on the principle of equal sacrifice in income taxation abstract in an influential article by young journal of economic theory 1988 44 321 335 it is shown that the traditional equal sacrifice principles in taxation can be justified from a non utilitarian perspective by proving that equal sacrifice is in fact a consequence of more primitive concepts of distributive justice this result is obtained in a distribution theoretic setting where total revenue to be raised is fixed the present paper studies the same question in a setting where the basic problem is to determine a tax function without any reference to the total tax revenue a setting which is familiar from the theory of progressive taxation and shows that i there exists a utility function which is continuous and strictly increasing relative to which all agents sacrifice equally if and only if the tax function is incentive preserving and ii any convex hence progressive and incentive preserving tax function equalizes sacrifice relative to a utility function which is continuous strictly increasing and concave

dumping adjustment costs and uncertainty abstract domestic demand uncertainty in the presence of adjustment costs can cause profit maximizing firms to sell output abroad at a loss firms may dump output at prices below long run marginal and average productions costs with probability arbitrarily close to one the model predicts dumping is particularly likely in process industries such as steel closed form dumping solutions and interesting comparative statics are obtained also the effect of domestic competition on dumping is examined i find domestic competition increases total dumping although a monopolist maximizing output subject to a zero expected profit constraint will dump more than a competitive industry

welfare analysis of tax reforms using household data abstract this paper discusses a methodology for calculating the distribution of gains and losses from a policy change using data for a large sample of households estimates are based on the equivalent income function which is money metric utility defined over observable variables this enables calculations to be standardised and a computer program to compute the statistics presented in the paper is available for a general demand system equivalent income is related to measures of deadweight loss and standard errors are computed for each of the welfare measures an application to u k data for 5 895 households is given which simulates a reform that involves eliminating housing subsidies

how well do static indicators identify the chronically poor abstract we investigate how well the most widely used static welfare indicators perform in identifying the chronically poor we propose a normative measure of performance the cost of a given impact on chronic poverty when transfers are contingent upon a purely static indicator using longitudinal household data from rural india we find that current consumption is not always a better indicator of chronic poverty than current income both however perform much better than other common indicators such as food share and access to land

welfare distributional change and the measurement of social mobility a new approach to the measurement of welfare distributional change and social mobility is developed the novel feature of this model is the use of price dependent measures of individual and social welfare in evaluating t he magnitude and direction of the movement in the distribution in addition the proposed indexes of mobility are decomposed into the sum of between group and w ithin group mobility each measure is implemented for the united states over the period 1947 1982 it is found that in each year society is upwardly mobile rela tive to the 1947 distribution copyright 1986 by mit press

gains from cartelisation in the oil market in this paper we ask whether opec still gains from cartelisation in the oil market despite low producer prices and a modest market share we apply two intertemporal equilibrium models of the global oil market one consisting of a cartel and a fringe and one describing a hypothetical competitive market comparing the outcome of these models we conclude that there are positive cartelisation gains of about 18 percent in the oil market in comparison with what pindyck 1978 found for the 1970s this may be considered as quite modest moreover we study whether the cartelisation gains to opec are altered by different moves by non opec producers or consumer countries generally we find that the relative cartelisation gains are unchanged one exception is exploration activities where we find that a major increase in non opec reserves could remove the cartelisation gains to opec completely in this case the opec countries could find themselves better off without the cartel

relative price changes and inequality in the size distribution of various components of income this article uses a comprehensive model of economic inequality to examine the impact of relative price changes on inequality in the marginal distributions of various income components in which the marginal distributions are derived from a multidimensional joint distribution the multidimensional joint distribution function is assumed to be a member of the pearson type vi family that is it is assumed to be a beta distribution of the second kind the multidimensional joint distribution is so called because it is a joint distribution of components of income and expenditures on various commodity groups gini measures of inequality are devised from the marginal distributions of the various income components the inequality measures are shown to depend on the parameters of the multidimensional joint distribution it is then shown that the parameters of the multidimensional joint distribution depend on the relative prices of various commodity groups and several other specified exogenous variables thus knowle

innis lecture equity and equality is horizontal equity he the most widely accepted principle of equity or does it stand in opposition to the advancement of human welfare this paper argues that the case for the he principle is not as straightforward as is usually thought and that it requires advanced notions of justice and well being the most likely ethical basis for he appears to combine a rawlsian maximin principle and a view of well being that allows for relative local comparison effects the paper also explores some of the dimensions of equality and well being along which the he principle can be applied and presents a number of examples showing how he considerations can provide an important input into policy analysis le principe d d equite horizontale he constitue t il le principe ethique le plus largement admis ou est il un frein a l avancement du bien etre cet article explique pourquoi les assises ethiques du principe d eh ne sont pas aussi claires qu il est parfois suggere et demontre que ce principe fait plutot appel a des notions avancees de justice et de bien etre les assises morales les plus susceptibles d appuyer le principe d eh semblent combiner un argument de type maximin rawlsien et une perspective du bien etre qui tient compte des effets locaux relatifs de comparaison le papier explore egalement certaines des dimensions de l egalite et du auxquelles le principe d eh peut etre applique et presente un certain nombre d exemples montrant en quoi de considerations de type eh peuvent influencer l analyse de politiques

