon equilibria with a small number of time periods

the significance of tax law asymmetries an empirical investigation this study uses tax return data for u s nonfinancial corporations for the period 1971 1982 to estimate the importance of restrictions on the ability of firms to use tax credits and to obtain refunds for tax losses our results suggest that the incidence of such unused tax benefits increased substantially during the early 1980s though we do not find these increases attributable to increased investment incentives during that period we present estimates of the marginal tax rate on interest payments which take into account unused tax benefits and emphasize the importance of distinguishing current tax payments from marginal tax rates in estimating the incentive to invest

fiscal consolidation and climate policy an overlapping generations perspective abstract this paper examines the distributional and efficiency impacts of public debt consolidation financed through a carbon tax employing a dynamic general equilibrium model with overlapping generations of the u s economy the numerical model features government taxes and spending and a multi sectoral production structure including intermediate production specific detail on the energy sector both in terms of primary energy carriers and energy intensive industries and sector and fuel specific carbon inputs in contrast to revenue neutral carbon tax swaps using the carbon revenue for deficit reduction implies a relaxation of future public budgets as debt repayment results in lower future interest obligations while intergenerational welfare impacts depend importantly on what tax recycling instrument is used we find that combining public debt consolidation with a carbon policy entails the possibility of sustained welfare gains for future generations if social discount rates are sufficiently low or if social preferences exhibit a large aversion with respect to intergenerational inequality combining fiscal consolidation and climate policy may offer the chance for societal gains even without considering potential benefits from averted climate change

food standards are good for middle class farmers we estimate the causal effect of food standards on vietnamese pangasius farmers wellbeing measured by per capita consumption expenditure we estimate both the average effects and the local average treatment effects on poorer and richer farmers by instrumental variable quantile regression our results indicate that large returns can be accrued from food standards but only for the upper middle class farmers i e those between the 50 and 85 quantiles of the expenditure distribution overall our result points to an exclusionary impact of standards for the poorest farmers while the richest do not apply standards because the added gain is too small

general equilibrium electricity generation technologies and the cost of carbon abatement a structural sensitivity analysis abstract electricity generation is a major contributor to carbon dioxide emissions and abatement in this sector is a key determinant of economy wide regulation costs the complexity of an integrated representation of economic and electricity systems makes simplifying assumptions appealing but there is no evidence in the literature on how important the pitfalls may be the aim of this paper is to provide such evidence drawing on numerical simulations from a suite of partial and general equilibrium models that share common technological features and are calibrated to the same benchmark data we report two basic findings first general equilibrium inter sectoral effects of an economy wide carbon policy are large it follows that assessing abatement potentials and price changes in the electricity sector with a partial equilibrium marshallian demand can only provide a crude approximation of the complex demand side interactions second we provide evidence that widely used top down representations of electricity technologies produce fuel substitution patterns that are inconsistent with bottom up cost data this supports the view that the parametrization of substitution possibilities with highly aggregated production functions is difficult to validate empirically the overall picture that emerges is one of large quantitative and even qualitative differences highlighting the role of key structural assumptions in the interpretation of climate policy projections

the structure and incentive effects of corporate tax liabilities this paper describes situations in which tax liabilities assume the form of a negative position in a call option this structure motivates an examination of the investment decisions of taxed corporations in the presence of risk it is shown that the structure of the tax liability creates an incentive to underinvest in more risky projects and an incentive for conglomerate merger these effects are then evaluated in the presence of conflicts of interest between stockholders and bondholders and under alternative assumptions about the tax code and about the timing of investment and financing decisions this paper makes an observation regarding the functional form assumed by the tax liabilities of corporations with potentially redundant deductions and evaluates its consequences for investment incentives interest and other deductions against taxable income can be taken for the most part only to the extent of that income in a single period model this gives the net tax liability a familiar structure it can be viewed as a call option where the exercise price on the call is the allowable deductions the tax paying entity holds a positive position in the assets which generate the taxable income and a negative position in a call option on those assets the analogy between options and the structure of tax liabilities calls attention to some interesting incentive effects concerning risk using their model of option valuation black and scholes 5 showed that the value of an option is increasing in the variance of the asset it is written on other authors have generalized this result and studied its implications for corporate financing see jagannathan 16 jensen and meckling 17 and green 15 the importance of the risk attributes of the underlying asset in option valuation suggests that taxation may have important incentive consequences for investment decisions involving risk it has been recognized in the public economics literature for some time that asymmetries in the tax schedule can affect risk taking behavior early papers by mossin 20 and stiglitz 25 studied individual portfolio decisions over a riskless and a risky asset our analysis differs from these in a number of respects the most important of these is our use of market valuation rather than expected utility in the decision maker s objective function this is surely a more appropri

the implications of risk and irreversibility for the measurement of marginal effective tax rates on capital the implications of risk and irreversibility for the measurement of marginal effective tax rates on capital are examined it is shown that when capital is irreversible the marginal effective tax rate is an increasing function of systematic and unsystematic capital and income risk the tax system may thus distort investments in risky capital to a much greater extent than is implied by previous research that ignored irreversibilities marginal effective tax rate calculations based upon the canadian corporate tax system are provided

