taxes housing and capital accumulation in a two sector growing economy abstract it is sometimes argued that the favorable tax treatment afforded to housing may lead to an oversupply of housing at the expense of capital this issue is examined in the context of a growing two sector economy in the basic model where the rate of time preference is constant and labor is instantaneously sectorally mobile the long run response of the capital stock to a tax on housing depends upon the relative capital intensities of the two sectors while the long run relative asset price of housing remains unchanged the robustness of these propositions to changes in the model are considered taxes on capital are also analyzed

an econometric analysis of u s foreign direct investment this paper constructs a theoretical model of foreign direct investment and examines the extent to which the model can explain the level of outward direct investment by u s companies over the last two decades the authors find that market size and factor costs both labor and capital are important factors in the investment decision instrumental variable estimation is used to demonstrate that the expectation of short run fluctuations in the dollar also influences the timing of investment copyright 1996 by mit press

international effects of tax reforms in an open economy with international capital flows there is an equivalence relation between income tax consumption tax international borrowing tax and an external interest earning tax this paper analyzes tax reform involving shifts between income and consumption taxes in this setting it is shown that the real effects of such revenue neutral tax reform depend critically on the country s current account position and the nature of the reform in particular whether the world interest rate rises or falls as a consequence of a budget deficit depends on the tax system in force the analysis provides a clear rationale for the international coordination of tax policies copyright 1989 by royal economic society

unfunded liabilities and uncertain fiscal financing we develop a rational expectations framework to study the consequences of alternative means to resolve the unfunded liabilities problem the projected exponential growth in federal social security medicare and medicaid spending with no known plan for financing the transfers resolution requires specifying a probability distribution for how and when monetary and fiscal policies will change as the economy evolves through the 21st century beliefs based on that distribution determine the existence of and the nature of equilibrium we consider policies that in expectation combine reaching a fiscal limit some distorting taxation modest inflation and some reneging on the government s promised transfers in the equilibrium inflation targeting monetary policy and debt targeting tax policy cannot anchor expectations on those target variables expectational effects are always present but need not have large impacts on inflation and interest rates in the short and medium runs in the economy s stationary distribution the capital stock may grow or shrink and substantial probability falls on little or no reneging

longitudinal studies of human growth and health a review of recent historical research longitudinal studies of health this paper reviews recent literature using stature and weight as measures of human welfare with a particular interest in cliometric or historical research we begin with an overview of anthropometric evidence of living standards and the new but fast growing field of anthropometric history this literature is always implicitly and often explicitly longitudinal in nature we then discuss i systematic empirical research into the relationship between conditions in early life and later life health and mortality and ii historical evidence on the relationship between body mass morbidity and mortality we conclude with a discussion of the importance of historical sources and understandings to health economics and population health

in search of substitution between foreign production and exports abstract are foreign production and exports substitutes or complements standard theory of the multinational corporation mnc assumes substitution while previous empirical work examining the relationship has generally found strong evidence of complementarity this study examines product level data which more closely fits the assumption of a single product firm often used in mnc theory and finds substantial evidence for both a substitution and a complementarity effect between affiliate production and exports with japanese automobile parts for the us market i also test for and find evidence of substitution using product level data on a set of japanese produced final consumer goods

foreign direct investment and exports a time series approach the impact of the accelerated internationalization of the last decade on the austrian economy is a controversial issue granger s concept of casuality is used to investigate one aspect of the internationalization of production the realtionship between foreign outward direct investment and exports using aggregate flow data from the austrian economy the stationarity of the time series is examined and cointegration tests for the adequacy of the multivariate time series approach are performed the estimation results suggest significant causality of austrian foreign outward direct investment and exports in both directions impulse response analysis and varience decomposition show a very slow dynamic response of both variables to exogenous shocks of the other it furthermnore indicates the possiblity of a positive effect of exogeneously increased foreign direct investment on exports and a negative effect of export shocks on foreign direct investment however significant long run effects are not established