measures of distributional change an axiomatic approach in recent years a number of interesting papers have appeared in the general field of the analysis of changes in a frequency distribution the most common applications of such analysis are in the areas of income and wealth re distribution and the contributions have usually focussed on a particular specialised issue such as mobility of individuals within a structure or of horizontal inequity as opposed to vertical inequality implicit in the comparison of two distributions a number of approaches to each of these problems have been suggested and indeed several specific practical indices of mobility or inequity have been proposed 1 whilst some of these can be shown to have very useful features in their application it is probably fair to say that most derive from an ad hoc approach to the particular aspect of the problem on which the author had focussed it is interesting to note that comparatively few papers attempt to exploit the similarities involved in each of these issues all this contrasts rather sharply with the state of play in an obviously closely related game that of the measurement of inequality much of the essential foundation of the problem of measuring inequality as we presently understand it seems to be more or less sorted out in a systematic fashion roughly speaking what may be done is as follows given

labour supply welfare rankings and the measurement of inequality abstract this paper presents an analysis of inequality using utility based measures of welfare derived from different approaches to modelling household labour supplies the almost ideal demand system specification of preferences is selected for the estimation of a neoclassical household model and of individual decision models which incorporate different assumptions concerning the intra household distribution of income using the rosen 1976 tax perception methodology the study also explores the implications of a model which does not constrain time at home to leisure welfare rankings and inequality measures defined on equivalent income are compared for each type of model the analysis uses australian unit record data on 3 352 households drawn from the australian bureau of statistics 1981 82 income and housing sample survey file the results indicate the sensitivity of welfare orderings and inequality measures to the choice of decision model and to the specification of lump sum transfers between family members a comparative study of equivalent incomes and selected money income variables also illustrates the limitations of observed household and individual incomes as welfare indicators for the analysis of inequality and for policy design

fiscal foresight and information flows news or foresight about future economic fundamentals can create rational expectations equilibria with non fundamental representations that pose substantial challenges to econometric efforts to recover the structural shocks to which economic agents react using tax policies as a leading example of foresight simple theory makes transparent the economic behavior and information structures that generate non fundamental equilibria econometric analyses that fail to model foresight will obtain biased estimates of output multipliers for taxes biases are quantitatively important when two canonical theoretical models are taken as data generating processes both the nature of equilibria and the inferences about the effects of anticipated tax changes hinge critically on hypothesized information flows different methods for extracting or hypothesizing the information flows are discussed and shown to be alternative techniques for resolving a non uniqueness problem endemic to moving average representations

estimation and control of spanish energy related co2 emissions an input output approach this article uses input output methods to obtain the energy related co2 intensities for the spanish economy in 1992 based on those intensities it yields a structural decomposition of spanish energy related co2 emissions and an estimation of the price effects of several hypothetical carbon taxes levied on fossil fuel consumption these results are related to the ongoing discussion within eu circles and member states about the consequences of carbon energy taxes and to the simulated effects of such taxes in various countries the paper also responds to the lack of reliable disaggregated data on spanish co2 emissions and to the growing awareness on the limited effectiveness of spanish climate change policies

what can survey forecasts tell us about information rigidities a lot we derive common and conflicting predictions from models in which agents face information constraints and then assess their validity using surveys of consumers firms central bankers and professional forecasters we document that mean forecasts fail to completely adjust on impact to shocks leading to statistically and economically significant deviations from the null of full information the dynamics of forecast errors after shocks are consistent with the predictions of models with information rigidities the conditional responses of forecast errors and disagreement among agents can also be used to differentiate between some of the most prominent models of information rigidities

how does government spending news affect interest rates evidence from the united states abstract this study analyzes the effects of news shocks to u s government spending on interest rates especially long term interest rates and investigates the role of agents expectations in the propagation of government spending to interest rates using large bayesian vector autoregressive models with sufficient information we find that news about increases in government spending induce significant increases in both short and long term interest rates while the effects of government spending surprise shocks on interest rates are mixed and ambiguous government spending news shocks in the baseline model account for around 10 of the variance in forecast errors in long term interest rates which is much more important than government spending itself using empirical dynamic term structural models we further decompose increases in long term interest rates into changes in expectations of future monetary policy and changes in term premiums we find that an increase in the long term interest rate after a positive government spending news shock mainly reflects higher expected future short term interest rates which demonstrates the importance of the coordination between fiscal and monetary policy communication

fiscal capacity tax effort and optimal equalization grants in this paper we address the question how should the tax burden in a feder ation be distributed across the different jurisdictions so that the social cost of providing government services is minimized using optimal tax theory we derive formulas for the optimal equalization grants that equalize the social marginal cost of raising revenue across all provinces we show how the optimal equalization grants are related to a measure of tax effort based on the marginal cost of public funds and a measure of fiscal capacity that takes into account the elasticity of the tax base and its substitutability with other tax bases