how big is the debt overhang problem abstract i re examine the debt overhang problem where the flexible investment level rather than the irreversible decision whether or not to operate is used to measure the underinvestment caused by debt financing i measure a large overhang cost with long term debt or short term debt as is standard underinvestment with long term debt is more severe when investment opportunities are poor and is mitigated as opportunities improve in contrast underinvestment with short term debt remains significant even when investment opportunities are good firms lever up as opportunities improve to take advantage of tax shields so that equity claimants still face the incentive to underinvest

effects of carbon taxes in an economy with prior tax distortions an intertemporal general equilibrium analysis abstract this paper analyzes the costs of carbon taxes in a model that recognizes interactions between this tax and pre existing taxes first we examine the extent to which costs of a u s carbon tax are reduced when its revenues finance cuts in income taxes such use of revenues significantly reduces but does not eliminate the overall policy costs the positive overall costs reflect the carbon tax s focus on intermediate inputs and its relatively narrow base in comparison with income taxes we also examine the sensitivity of the carbon tax s costs to the level of pre existing taxes for any given use of revenues welfare costs rise significantly with pre existing tax rates indicating that models disregarding pre existing taxes may substantially understate the costs of new environmental tax initiatives

taxes and corporate debt policy in canada an empirical investigation this paper explores the implications of asymmetric corporate taxes for firms debt policy the focus is on the effects of two dynamic tax provisions loss carry forward and loss carry back on net debt issues an effective tax variable is first estimated using a tobit framework accounting for the fact that firms losses for tax purposes are censored this effective tax variable and other explanatory factors are employed to explain net debt issues heteroskedasticity caused by the firm size effect is also corrected using a panel of 128 firms between 1979 and 1989 this paper finds that corporate taxes have significant effects on firms debt policy

global warming and endogenous technological change revisiting the green paradox one of the most pressing policy challenges facing the world today concerns how to mitigate global warming while improving people s well being the green paradox argues that increasing taxes on co2 emissions exacerbates global warming in the present because firms have the incentive to bring forward the extraction and sale of fossil fuels this paper shows that whenever technological progress allows the extraction costs of fossil fuels to be reduced over time and a positive r d subsidy is paid a growing tax on co2 emissions reveals a welfare maximizing policy

do private standards create exclusive supply chains new evidence from the peruvian asparagus export sector abstract developing countries are increasingly exporting fresh horticultural products to high income countries these exports increasingly have to comply with stringent public and private standards as well as other quality and safety issues there is an ongoing debate on the effect of private standards on the inclusion of small scale farmers in export supply chains with this paper we contribute to this debate by providing new evidence from the peruvian asparagus export sector and by addressing several important methodological shortcomings and gaps in the existing literature we describe export dynamics using a unique firm level dataset on 567 asparagus export firms from 1993 to 2011 and the evolution of certification to private standards using own survey data from a stratified random sample of 87 export firms we use an unbalanced panel of the surveyed companies on 19 years and several methods including fixed effects and gmm estimators to estimate the causal impact of certification to private standards on companies sourcing strategy we find that certification leads to vertical integration and significantly reduces the share of produce that is sourced from external producers with a larger effect for small scale producers when distinguishing between production and processing standards and between low level and high level standards we find that especially high level production standards have a negative impact on sourcing from small scale producers

tax distortions and global climate policy with mustafa babiker and john reilly we consider the efficiency implications of policies to reduce global carbon emissions in a world with preexisting tax distortions we first note that the weak double dividend the proposition that the welfare improvement from a tax reform where environmental taxes are used to lower distorting taxes must be greater than the welfare improvement from a reform where the environmental taxes are returned in a lump sum fashion need not hold in a world with multiple distortions we then present a large scale computable general equilibrium model of the world economy with distortionary taxation we use this model to evaluate a number of policies to reduce carbon emissions we find that the weak double dividend is not obtained in a number of european countries results also demonstrate the point that the interplay between carbon policies and pre existing taxes can differ markedly across countries thus one must be cautious in extrapolating the results from a country specific analysis to other countries r 2003 elsevier science usa all rights reserved

effect of certified organic production systems on poverty among smallholder farmers empirical evidence from kenya summary this study evaluates the effect of certified organic production on poverty in smallholder production systems data was collected from cross sectional survey of local market oriented peri urban vegetable and rural honey producers in kenya poverty was measured using the multidimensional poverty methodology and endogenous switching probit model used to assess the effect of certified organic production on multidimensional poverty findings were that certified producers were less likely to be multidimensional poor compared to their counterfactual case of not participating in organic certification schemes additionally noncertified producers would be less likely to be poor if they were to participate in organic certification production