domestic and foreign disturbances in an optimizing model of exchange rate determination abstract this paper analyzes the effects of various disturbances of domestic and foreign origin in a small open economy under imperfect capital mobility in which the behavioral relationships are divided from optimization by the private sector in this model the domestic economy jumps instantaneously to its new equilibrium following a change in either the domestic monetary growth rate or domestic fiscal policy in response to a disturbance in either the foreign interest rate or inflation rate the economy undergoes an initial partial jump towards its new equilibrium which it thereafter approaches gradually the implications of these results for exchange rate adjustments and the insulation properties of flexible exchange rates are discussed

growth effect of taxes in an endogenous growth model to what extent do taxes affect economic growth abstract this paper presents an endogenous growth model comprising of financial human and physical capital and incorporating major features of a general tax system technology and preference parameter values in the model are chosen to fit the actual growth experiences of the united states and a rapidly growing east asian nic using the calibrated model i assess the role of differences in taxes and other variables in explaining the difference in growth rates the main findings are i the difference in tax systems across countries explains a significant proportion around 30 of the difference in growth rates ii the difference in preferences explains at most 4 and iii differences in labor income tax debt equity ratio and inflation can be important in explaining the growth difference further i evaluate the contribution of the monetary factor to the growth rate gap and the growth effect of us tax reforms e g revenue neutral changes in relative tax structure

stochastic control for economic models past present and the paths ahead abstract on the 30th anniversary of a meeting between engineers and economists at princeton university to discuss the potential application of stochastic control methods to economics this paper provides a review of past present and paths ahead the events surrounding some of the key developments of the past are described along with a discussion of the present state of the research and of paths for future research the paper is structured around the primary methods for solving quadratic linear economic stochastic control models namely open loop classical control handcrafted feedback rules optimal feedback min max control optimal feedback rules with parameter uncertainty and dual control the paper also includes a discussion of software developments in economic stochastic control modeling

improving human development a long run view abstract the pessimistic flavour of the human development reports appears to be in contradiction with their own numbers as developing countries fare comparatively better in human development than in per capita gdp terms this paper attempts to bridge this gap by providing a new improved human development index ihdi informed by welfare economics the ihdi is presented here alongside the united nations development programme s undp hdi for the world and its main regions since the late 19th century social dimensions in the ihdi are derived following kakwani journal of development economics 41 1993 pp 307 336 with a convex achievement function whereas a geometric average is employed to combine its dimensions longevity knowledge and income thus the ihdi does not conceal the gap between rich and poor countries and casts a much less optimistic view than the conventional undp index while it fits with the undp concern for international differences the paper s findings highlight main weaknesses in human development dimensions of present day developing countries

the review of the achieved degree of sustainable development in south eastern europe the use of linear regression method the need for preservation and adequate management of the quality of environment requires the development of new methods and techniques by which the achieved degree of sustainable development can be defined as well as the laws regarding the relationship among its subsystems main objective of research is to point to a strong contradiction between the development of ecological and economic subsystems in order to improve previous research this study suggests the use of linear evaluation by which it is possible to determine the exact degree of contradiction between these two subsystems and to define the regularities as well as the deviations authors present the essential steps that were used conducted by the method of linear regression this research shows a significant negative correlation between ecological and economic subsystem indicators whereas its value r2 0 58 proves the expected contradiction that exists between the two previously mentioned subsystems by observing the sustainable development as a two dimensional system that includes ecological and economic indicators the authors suggest the methodology to modelling the relationship between economic and ecological development as an orthogonal distance between the degree of the current state measured by the relation between economic and ecological indicators of sustainable development and the degree which was obtained in a traditional way the method used in this research proved to be extremely suitable for modelling the relationship between ecological and economic subsystems of sustainable development this research was conducted on a repeated sample of countries of south east europe by including the data for france and germany being two countries on the highest level of development in the european union