preferences for redistribution in the land of opportunities this paper explores how individual preferences for redistribution depend on future income prospects in addition to estimating the impact of individuals socioeconomic background and of their subjective perceptions of future mobility we employ panel data to construct dobjectivet measures of expected gains and losses from redistribution for different categories of individuals we find that such measures have considerable explanatory power and perform better than dgeneral mobilityt indexes we also find that preferences for redistribution respond to individual beliefs on what determines one s position in the social ladder ceteris paribus people who believe that the american society offers equal opportunities are more averse to redistribution d 2004 published by elsevier b v

international income mobility abstract we perform a novel analysis of the international mobility of per capita gnp we find general but not unambiguous support for the notion that world income mobility increased between 1972 and 1992 counterpointing the increased inequality over this period

equity and policy effectiveness with imperfect targeting abstract we propose a general approach that jointly integrates horizontal and vertical equity criteria in the assessment of poverty alleviation programs with the strength of each criterion being captured through its own inequity aversion parameter this contrasts with the assessment of poverty alleviation programs done with simple under coverage and leakage ratios or with other methods that do not take into account the heterogeneity of the poor and that do not address directly the social benefits of achieving normative criteria our methodology is illustrated using tunisian data and two alternative poverty alleviation policies we find inter alia that the social ranking of commodity and socio demographic targeting in tunisia depends on the policymaker s comparative preference for vertical and horizontal equity

measuring movement of incomes we consider a small set of elementary properties for income movement measures and show that there is essentially only one measure that satisfies all of these properties the per capita aggregate change in log incomes we demonstrate next that this movement mobility measure has a number of appealing descriptive and normative properties and provide a formal generalization of our basic characterization theorem drawing from the related literature on poverty measurement finally we present here an empirical application in which we show by using our new measure that there has been a broad based increase in income movement in the united states between the 1970s and 1980s

comment on the relative deprivation curve and its applications the article by kakwani 1984 introduced a measure of inequality that is weighted to take account of a sense of deprivation an individual may feel on seeing others who are better off in the second part of the article kakwani presented estimates of deprivation using australian data i would like first to comment on the welfare implications of the measure of relative deprivation proposed in the article and second to point out some crucial assumptions underlying the use of household incomes in the empirical work the measure of relative deprivation is based on a utility function for the representative individual of the form w u y x with uy x uy 0 for y o where x is own income and y denotes the incomes of other individuals the condition uy x is interpreted as the deprivation an individual suffers with an increment in the income of any individual who is better off the conditions on uy introduce a crucial asymmetry in the individual s utility function the individual suffers deprivation on observing incomes above x but derives no sense of satisfaction from observing individuals on incomes below x under this condition a social welfare function of the form w u w u o does not necessarily satisfy the pareto criterion it may be possible to increase social welfare by making some people worse off without making anyone better off in particular it may be possible to increase social welfare by reducing incomes of individuals just above x who may be relatively poor if x is sufficiently low clearly this is the case when the utility function is specified as

taxation of petroleum products theory and empirical evidence the domestic taxation of petroleum products is an important source of revenue in most countries however there is a wide variation of tax rates on petroleum products across countries which cannot be explained by economic theory alone this paper surveys different considerations advanced for taxing petroleum and presents petroleum tax rate data in 120 countries

energy and carbon taxes and their distributional implications this paper studies the equity effects of energy and carbon taxes as policy instruments to reduce greenhouse gas emissions and fulfil the legally binding reduction targets adopted in the 1997 kyoto protocol to the united nations framework convention on climate change unfccc the equity effects of taxes on energy products are studied in the broader context of a revenue neutral environmental fiscal reform the paper shows that carbon or energy taxes are mildly regressive and that impacts on low income households are less than expected the distributional implications depend on various issues such as whether the type of fuel being taxed heating transport and in particular how the revenues are recycled back to the economy the importance of compensation and mitigation measures is also discussed

aggregate consumer behaviour and the measurement of inequality this paper presents an approach to inequality measurement based on an econometric model of aggregate consumer behaviour the novel feature of this model is that systems of individual demand functions can be recovered uniquely from the system of aggregate demand functions we present methods for evaluating social welfare based on an explicit social welfare function this social welfare function incorporates measures of individual welfare based on indirect utility functions for all consumer units we develop indexes of inequality based on actual and potential levels of social welfare

the impacts of petroleum price fluctuations on income distribution across ethnic groups in malaysia crude oil price hikes have compelled governments of developing countries to let domestic prices of energy increase fiscal priorities made it impossible to fully compensate the hikes by raising energy subsidies this paper examines the potential impacts of a limited deregulation of the petroleum price on the income distribution in malaysia paying specific attention to differences in impacts on major ethnic groups we introduce an extended social accounting matrix sam model which not only incorporates substitution possibilities among production inputs and consumption goods but also allows for the exogenous determination of the price of intermediate inputs the results of simulations indicate that distributional impacts of rising petroleum prices tend to be regressive affecting poor people more severely than richer people all ethnic groups experience income loss with the real incomes of malay households which are relatively poor on average more than the chinese and indian households which are the generally richer