effective tax rates in macroeconomics cross country estimates of tax rates on factor incomes and consumption abstract this paper proposes a method for computing tax rates using national accounts and revenue statistics using this method we construct time series of tax rates for large industrial countries the method identifies the revenue raised by different taxes at the general government level and defines aggregate measures of the corresponding tax bases this method yields estimates of effective tax rates on factor incomes and consumption consistent with the tax distortions faced by a representative agent in a general equilibrium framework these tax rates compare favorably with existing estimates of marginal tax rates and highlight important international differences in tax policy

corporation tax asymmetries and investment evidence from uk panel data theoretical work has emphasised the potentially powerful impact of corporation tax asymmetries on investment behaviour but empirical work has mainly been confined to the measurement of effective tax rates this paper uses panel data from 597 u k companies to ask are tax asymmetries important to understanding observed investment behaviour an optimising investment model is developed and estimated both as a q equation and a euler equation in which the cost of capital appears careful modelling of asymmetries does not noticeably improve the empirical performance of these equations possible explanations are discussed

the economic and budgetary impact of climate policy in portugal carbon taxation in a dynamic general equilibrium model with endogenous public sector behavior the objective of this paper is to study hbox co 2 taxation in its dual role as a climate and fiscal policy instrument using a dynamic general equilibrium model of the portuguese economy which highlights the mechanisms of endogenous growth and incorporates a detailed modeling of public sector behavior and accounts in addition to the conventional marginal abatement cost curve we present a pair of complementary marginal abatement cost curves which highlight the impact hbox co 2 taxation has on economic performance and public debt and are therefore directly relevant to the terms of the policy debate these marginal abatement cost curves provide an effective tool for understanding the rate at which the environmental effectiveness economic costs and budgetary effects change with the tax level our results indicate that hbox co 2 taxes can be an important policy instrument for reducing emissions and promoting fiscal consolidation although this will come at a cost in terms of economic performance simulation results suggest that a tax of 17 00 euros per hbox tco 2 can satisfy existing climate policy targets the tax revenue effects together with reductions in public spending yield a 4 8 reduction in public debt these desirable outcomes come at the cost of a 1 3 reduction in gdp over the long term our analysis highlights that limiting public consumption expenditures can contribute to larger reductions in public debt albeit at a marginally greater cost to economic activity in turn reducing public investment although effective in reducing public debt produces a much larger negative economic impact this evokes an important trade off particularly pronounced in the present debates regarding austerity measures in the eu between fiscal consolidation efforts and efforts to promote convergence to eu standards of living these results further highlight that modeling assumptions with respect to public spending decision are not innocuous an exogenous trajectory for public spending suggests substantially smaller gdp effects and substantially larger public debt effects for any given emissions target

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

labor turnover costs and average labor demand labor turnover costs may or may not decrease average employment in a partial equilibrium model of labor demand depending on the form of the revenue function on the rates of discount and of labor attrition and on the relative size of hiring and firing costs if discount and attrition rates are strictly positive firing costs may well increase average employment even when hiring costs reduce it

the second dividend and the demographic structure the demographic structure of a country influences economic activity the second dividend modifies growth accordingly in general equilibrium the second dividend and the demographic structure are interrelated this paper aims at assessing empirically the second dividend in a dynamic empirical and intertemporal setting that allows for measuring its impact on growth its intergenerational redistributive effects and its interaction with the demographic structure the paper uses a general equilibrium model with overlapping generations an energy module and a public finance module that distinguishes between non ageing related public spending and a pension regime policy scenarios compare the consequences of different scenarios of recycling a carbon tax through lower proportional income taxes rather than higher public lump sum expenditures they are computed for two countries with different demographics france and germany results suggest that the magnitude of the second dividend is significantly related with the demographic structure the more concentrated the demographic structure on cohorts with higher income and saving rate the stronger the effect on capital supply of the second dividend the second dividend weighs on the welfare of relatively aged working cohorts it fosters the wellbeing of young working cohorts and of future generations the more concentrated the demographic structure on aged working cohorts the higher the intergenerational redistributive effects of the second dividend

the feasibility costs and environmental implications of large scale biomass energy abstract what are the feasibility costs and environmental implications of large scale bioenegry we investigate this question by developing a detailed representation of bioenergy in a global economy wide model we develop a scenario with a global carbon dioxide price applied to all anthropogenic emissions except those from land use change that rises from 25 per metric ton in 2015 to 99 in 2050 this creates market conditions favorable to biomass energy resulting in global non traditional bioenergy production of 150 exajoules ej in 2050 by comparison in 2010 global energy production was primarily from coal 138 ej oil 171 ej and gas 106 ej with this policy 2050 emissions are 42 less in our base policy case than our reference case although extending the scope of the carbon price to include emissions from land use change would reduce 2050 emissions by 52 relative to the same baseline our results from various policy scenarios show that lignocellulosic lc ethanol may become the major form of bioenergy if its production costs fall by amounts predicted in a recent survey and ethanol blending constraints disappear by 2030 however if its costs remain higher than expected or the ethanol blend wall continues to bind bioelectricity and bioheat may prevail higher lc ethanol costs may also result in the expanded production of first generation biofuels ethanol from sugarcane and corn so that they remain in the fuel mix through 2050 deforestation occurs if emissions from land use change are not priced although the availability of biomass residues and improvements in crop yields and conversion efficiencies mitigate pressure on land markets as regions are linked via international agricultural markets irrespective of the location of bioenergy production natural forest decreases are largest in regions with the lowest barriers to deforestation in 2050 the combination of carbon price and bioenergy production increases food prices by 3 2 5 2 with bioenergy accounting for 1 3 3 5