survey of social and economic growth in se europe a new conceptual frame for sustainability metrics the practice so far has indicated that there is a sensitive relationship that exists between social and economic subsystem of sustainable development therefore this research suggests comparison of the states of these two subsystems as a new conceptual frame which is essential for strategic conceptualization of development the research pointed out a rather visible collision between the achieved degree of economic and social development in the countries of south eastern europe in respect to germany and france which were taken into consideration as two of the most developed countries in the european union and in the entire world the indicators which are given in this research point to the necessity of further scientific and practical consideration of strategic conceptualization of relationship between economics and society

ten things we should know about time series abstract time series data affect many aspects of our lives this paper highlights 10 things we should all know about time series namely a good working knowledge of econometrics and statistics an awareness of measurement errors testing for zero frequency seasonal and periodic unit roots analysing fractionally integrated and long memory processes estimating varfima models using and interpreting cointegrating models carefully choosing sensibly among univariate conditional stochastic and realized volatility models not confusing thresholds asymmetry and leverage not underestimating the complexity of multivariate volatility models and thinking carefully about forecasting models and expertise

the economics of foreign direct investment and trade with an application to the u s food processing industry this article investigates the determinants of foreign direct investment and its relationship to trade in the u s food industry a multinational corporation maximizes profits by choosing between production at home which is exported and production in a host country this introduces the possibility that foreign affiliate sales can substitute and or complement exports the empirical framework consists of a four equations system with foreign affiliate sales exports affiliate employment and fdi as endogenous variables the results confirm small substitution between foreign sales and exports and that the host country s protection policies affect the decision to invest abroad

the equity premium in brock s asset pricing model abstract in this paper we combine dynamic programming methods with projection methods for solving stochastic growth models as an application of these methods we solve brock s asset pricing model with a variety of parameterizations we focused on finding parameterizations that result in an equity premium that is high relative to the variation in consumption we show both analytically and numerically that the equity premium can be higher in a production based asset pricing model than it is in the consumption based asset pricing model even when the real output level is the same in both models

are empirical measures of macroeconomic uncertainty alike there is a plethora of time series measures of uncertainty for inflation and real output growth in empirical studies but little is known whether they are comparable to the uncertainty measure reported by individual forecasters in the survey of professional forecasters are these two measures of uncertainty inherently distinct this paper shows that compared with many uncertainty proxies produced by time series models the use of real time data with fixed sample recursive estimation of an asymmetric bivariate generalized autoregressive conditional heteroskedasticity model yields inflation uncertainty estimates which resemble the survey measure there is however overwhelming evidence that many of the time series measures of growth uncertainty exceed the level of uncertainty obtained from survey measure our results highlight the relative merits of using different methods in modelling macroeconomic uncertainty which are useful for empirical researchers

the incidence of taxes a dynamic macroeconomic analysis abstract this paper analyzes the incidence of various tax changes using the intertemporal optimizing framework developed by brock and turnovsky the model contains a reasonably complete specification of the corporate sector in which firms have the choice of financial structure it also allows for a range of government financial policies although only one is considered in detail both the short run and the long run effects of changes in the personal income capital gains and corporate profit tax rates are analyzed it is shown that the effects of tax changes a vary between the short and long run b the effects of tax changes depend critically upon the financial structure adopted by forms and c may also depend upon government financial policy

does economic development impact the foreign direct investment trade relationship a gravity model approach the purpose of this study is to examine the relationship between foreign direct investment fdi and trade in a bilateral context that is home source country s exports and fdi to a host recipient country are analyzed using a gravity model approach the fdi trade relationship has been a centerpiece of the international economics literature over the past decade the home country s primary concern here is on the possible loss of employment due to more fdi than trade lipsey of late there have been concerns on knowledge spillovers and the erosion of technological leadership market failure due to capital outflows for a host country the focus is on the effects of fdi on economic growth and development and technology transfer prior theoretical studies have used mostly imperfect competition models to identify the fdi trade relationship helpman and krugman markusen and venables a majority of the empirical studies has used regression techniques with one period lagged trade and fdi as an argument in current trade or fdi equations barrell and pain gopinath pick and vasavada egger aggregate firmlevel data and industry product specific data have been used in many of these studies blonigen lipsey and ramstetter some have used cointegration methods to infer on the long run association between trade and fdi pfaffermayr however few fdi trade