revisiting the classical view of benefit based taxation this paper explores how the persistently popular classical logic of bene t based taxation in which an individual s bene t from public goods is tied to his or her income earning ability can be incorporated into modern optimal tax theory if lindahl s methods are applied to that view of bene ts rst best optimal policy can be characterized analytically as depending on a few potentially estimable statistics in particular the coe cient of complementarity between public goods and innate talent constrained optimal policy with a pareto e cient objective that strikes a balance controlled by a single parameter between this principle and the familiar utilitarian criterion can be simulated using conventional constraints and methods a wide range of optimal policy outcomes can result including those that match well several features of existing policies to the extent that such an objective re ects the mixed normative reasoning behind prevailing

a note on energy requirements calculations using the 1968 and 1974 uk input output tables abstract input output data are useful when studying the way the economy uses fuels for the uk there are now two well based sets of input output tables available which permit the allocation of total fuel use in 1968 and 1974 to the production of 90 commodities this paper reports some results using these data sets relating the situation in 1968 and 1974 with respect to the primary energy requirements of commodities the ranking of commodities by primary energy intensity the impact on the relative prices of commodities of primary fuel price increases and the roundaboutness of electricity use in the production of commodities

an index of inequality with applications to horizontal equity and social mobility horizontal equity and social mobility are discussed in terms of a non utilitarian social welfare function which takes account of the process by which an ex ante distribution is mapped into an ex post distribution by the tax system for example an index of inequality is proposed which decomposes into two components corresponding to vertical and horizontal equity respectively a functional form for the social welfare function is derived for the purposes of empirical work and an application to data for 5895 uk households is presented the paper contains a theoretical application of the index to a model of optimal taxation it is conventional to assess the merits of alternative public policies in terms of a trade off between equity and efficiency in practice however a change in say the tax system involves three effects first it may have incentive or disincentive effects leading to efficiency gains or losses secondly it may alter the distribution of welfare levels thirdly it may alter the ranking of individuals or households within the distribution these three effects correspond to efficiency vertical equity and we shall argue certain aspects of horizontal equity respectively and any assessment of a tax change must take into account all three the principal assumption of this paper is that government is concerned about the trade off between these three effects a strict utilitarian is concerned only with the consequences of an action and in the evaluation of a particular reform a utilitarian measure of social welfare is defined over the vector of ex post utilities no account is taken of the process by which the vector of ex ante utilities is mapped into the ex post vector and no ethical status is awarded to the ex ante distribution one does not have to adopt an entitlement theory of justice to believe that the utilitarian approach may ignore some relevant considerations such as the fairness of the redistributive process a striking example of this arises in the model used by mirrlees 11 to examine optimal income taxation in that model individuals have identical preferences defined over consumption and leisure and differ only in respect of their potential wage rates or ability levels clearly in the absence of taxation individual utility is an increasing function of ability suppose the government uses redistributive lump sum taxes to achieve the first best optimum then as mirrlees 11 12 shows the first best optimum for a utilitarian social welfare

dumping and dynamic competition abstract when the current output level affects future production costs domestic and foreign profit maximizing firms may set prices below current costs to gain experience antidumping enforcement which poses a barrier to below cost sales by foreign rivals changes the payoff structure of competition and alters the equilibrium decisions of both foreign and domestic firms a comparison of the nash equilibria with and without antidumping rules shows that these rules change market outcomes even when they do not appear to be binding ex post this positive analysis of antidumping enforcement complements previous studies that have considered the motivation for dumping

the meaning and measurement of income mobility abstract income mobility may be seen as arising from two sources i the transfer of income among individuals with total income held constant and ii a change in the total amount of income available in this paper we propose several sensible properties defining the concept of income mobility and show that an easily applicable measure of mobility is uniquely implied by these properties we also show that the resulting measure is additively decomposable into the two sources listed above namely mobility due to the transfer of income within a given structure and mobility due to economic growth or contraction finally these results are compared and contrasted with other mobility concepts and measures in the literature journal of economic literature classification numbers d31 d63

anti dumping laws production location and prices in a three country model of international trade the price effects of anti dumping laws and of tariffs in the presence of anti dumping laws may be counter intuitive the application of an anti dumping law may lead to a decline in the price of an imported good in the protecting country or an increase in the price of the good in the original host country the imposition of an import tariff in the presence of an anti dumping law may result in a decline in domestic price of the import in the policy active country

using stock returns to identify government spending shocks this article explores a new approach to identifying government spending shocks which avoids many of the shortcomings of existing approaches the new approach is to identify government spending shocks with statistical innovations to the accumulated excess returns of large us military contractors this strategy is used to estimate the dynamic responses of output hours consumption and real wages to a government spending shock we find that positive government spending shocks are associated with increases in output hours and consumption real wages initially decline after a government spending shock and then rise after a year we estimate the government spending multiplier associated with increases in military spending to be about 1 5 over a horizon of 5 years

the political economy of administered protection trade restrictions are hardly ever voted directly by congress though the threat of direct congressional action is frequently present pressure for protection is usually applied through the major instruments for the administrative regulation of imports the antidumping and countervailing duty procedures and the escape clause mechanism in this paper we will examine these instruments for the administrative regulation of imports the form of the paper is not novel a theory of how these mechanisms work is developed then operational implications of this theory are deduced and tested over the record of countervailing duty antidumping and escape clause cases decided from 1975 through 1979 this is the period over which the trade act of 1974 was in force because the nature of these mechanisms is relatively unfamiliar a relatively large amount of institutional information is provided