methodologies and perspectives in research on labour relations in global agricultural production networks a review the integration of global south actors into the global agricultural economy has attracted research on labour effects this is because global south actors are often integrated at the level of produc

interactions of corporate financing and investment decisions a dynamic framework this article analyzes the interaction between a firm s dynamic investment operating and financing decisions in a model with operating adjustment and recapitalization costs using numerical analysis we solve the model for cases that highlight interaction effects we find that higher production flexibility due to lower costs of shutting down and reopening a production facility enhances the firm s debt capacity thereby increasing the net tax shield value of debt financing while higher financial flexibility resulting from lower recapitalization costs has a similar effect production flexibility and financial flexibility are to some extent substitutes we find that the impact of debt financing on the firm s investment and operating decisions is economically insignificant

an empirical estimate of corporate tax refundability and effective tax rates the provisions of generous tax incentives during the 1970s and the recession of the early 1980s led to a marked increase in the number of nontaxable corporations in canada during the 1977 to 1982 period over 40 percent of investment was done by corporations that were rarely taxable 30 percent by corporations that were normally taxable and the balance undertaken by corporations that were taxable about half the time 1 the degree to which taxable losses can be used to shelter other forms of taxable income has important implications with regard to the study of effective tax rates on capital income this paper attempts to quantify the impact of imperfect loss offsetting or refundability on industry effective tax rate measurements section ii of this note provides an estimate of the extent to which tax losses are written off current or future taxable income in a present value sense refundability is measured by discounting the estimated proportion of a taxable loss written off by companies through carryback and carryforward provisions section iii uses the refundability measures to estimate effective tax rates on canadian firms by industry three cases are compared i the taxpaying firm this firm expects to use all deductions and credits immediately ii the nontaxpaying firm this firm expects to be nontaxpaying with probability 1 in the period in which new investment is undertaken marginal tax losses on new investment are used up slowly over time

an inverted u relationship between inequality and long run growth abstract the relationship between income distribution and long run economic growth has been a popular topic in recent economic research existing theoretical works find either a positive or a negative relationship but not both in this paper we propose an inverted u relationship between initial income distribution and long term economic growth and estimate and test the relationship using cross country data

potential impacts of bt eggplant on economic surplus and farmers health in india in this article the potential impacts of bt eggplant technology in indian agriculture are analyzed several proprietary bt hybrids are likely to be commercialized in the near future based on field trial data it is shown that the technology can significantly reduce insecticide applications and increase effective yields comprehensive farm survey data are used to project farm level effects and future adoption rates simulations show that the aggregate economic surplus gains of bt hybrids could be around us 108 million per year consumers will capture a large share of these gains but farmers and the innovating company will benefit too as the company has also shared its technology with the public sector bt open pollinated varieties might become available with a certain time lag this would make the technology more accessible especially for resource poor farmers entailing further improvements in welfare and distribution effects the wider implications of the private public technology transfer are discussed furthermore the potential benefits for farmers health resulting from reduced insecticide applications are examined using an econometric model and a cost of illness approach these benefits are worth an additional 3 4 million per year yet they constitute only a small fraction of the technology s environmental and health externalities more research is needed for comprehensive impact analysis

governance and trade in fresh vegetables the impact of uk supermarkets on the african horticulture industry production of fresh vegetables for export has grown rapidly in a number of countries in sub saharan africa over the last decade this trade brings producers and exporters based in africa together with importers and retailers in europe large retailers in europe play a decisive role in structuring the production and processing of fresh vegetables exported from africa the requirements they specify for cost quality delivery product variety innovation food safety and quality systems help top determine what types of producers and processors are able to gain access to the fresh vegetables chain and the activities they must carry out the control over the fresh vegetables trade exercised by uk supermarkets has clear consequences for inclusion and exclusion of producers and exporters of differing types and for the long term prospects for the fresh vegetables industry in the two major exporting countries studied kenya and zimbabwe

pollution taxes and revenue recycling abstract discussions of environmental policy and the tax system have emphasized the value of pollution tax revenues which can be used to reduce other tax distortions in the economy however by raising private marginal production costs environmental taxes also tend to reduce gdp and exacerbate the welfare costs of conventional taxes for environmental taxes in consumption goods industries the net welfare change from these two effects is negative unless this good is a relatively weak substitute for leisure an estimate for the optimal pollution tax with full revenue recycling is 63 to 78 of marginal environmental damages