longitudinal studies of human growth and health a review of recent historical research this paper reviews recent literature using stature and weight as measures of human welfare with a particular interest in cliometric or historical research we begin with an overview of anthropometric evidence of living standards and the new but fast growing field of anthropometric history this literature is always implicitly and often explicitly longitudinal in nature we then discuss i systematic empirical research into the relationship between conditions in early life and later life health and mortality and ii historical evidence on the relationship between body mass morbidity and mortality we conclude with a discussion of the importance of historical sources and understandings to health economics and population health

liberalization fdi and growth in developing countries a panel cointegration approach using a panel cointegration framework the article explores the two way link between fdi and growth for a panel of 23 developing countries in addition it investigates the impact of liberalization on the dynamics of the fdi and gdp relationship a long run cointegrating relationship is found between fdi and gdp after allowing for heterogeneous country effects the cointegrating vectors reveal a bidirectional causality between gdp and fdi for more open economies for relatively closed economies long run causality appears unidirectional and runs from gdp to fdi implying that growth and fdi are not mutually reinforcing under restrictive trade and investment regimes

kyoto protocol implementation in serbia as precognition of sustainable energetic and economic development the paper gives reasons for low energy efficiency typical of the serbian economy which is based on outdated and dirty technologies the comparison of selected economic indicators and indicators of energy efficiency in both serbia and the european union points out the benefits of the kyoto protocol implementation due to the growth of competitiveness in the global market serbia has no obligation to reduce ghg emissions the authors point to the proposals whose implementation along with the mechanisms of the protocol can enable serbia the access to markets that trade ghg emissions and the access to dedicated funds self financing or attracting foreign investments to raise energy efficiency which will be accompanied by adequate economic benefits a similar principle can be applied in all countries that are not obliged to reduce ghg emissions the application of different mechanisms aiming to increase energy efficiency in serbia could contribute to the increase of gdp annual growth rate from 5 to 7 which cannot be achieved by any other economic instrument energy efficiency which is actually a question of competitiveness of each economy can finance itself through the mechanisms of the kyoto protocol by selling excess emissions resulting from improved energy efficiency

explaining output volatility the case of taxation this paper presents strong empirical evidence that the observed heterogeneity of output volatility across countries and over time is partly endogenous in particular based on a closed form solution we obtain a long run equilibrium relationship between taxes and output volatility in the stochastic neoclassical growth model by showing that asymptotically the variance of output growth rates is affected by the level of taxes without affecting the mean we estimate the tax semi elasticities on output volatility and provide convincing empirical evidence that taxes are important to understand differences in output volatility among oecd countries

energy security measurement a sustainable approach abstract the main objective of this paper is to define new energy security indicator with the long term sustainability and to test it in a sample of 28 european union countries for the period 1990 2012 as well as to determine the level of impact of six different indicators on energy security the previous methodologies for measuring of energy security have been mainly focused on security of supply while not taking into account environmental indicators and the social component the newly proposed indicator energy security index differs from the existing measuring methods precisely in a way that it includes environmental and social aspects energy security index recorded a decline in values in most countries in the period 1990 2000 in the period 2000 2008 the values became positive and after 2008 some countries reported again gradual deterioration the index value varies by year and the biggest positive changes were recorded in the case of the netherlands slovenia and spain the four economically strongest eu countries the united kingdom france germany and italy recorded significantly less fluctuations in energy security over 23 years compared to other countries the data for france and denmark show that an increased share of energy from nuclear and renewable sources can compensate even increased energy import dependence the assessment of impact of individual indicators on energy security index was conducted by using principal component analysis and showed that energy intensity gdp per capita and carbon intensity have the greatest impact the countries of the former eastern bloc are facing particular challenges of energy security which is primarily related to the rapid economic growth and at the same time a high degree of dependence on import of energy generating products in terms of energy security the most stable transition was reported in hungary and poland