aggregate consumer behavior and the measurement of social welfare this paper describes a new approach to normative economics combining the theory of social choice with econometric modeling of aggregate consumer behavior we first derive a system of aggregate demand functions by exact aggregation over individual demand functions we then construct measures of individual welfare from systems of individual demand functions finally we incorporate these measures into a social welfare function introducing ethical assumptions based on horizontal and vertical equity to illustrate the application of this approach we consider the u s standard of living and its cost over the period 1947 1985 the purpose of this paper is to describe a remarkable convergence that has occurred between economic theory and econometrics over the past decade this conjunction has taken place between the theory of social choice and econometric modeling of aggregate consumer behavior the confluence of these two streams of research has produced a new approach to normative economics this approach has been successfully applied to the evaluation of economic policy the measurement of poverty and inequality and the assessment of the standard of living and its cost a common problem in the modeling of consumer behavior and social choice is the representation of individual preferences in the econometric modeling of aggregate consumer behavior the primary emphasis has been on simplifying aggregate demand functions the most familiar approach to this problem is the model of a representative consumer this model is required to justify applications of the theory of individual consumer behavior to aggregate data on prices and quantities consumed the simplest version of the model is based on identical homothetic preferences for all individuals under identical homothetic preferences aggregate quantities consumed are functions of aggregate expenditure and prices these functions have precisely the same properties as demand functions in the theory of individual consumer behavior the condition of identical homothetic preferences was weakened by gorman 1953 to permit displacements from the origin for individual demand functions gorman showed that a necessary and sufficient condition for aggregate demand functions to depend on aggregate expenditure is that all individu

dumping at less than marginal cost abstract the traditional analysis of dumping in an export market treats the term merely as a synonym for price discrimination in an international context crucially it does not predict that goods will be sold overseas at price less than marginal cost this paper explores the possibility that dumping can occur in the more obvious lay sense of selling at less than marginal cost it suggests three reasons why this may occur in circumstances of uncertainty pursuance of managerial goals and strategic entry deterrence in the first of these the traditional prediction of reduced surplus for domestic consumers is no longer assured

can government purchases stimulate the economy this essay briefly reviews the state of knowledge about the government spending multiplier drawing on theoretical work aggregate empirical estimates from the united states as well as cross locality estimates i assess the likely range of multiplier values for the experiment most relevant to the stimulus package debate a temporary deficit financed increase in government purchases i conclude that the multiplier for this type of spending is probably between 0 8 and 1 5 jel e23 e62 h50

government purchases reloaded informational insufficiency and heterogeneity in fiscal vars using a large bayesian var we approximate the flow of information received by economic agents to investigate the effects of changes to government purchases we document robust evidence that informational insufficiency in conventional models explains inconsistent results across samples and commonly employed identifications in recursive structural vars and expectational vars furthermore we report heterogeneous effects of components of government purchases while aggregate government purchases do not appear to produce strong stimulative effects with output multiplier around 0 7 government investment components have multipliers well above unity state and local consumption which captures investment in education and health elicits a strong response

on the evaluation of economic mobility this paper presents a framework for the evaluation and measurement of reversal and origin independence as separate aspects of economic mobility we show how that evaluation depends on aversion to multi period inequality aversion to inter temporal fluctuations and aversion to future risk we construct extended atkinson indices that allow us to quantify the relative impact of reversal and origin independence on welfare we apply our approach to the comparison of income mobility in germany and in the united states when aversion to inequality is the only consideration the us gains more from mobility than germany this reflects similar gains from reversal in the two countries but greater gains in the us from origin independence the introduction of aversion to intertemporal fluctuations and aversion to future risk makes the impact of mobility in the two countries more similar

market responses to antidumping laws some evidence from the u s chemical industry in this paper the authors provide empirical evidence of the effects of the u s antidumping law using monthly product specific macroeconomic data from the u s chemical industry over the 1976 88 period they analyze import responses highlighting the differences between allegedly dumped and nondumped import behavior at the various stages of an antidumping investigation the authors find a wide range of behavioral responses that do not necessarily appear to be dependent upon the final outcome of the investigations and in some cases contradict the accepted wisdom of the impacts these cases have upon import behavior

domestic uncertainty and foreign dumping this paper investigates the links between uncertainty in a firm s home market and below cost dumping in foreign markets the form that uncertainty takes is shown to determine the likelihood and expected magnitude of dumping a number of forms of uncertainty are indicated to impart a pro dumping bias to firms output decisions a consequence is that risk neutral firms may plan to sell some output abroad even though firms know with certainty that exports can never cover marginal cost

the promise of positive optimal taxation normative diversity and a role for equal sacrifice abstract a prominent assumption in modern optimal tax research is that the objective of taxation is utilitarian i present new survey evidence that most people reject this assumption s implications for several prominent features of tax policy instead preferring tax policies based at least in part on a classic alternative objective the principle of equal sacrifice i generalize the standard model to accommodate this preference for a mixed objective proposing a method by which to make disparate criteria commensurable while respecting pareto efficiency then i show that optimal policy in this generalized model calibrated to the survey evidence and u s microdata is capable of quantitatively matching several features of existing tax policy that are incompatible in the conventional model but widely endorsed in the survey and reality including the coexistence of substantial redistribution and limited tagging together these findings demonstrate the potential of a positive theory of optimal taxation