distributional impacts of carbon pricing a general equilibrium approach with micro data for households article i nfo many policies to limit greenhouse gas emissions have at their core efforts to put a price on carbon emissions carbon pricing impacts households both by raising the cost of carbon intensive products and by changing factor prices a complete analysis requires taking both effects into account the impact of carbon pricing is determined by heterogeneity in household spending patterns across income groups as well as heterogeneity in factor income patterns across income groups it is also affected by precise formulation of the policy how is the revenue from carbon pricing distributed as well as the treatment of other government policies e g the treatment of transfer payments what is often neglected in analyses of policy is the heterogeneity of impacts across households even within income or regional groups in this paper we incorporate 15 588 households from the u s consumer and expenditure survey data as individual agents in a comparative static general equilibrium framework these households are represented within the mit usrep model a detailed general equilibrium model of the u s economy in particular we categorize households by full household income factor income as well as transfer income and apply various measures of lifetime income to distinguish households that are temporarily low income e g retired households drawing down their financial assets from permanently low income households we also provide detailed within group distributional measures of burden impacts from various policy scenarios

limited trading of emissions permits as a climate cooperation mechanism us china and eu china examples abstract recent multilateral climate negotiations have underlined the importance of international cooperation and the need for support from developed to developing countries to address climate change this raises the question of whether carbon market linkages could be used as a cooperation mechanism policy discussions surrounding such linkages have indicated that should they operate a limit would be set on the amount of carbon permits that could be imported by developed regions from developing countries this paper analyzes the impact of limited carbon trading between an ets in the eu or the us and a carbon market covering chinese electricity and energy intensive sectors using a global economy wide model we find that the limit results in different carbon prices between china and europe or the us although the impact on low carbon technologies in china is moderate global emission reductions are deeper than in the absence of international trading due to reduced carbon leakage if china captures the rents associated with limited permit trading we show that it is possible to find a limit threshold that makes both regions better off relative to carbon markets operating in isolation

average marginal tax rates from social security and the individual income tax we extend previous estimates of the average marginal tax rate from the federal individual income tax to include social security our computations consider the tax rates on employers employees and the self employed the income that accrues to persons with earnings below the ceiling and the effective deductibility of employers social security contributions from workers taxable income the next effect of social security on the average marginal tax rate is below 02 until 1966 but then rises to 03 in 1968 04 in 1973 05 in 1974 06 in 1979 and 07 in 1982 this abstract was borrowed from another version of this item

the dynamic effects of tax law asymmetries under the laws of most countries a distinction is made between gains and losses by businesses losses that must be carried forward are subjept to two penalties a loss of interest and expiration previous examinations have focused on the higher expected tax payments such a tax system without full loss offset imposes on risky projects this paper presents a dynamic analysis of the impact of taxation on investment when gains and losses are treated asymmetrically the results demonstrate how firm characteristics and the timing of taxes can influence behaviour under current u s tax law a distinction is made between gains and losses by businesses for corporations gains are taxed at what is essentially a flat rate of 46 while losses do not necessarily qualify for a refund at the same rate to obtain an immediate refund the taxpayer must have had taxable income during the three previous years in excess of the current loss any losses that cannot be carried back in this fashion must be carried forward subject to two implicit penalties such loss carryforwards earn no interest and they expire after fifteen years similar provisions apply in other countries hence businesses investing in risky projects for which the probability of having to carry losses forward is positive can expect to pay higher taxes than they would under a system with full loss offset i e the immediate refund of taxes for losses incurred many corporations

distributional effects of fiscal consolidation if public goods and transfers are relatively more valuable to the poor the elderly poor stand to lose from public debt reduction achieved through spending cuts when long term surpluses produced by debt reduction are recycled into higher provision of public goods and transfers future generations of poor could gain if future surpluses are recycled through lower labour taxes working households in the future would be positively affected the impact of debt reduction on vertical equity is ambiguous yet inter rather than intragenerational equity is likely to pose the greatest obstacle to fiscal consolidation based on majority voting by self interested households debt reduction is unlikely to occur jel classification d91 e62 h23 h63

endogeneity in count data models an application to demand for health care the generalized method of moments gmm estimation technique is discussed for count data models with endogenous regressors count data models can be specified with additive or multiplicative errors and it is shown that in general a set of instruments is not orthogonal to both error types simultaneous equations with a dependent count variable often do not have a reduced form which is a simple function of the instruments however a simultaneous model with a count and a binary variable can only be logically consistent when the system is triangular utilizing data from the british health and lifestyle survey 1991 1992 the gmm estimator is used in the estimation of a model explaining the number of visits to doctors with a self reported binary health index as a possible endogenous regressor if this regressor is truly endogenous one expects the pseudo likelihood estimate of its coefficient to be biased upwards indeed for the additive model the estimated coefficient of the binary health index decreases in value when the possible endogeneity of this regressor is taken into account further indication of endogeneity is given by the fact that the overidentifying restrictions are rejected in the multiplicative model but not in the additive model finally a model that includes predicted latent health instead of the binary health index is estimated in stages