a new method for estimating the effects of fuel taxes an application to thailand this article proposes a new methodology for estimating the impact of fuel price and tax changes on the general price level and the distribution of income and applies a model to thailand using data for 1975 76 and 1981 82 because the model allows for pricing under international competition where tax increases must be partially absorbed in reduced factor income rather than always being passed on in higher consumer prices the results are significantly different from those generated by the more conventional cost plus pricing rule the inflationary impact of fuel tax changes is slight because of both the openness of the economy and the low energy intensity of manufacturing and other production in thailand in contrast taxes on imports engender price increases not only for imports but also for goods which substitute for imports the model also indicates that the net effects of taxes on petroleum products other than kerosene are progressive in their distributional impact relative to a tax on imports or consumption a main policy conclusion of the study is that fuel taxes could be used to increase both equity and allocative efficiency without inducing significant inflationary responses it follows that in the current circumstances of falling world oil prices developing countries could generate revenues needed for structural adjustment by increasing fuel taxes to maintain domestic petroleum price levels

beyond kyoto backstop technologies and endogenous prices on co2 permits and fossil fuels this paper analyses the markets for fossil fuels given that the limits the kyoto protocol sets on co2 emissions from annex b countries extend beyond 2008 2012 a forward looking model with endogenous prices for fossil fuels is applied under different assumptions concerning the technological progress for a carbon free backstop technology both the time profile of the international permit price needed for the kyoto forever targets as well as the implications through reduced demand and lower producer prices for fossil fuels are calculated the permit price has to rise at least up to 2030 in order to fulfil the emission targets from then on the necessary permit price shows different future developments dependent on when the backstop technology starts to replace oil since changes in the availability of the backstop technology shift the time profile of the permit price the loss of petroleum wealth for oil and gas producers varies between the scenarios but is never more than 20 findings indicate that the

estimating fiscal multipliers news from a non linear world we estimate non linear vars to assess to what extent fiscal spending multipliers are countercyclical in the us we deal with the issue of non fundamentalness due to fiscal foresight by appealing to sums of revisions of expectations of fiscal expenditures this measure of anticipated fiscal shocks is shown to carry valuable information about future dynamics of public spending results based on generalised impulse responses suggest that fiscal spending multipliers in recessions are greater than one but not statistically larger than those in expansions however non linearities arise when focusing on extreme events that is deep recessions versus strong expansionary periods

antidumping cases in the us chemical industry a panel data approach factors motivating the decision to file an antidumping petition are analyzed with data from 1976 88 for the u s chemical industry the incidence of antidumping filings is related to disaggregate levels of and changes in macroeconomic variables in a count model framework import penetration number of employees price cost margins the chemical production index and dumping margins all significantly influence the filing decision while average wages the capital to shipments ratio and the new capital expenditures to shipments ratio do not there is also evidence that antidumping filings increased significantly following implementation of the trade agreements act of 1979 copyright 1994 by blackwell publishing ltd

in search of predatory pricing can predatory pricing be reproduced in a laboratory environment we report research motivated by this objective we began with conditions that based on the literature appeared to combine the features this literature has suggested are favorable to the emergence of predation next we operationalized what was meant by predatory pricing in our design in order to compare prices with predictions from alternative theories of 10 experiments none evidenced predatory behavior most supported the dominant firm theory the second series of experiments addresses remedies for predation and finds that the effect is to increase prices and reduce efficiency

measuring the impact of fiscal policy in the face of anticipation a structural var approach empirical estimates of the impact of government spending shocks disagree on central issues such as the size of output multipliers and the responses of consumption and the real wage one explanation for the disagreement is that fiscal shocks are often anticipated due to misspecification of the information set anticipation effects may invalidate svar estimates of impulse responses we use economic theory to derive a fiscal svar estimator that is applicable when fiscal shocks are anticipated we study its properties and apply it to us data we fail to find evidence that anticipation effects overturn the existing findings from the fiscal svar literature despite years of intensive research the empirical literature on fiscal policy has yet to reach consensus on the macroeconomic impact of fiscal policy shocks disagreements concern central issues such as the size of output multipliers and the impact of government spending shocks on consumption and the real wage clearly such level of disagreement constrains our ability to give simple guidelines for the operation of one of the most important stabilisation policies a key empirical obstacle is the measurement of innovations to fiscal policy one strand of the literature employs structural vector autoregressive svar methods and achieves identification based on the presence of decision lags or sign restrictions

the dynamic effects of aggregate demand and supply disturbances we interpret fluctuations in gnp and unemployment as due to two types of disturbances disturbances that have a permanent effect on output and disturbances that do not we interpret the first as supply disturbances the second as demand disturbances demand disturbances have a hump shaped mirror image effect on output and unemployment the effect of supply disturbances on output increases steadily over time peaking after two years and reaching a plateau after five years

government spending and heterogeneous consumption dynamics abstract what is the effect of government spending on consumption neoclassical and new keynesian models deliver opposing predictions and empirical studies differ in their conclusions this paper takes a data driven approach and exploits information from over 200 variables via a bayesian factor augmented var model i use sign restrictions for identifying effects that both classes of models agree upon this approach imposes a minimal set of restrictions on the empirical model leaving the sign and magnitude of the effect of government spending on consumption free to be determined by the data i find that i government spending increases aggregate consumption ii the estimated spending multiplier is close to 2 iii there exists heterogeneity even within durable nondurable and service consumption variables which is undocumented in the literature finally i show that my identified structural shocks are not predictable by economic agents and are uncorrelated with traditional monetary policy shocks suggesting that these effects are not confounded by monetary policy

reference price independent welfare prescriptions abstract a number of studies have evaluated the social welfare impact of price and income changes using equivalent incomes that are computed at some reference price vector and an aggregator with these equivalent incomes as arguments in place of a social welfare function this paper investigates the impact of the choice of the reference price vector on the results of such exercises distinguishing the case of individualized prices from the constrained case where all individuals face the same price vector we characterize preferences and aggregators leading to reference price independent welfare prescriptions

what are the effects of fiscal policy shocks we propose and apply a new approach for analyzing the effects of fiscal policy using vector autoregressions specifically we use sign restrictions to identify a government revenue shock as well as a government spending shock while controlling for a generic business cycle shock and a monetary policy shock we explicitly allow for the possibility of announcement effects i e that a current fiscal policy shock changes fiscal policy variables in the future but not at present we construct the impulse responses to three linear combinations of these fiscal shocks corresponding to the three scenarios of deficit spending deficit financed tax cuts and a balanced budget spending expansion we apply the method to us quarterly data from 1955 to 2000 we find that deficit financed tax cuts work best among these three scenarios to improve gdp with a maximal present value multiplier of five dollars of total additional gdp per each dollar of the total cut in government revenue 5 years after the shock copyright 2009 john wiley sons ltd

fiscal policy in general equilibrium this paper studies four classic fiscal policy experiments within a quantitatively restricted neoclassical model the authors main findings are as follows 1 permanent changes in government purchases can lead to short run and long run output multipliers that exceed one 2 permanent changes in government purchases induce larger effects than temporary changes 3 the financing decision is quantitatively more important than the resource cost of changes in government purchases and 4 public investment has dramatic effects on private output and investment these findings stem from important dynamic interactions of capital and labor absent in earlier equilibrium analyses of fiscal policy copyright 1993 by american economic association

measuring social mobility as unpredictability by associating mobility with the unpredictability of social states new measures of social mobility may be constructed we propose a family of three state by state and aggregate scalar predictability measures the first set of measures is based on the transition matrix the second uses a sampling approach and permits statistical testing of the hypothesis of perfect mobility providing a new justification for the use of the x2 statistic the third satisfies the demanding criterion of period consistency an empirical example demonstrates the usefulness of the new measures to complement existing ones in the literature

antidumping duties undertakings and foreign direct investment in the eu we study the effects of eu antidumping policy when foreign firms can jump antidumping duties through foreign direct investment fdi in the eu we show that duty jumping or duty pre empting fdi occurs if the eu administration has broader objectives than protecting eu industry s profitability and if cost advantages of foreign firms are transferable abroad the expectation of price undertakings reduces the incentives to engage in fdi and may even discourage fdi as long as products are not too differentiated the results are consistent with recent empirical findings on antidumping jumping fdi

sufficient information in structural vars abstract necessary and sufficient conditions under which a var contains sufficient information to estimate the structural shocks are derived on the basis of this theoretical result we propose two simple tests to detect informational deficiency and a procedure to amend a deficient var a simulation based on a dsge model with fiscal foresight suggests that our method correctly identifies and fixes the informational problem in an empirical application we show that a bivariate var including unemployment and labor productivity is informationally deficient once the relevant information is included into the model technology shocks appear to be contractionary

production effects of price and cost based anti dumping laws under flexible exchange rates this paper investigates the production response of an exporting firm when faced with the threat of an anti dumping ad action the firm s production decision is sensitive to market conditions at home and abroad as well as to the definition of dumping we examine the incentives facing the exporting firm under price based marginal cost based and average total cost based anti dumping laws depending on the nature of the anti dumping rules and market conditions a firm s production may rise fall or remain unchanged in response to ad legislation les effets de production des lois anti dumping fondees sur les prix et sur les couts dans un

on the equitability of progressive taxation abstract we propose the principle of equal sacrifice to determine the class of vertically inequitable progressive taxes a necessary condition for an income tax function to be equal sacrifice is formulated and hence a subclass of progressive taxes which cannot inflict the same sacrifice upon all individuals relative toanystrictly increasing and concave utility function is determined conversely it is shown in a general framework that any convex thus progressive tax function satisfies the principle of equal sacrifice our findings point to the fact that equal sacrifice under progressive income taxation depends heavily upon the degree of marginal rate as opposed to average rate progressivity journal of economic literatureclassification numbers d63 h20