should a vehicle fuel economy standard be combined with an economy wide greenhouse gas emissions constraint implications for energy and climate policy in the united states abstract the united states has adopted fuel economy standards that require increases in the on road efficiency of new passenger vehicles with the goal of reducing petroleum use and more recently greenhouse gas ghg emissions understanding the cost and effectiveness of fuel economy standards alone and in combination with economy wide policies that constrain ghg emissions is essential to inform coordinated design of future climate and energy policy we use a computable general equilibrium model the mit emissions prediction and policy analysis eppa model to investigate the effect of combining a fuel economy standard with an economy wide ghg emissions constraint in the united states first a fuel economy standard is shown to be at least six to fourteen times less cost effective than a price instrument fuel tax when targeting an identical reduction in cumulative gasoline use second when combined with a cap and trade cat policy a binding fuel economy standard increases the cost of meeting the ghg emissions constraint by forcing expensive reductions in passenger vehicle gasoline use displacing more cost effective abatement opportunities third the impact of adding a fuel economy standard to the cat policy depends on the availability and cost of abatement opportunities in transport if advanced biofuels provide a cost competitive low carbon alternative to gasoline the fuel economy standard does not bind and the use of low carbon fuels in passenger vehicles makes a significantly larger contribution to ghg emissions abatement relative to the case when biofuels are not available this analysis underscores the potentially large costs of a fuel economy standard relative to alternative policies aimed at reducing petroleum use and ghg emissions it further emphasizes the need to consider sensitivity to vehicle technology and alternative fuel availability and costs as well as economy wide responses when forecasting the energy environmental and economic outcomes of policy combinations

trade standards and poverty evidence from senegal summary in the debate on trade and poverty it is argued that standards act as trade barriers and cause marginalization of the poor this paper quantifies income and poverty effects of high standards trade and integrates labor market effects by using company and household survey data from the vegetable export chain in senegal we find that exports grew sharply despite increasing standards contributing importantly to rural incomes and poverty reduction tightening standards induced a shift from smallholder contract farming to integrated estate production altering the mechanism through which poor households benefit through labor markets instead of product markets

the kyoto protocol and developing countries abstract under the kyoto protocol the world s wealthier countries assumed binding commitments to reduce greenhouse gas emissions the agreement requires these countries to consider ways to minimize adverse effects on developing countries of these actions transmitted through trade using a general equilibrium model of the world economy we find that adverse effects fall mainly on energy exporting countries for some even greater than on countries that are assuming commitments removing existing fuel taxes and subsidies and using international permit trading would greatly reduce the adverse impacts and also reduce economic impacts on the countries taking on commitments another approach preferential tariff reduction for developing countries would benefit many developing countries but would not target those most adversely affected if instead oecd countries directly compensated developing countries for losses the required annual financial transfer would be on the order of 25 billion 1995 us in 2010

integrating information about the cost of carbon through activity based costing abstract environmental protection has been an issue of serious concern for many years it is not a trend but the responsibility of corporations this responsibility for environmental protection should be internalized into business operations prior to production in order to reflect the true cost of the final product due to the use of traditional cost accounting many organizations have not estimated their environmental costs precisely therefore environmental accounting systems such as carbon management accounting environmental management accounting and greenhouse gas accounting have attracted worldwide attention in this paper we propose an integrated concept the activity based costing approach to solve the problem of environmental and cost evaluation we include a case study of an existing pulp and paper company in taiwan to show that the activity based costing method estimates emissions of waste and the environmental costs of a final product more accurately than traditional approaches do the method can therefore provide information for use in existing environmental accounting systems and help managers incorporate environmental costs into their decision making processes

optimal environmental taxation in the presence of other taxes general equilibrium analyses this paper examines the optimal setting of environmental taxes in economies where other distortionary taxes are present we employ analytical and numerical models to explore the degree to which in a second best economy optimal environmental tax rates differ from the rates implied by the pigovian principle according to which the optimal tax rate equals the marginal environmental damages both models indicate contrary to what several analysts have suggested that the optimal tax rate on emissions of a given pollutant is generally less than the rate supported by the pigovian principle moreover the optimal rate is lower the larger are the distortions posed by ordinary taxes numerical results indicate that previous studies may have seriously overstated the size of the optimal carbon tax by disregarding pre existing taxes this abstract was borrowed from another version of this item

the effect of taxes and depreciation on corporate investment and financial leverage this paper provides an analysis of the effect of corporate and personal taxes on the firm s optimal investment and financing decisions under uncertainty it extends the deangelo aad masulis capital structure model by endogenizing the firm s investment decision the authors results indicate that when investment is allowed to adjust optimally the existing predictions about the relationship between investment related and debt related tax shields must be modified in particular the authors show that increases in investment related tax shields due to changes in the corporate tax code are not necessarily associated with reductions in leverage at the individual firm level in cross sectional analysis firms with higher investment related tax shields normalized by expected earnings need not have lower debt related tax shields normalized by expected earnings unless all firms utilize the same production technology differences in production technologies across firms may thus explain why the empirical results of recent cross sectional studies have not conformed to the predictions of deangelo and masulis

carbon price and wind power support in denmark abstract this paper aims at characterizing the conditions of wind power deployment in order to infer a carbon price level that would provide wind power with comparable advantage over fossil fuel technologies as effective wind support policies the analysis is conducted on denmark after the electricity market liberalization probit and tobit techniques are employed to take account of a potential threshold effect i find that the level and type of the support policy are the dominant drivers of deployment a feed in tariff significantly brings more wind power in than a premium policy the additional capacity installed monthly increases by more than 1 mw for each additional mwh of support this is compared to the effect of the electricity price investment cost interest rate and general economic activity if the policy is a premium i find that 23 mwh of support in addition to electricity price is needed to observe the connection of new turbines to the grid with a 0 5 probability i convert this support level into a carbon price of 27 ton if wind power competes with coal and 48 t if it competes with gas

corporation tax finance and the cost of capital this paper examines the influence of corporate tax exhaustion on the firm s financial and investment decisions a dynamic programming model is used to establish effective marginal tax rates in the presence of a tax system that permits the carry forward of losses to future periods the paper demonstrates that internal optimal financial structures may result which do not require the imposition of external constraints the cost of capital is highly sensitive to the current taxable earnings of the firm and the implications of this for such tax transfer activities as leasing are discussed

welfare effects of vegetable commercialization evidence from smallholder producers in kenya we investigate whether smallholder horticultural commercialization is able to as often stipulated reduce poverty in developing countries with the help of panel household survey data from kenya we find evidence for a positive association between vegetable commercialization and household welfare even when controlling for unobserved heterogeneity across households interestingly the effect differs depending on which market vegetables are being produced for commercialization through the export market is consistently positively associated with income but not wealth while there is some limited evidence for commercialization through the domestic market channel being positively related to welfare measured by asset holdings and income depending on the specification

taxation corporate financial policy and the cost of capital the cost of capital plays an important role in the allocation of resources among competing uses in a decentralized market system the purpose of this paper is to organize and present what is known and what is hypothesized about the effects of taxation on the incentive to invest via the cost of capital taking full account of important issues that arise independently from the question of taxation included in the analysis is a discussion of empirical findings about the interaction of inflation and taxation in influencing the incentive to invest and a treatment of taxation and uncertainty this abstract was borrowed from another version of this item

valuing financial health and environmental benefits of bt cotton in pakistan data from a farm survey and choice experiment are used to value the benefits of bt cotton in pakistan unlike previous research on the economic impacts of bt which mostly concentrated on financial benefits in terms of gross margins we also quantify and monetize positive externalities associated with technology adoption due to lower chemical pesticide use on bt cotton plots there are significant health advantages in terms of reduced incidence of acute pesticide poisoning and environmental advantages in terms of higher biodiversity and lower soil and groundwater contamination these positive externalities are valued at us 79 per acre of which half is attributable to health and the other half to environmental improvements adding average gross margin gains of us 204 results in an aggregate benefit of us 283 per acre of bt or us 1 7 billion for the total bt cotton area in pakistan

a public choice view on the climate and energy policy mix in the eu how do the emissions trading scheme and support for renewable energies interact abstract in this paper we analyze the rationale for an energy policy mix when the european emissions trading scheme ets is considered from a public choice perspective that is we argue that the economic textbook model of the ets implausibly assumes 1 efficient policy design and 2 climate protection as the single objective of policy intervention contrary to these assumptions we propose that the ets originates from a political bargaining game within a context of multiple policy objectives in particular the emissions cap is negotiated between regulators and emitters with the emitters abatement costs as crucial bargaining variable this public choice view yields striking implications for an optimal policy mix comprising res supporting policies whereas the textbook model implies that the ets alone provides sufficient climate protection our analysis suggests that support for renewable energies 1 contributes to a more effective ets design and 2 may even increase the overall efficiency of climate and energy policy if other externalities and policy objectives besides climate protection are considered thus our analysis also shows that a public choice view not necessarily entails negative evaluations concerning efficiency and effectiveness of a policy mix

food standards certification and poverty among coffee farmers in uganda summary voluntary standards are gaining in importance in global markets for high value foods we analyze and compare impacts of three sustainability oriented standards fairtrade organic and utz on the livelihoods of smallholder coffee farmers in uganda using survey data and propensity score matching with multiple treatments we find that fairtrade certification increases household living standards by 30 and reduces the prevalence and depth of poverty for the other two certification schemes no significant impacts are found several factors that can explain differential impacts are discussed overly general statements about the effects of sustainability standards on smallholder livelihoods may be misleading

the cost of climate policy in the united states abstract we re evaluate prospects for us economic growth and the likely costs of advanced technologies given recent developments and then apply the mit emissions prediction and policy analysis eppa model to evaluate three core ghg policy scenarios for the us that cap emissions at different levels the three policy scenarios involve allowance allocations that through 2050 are 1 constant at present emissions levels 2 linearly reduced to 50 below present 3 linearly reduce emissions to 80 below present the cumulative allowance allocations over the horizon of the policy are 287 203 and 167 gt of co 2 equivalent respectively we compare the results to previous analysis of these same policy scenarios to evaluate how the changed growth and technology prospects affect the results we focus on 203 and 167 gt scenarios because current proposals envision deep cuts in emissions from present the 167 gt scenario is closest to proposals currently being considered by congress and supported by the us administration however we do not attempt to model specific details of actual proposals we test results to alternative assumptions about program coverage and banking behavior measured in terms of changes in economic welfare the economic cost of 203 and 167 gt cases is in the range of 2 to 3 by 2050 with co 2 prices between 48 and 67 in 2015 rising to between 190 and 266 by 2050 implementation details matter when an idealized economy wide cap and trade is replaced by coverage omitting some sectors or if the credibility of long term target is weak limiting banking behavior prices and welfare costs change substantially

on the impacts of carbon tax and technological progress on china using a dynamic national computable general equilibrium model we investigate the impact of carbon tax and energy efficiency improvement on the economy and environment of china the chinese social

on the construction of marginal federal personal and social security tax rates in the u s abstract in this article i correct and extend my earlier series on marginal federal personal income tax rates i also construct a measure of the marginal social security tax rate and add this to the income tax rate to obtain a measure of the effective marginal tax rate on income due to federal taxes finally i compare my series on marginal income tax rates and its method of construction with those of barro and sahasakul

supermarkets farm household income and poverty insights from kenya summary the expansion of supermarkets in developing countries may have important implications for poverty and rural development while previous studies have compared farm profits between participants and non participants in supermarket channels wider income effects have hardly been analyzed moreover most existing studies do not account for structural differences between the two groups we address these issues by using endogenous switching regression and building on a survey of vegetable farmers in kenya participation in supermarket channels is associated with a 48 gain in average household income which also contributes to poverty reduction to realize these benefits on a larger scale will require institutional support

a review of the stern review on the economics of climate change how much and how fast should we react to the threat of global warming the stern review argues that the damages from climate change are large and that nations should undertake sharp and immediate reductions in greenhouse gas emissions an examination of the review s radical revision of the economics of climate change finds however that it depends decisively on the assumption of a near zero time discount rate combined with a specific utility function the review s unambiguous conclusions about the need for extreme immediate action will not survive the substitution of assumptions that are consistent with today s marketplace real interest rates and savings rates

quantifying regional economic impacts of co2 intensity targets in china we acknowledge the support of the ministry of science and technology of china through the institute for energy environment and economy at tsinghua university and the support from graduate school of tsinghua university which is supporting zhang da s doctoral research as a 22 visiting scholar at the massachusetts institute of technology we are also grateful for the support provided by rio tinto china and social science key research program from national social science foundation china of grant no 09 zd029 we further acknowledge the support of eni s p a icf international and shell founding sponsors of the china energy and climate project for supporting this model development work we would further like to thank dr john reilly dr sergey paltsev dr kyung min nam dr henry chen paul kishimoto and tianyu qi at joint program on the science and policy of global change and participants in the annual meeting of china energy and climate project and ecomod 2012 conference for helpful comments and discussion 23

growth renewables and the optimal carbon tax optimal climate policy is investigated in a ramsey growth model of the global economy with exhaustible oil reserves an infinitely elastic supply of renewables stock dependent oil extraction costs and convex climate damages four regimes can occur depending on the initial social cost of oil being larger or smaller than that of renewables and depending on the initial oil stock being large or small we also offer some policy simulations for the first and second regime which illustrate that with a lower discount rate more oil is left in situ and renewables are phased in more quickly we identify the conditions under which the optimal carbon tax rises or decreases subsidizing renewables without a carbon tax induces more oil to be left in situ and a quicker phasing in of renewables but oil is depleted more rapidly initially the net effect on global warming is ambiguous abstract from author

simulating fundamental tax reform in the united states this paper uses a new large scale dynamic life cycle simulation model to compare the welfare and macroeconomic effects of transitions to five fundamental alternatives to the u s federal income tax including a proportional consumption tax and a flat tax the model incorporates intragenerational heterogeneity and a detailed specification of alternative tax systems simulation results project significant long run increases in output for some reforms for other reforms namely those that seek to insulate the poor and initial older generations from adverse welfare changes long run output gains are modest

impact of bt cotton on pesticide poisoning in smallholder agriculture a panel data analysis while substantial research on the productivity and profit effects of bt cotton has been carried out recently the economic evaluation of positive and negative externalities has received much less attention here we focus on farmer health impacts resulting from bt related changes in chemical pesticide use previous studies have documented that bt cotton has reduced the problem of pesticide poisoning in developing countries but they have failed to account for unobserved heterogeneity between technology adopters and non adopters we use unique panel survey data from india to estimate unbiased effects and their developments over time bt cotton has reduced pesticide applications by 50 with the largest reductions of 70 occurring in the most toxic types of chemicals results of fixed effects poisson models confirm that bt has notably reduced the incidence of acute pesticide poisoning among cotton growers these effects have become more pronounced with increasing technology adoption rates bt cotton now helps to avoid several million cases of pesticide poisoning in india every year which also entails sizeable health cost savings