the collected papers of richard a musgrave a review article richard musgrave is the doyen of public finance economists his written work has affected virtually every branch of the subject it is important not only in its own right but also on account of where it has led others to follow the theory of public finance 1959 is a landmark in the field unlikely ever to be surpassed in breadth of coverage or depth of scholarship his teaching has influenced many generations of students at michigan johns hopkins princeton and harvard and his active participation in professional activities both inside and outside universities has been an example to us all the publication of his collected papers in public finance in a democratic society is therefore very much to be welcomed the two volumes reviewed here reprint articles and contributions to books spanning the period from his voluntary exchange theory of public economy in 1938 to the a brief review of fiscal doctrine which appeared in the first volume of the handbook of public economics in 1985 the 800 pages represent only a fraction of musgrave s total writings which he estimates at some 10 000 pages i 90 but the collection provides an excellent overall view of his contribution to public finance the first volume deals with fiscal functions and social goals taxation and macro economic aspects of fiscal policy the second volume covers fiscal federalism social security development finance and fiscal doctrine it need hardly be said that such a broad canvas cannot be adequately covered in this article and my review selects a small number of topics for discussion

world transport energy demand modelling methodology and elasticities abstract this paper presents the international energy agency s iea approach of modelling transport energy demand fuel demand which is not a demand per se is derived whenever possible from the economic activity in the transport sector and not estimated directly ie using one equation or simultaneous equation system in general the transport models employ a two step approach in the first step transport activity the sector s relevant energy service is estimated econometrically in the second step the transport activity projections are then combined with estimates of efficiency improvements car turnover rates and diesel gasoline penetration assumptions in order to arrive at projections of fuel demand the principal advantages of this approach are that the relevant energy services are modelled and that for model simulation efficiency improvements can be dealt with explicitly the effectiveness of economic instruments is a function of the reaction of consumers and businesses to income and price changes an in depth understanding of income and price elasticities of transport demand and transport energy demand is important in order to be able to assess the effectiveness of policies considered the paper also shows the underlying long term income and price elasticities for oecd and non oecd regions

normative indices for measuring social mobility this paper introduces relative and absolute indices of social mobility to each index there corresponds a different social welfare function when the symmetric mean of order 1 social welfare function is employed the relative index becomes the king 1983 index of social mobility

a measure of horizontal inequity politicians academicians and the general public alike have perceived that the status quo tax and transfer legislation creates inequities among living units tax laws create numerous situations in which living units with seemingly equal abilities to pay are taxed quite different amounts state by state differences in welfare eligibility rules benefit schedules and administrative procedures the general unavailability of cash welfare to childless nonaged healthy couples and single individuals and other features of transfer programs similarly provide vastly different levels of income support to units with equal needs advocates of major tax and welfare reform have marshalled such evidence into a central argument in favor of their proposals while there is wide agreement that the process of redistributing incomes abounds with inequities there have been few attempts to quantify their extent 2 this paper develops a measure of horizontal inequity and illustrates its use section ii discusses the concept of horizontal equity then builds upon familiar lorenz curve gini coefficient analysis to derive the inequity index the third part considers some problems of implementing the measure and illustrates it section iv provides a short conclusion

progressivity horizontal equity and reranking in health care finance a decomposition analysis for the netherlands this paper employs the method of aronson et al 1994 to decompose the redistributive effect of the dutch health care financing system into three components a progressivity component a classical horizontal equity component and a reranking component results are presented for the health care financing system as a whole as well as for its constituent parts a final section sets out to uncover the relative importance in terms of their effects on progressivity horizontal equity and reranking of the key institutional features of one component of the dutch system the awbz social insurance scheme

on measuring the effects of fiscal policy in recessions we do not have a good measure of the effects of fiscal policy in a recession because the methods that we use to estimate the effects of fiscal policy both those using the observed outcomes following different policies in aggregate data and those studying counterfactuals in fitted model economies almost entirely ignore the state of the economy and estimate the government multiplier which is presumably a weighted average of the one we care about the multiplier in a recession and one we care less about the multiplier in an expansion notable exceptions to this general claim sug gest this difference is potentially large our lack of knowledge stems significantly from the focus on linear dynamics vector autoregressions and linearized or close to linear dynamic stochastic general equilibrium dsge models our lack of knowledge also reflects a lack of data deep recessions are few and nonlinearities hard to measure the lack of statistical power in the estimation of nonlinear models using aggregate data can be addressed by exploiting estimates of partial equilibrium responses in disaggregated data microeconomic estimates of the partial equilibrium causal effects of a policy can discipline the causal channels inherent in any dsge model of the general equilibrium effects of policy microeconomic studies can also provide measures of the dependence of the effects of a policy on the states of different agents which is a key component of the dependence of the general equilibrium effects of fiscal policy on the state of the

empirical measurement of horizontal inequity abstract horizontal inequity is the unequal treatment of equals a crucial problem arising when measuring its extent is how should differential treatment which has some equity justification be distinguished from that which does not the literature to date has suggested that genuine equals can be identified and thence the problem solved by adjusting incomes prior to calculations using equivalence scales the paper argues that there are some good reasons for considering an alternative approach labelled partial symmetry in this the emphasis is on measuring horizontal inequity within each group of households with the same equity relevant characteristics rather than on adjusting incomes and then using the same measure for all households in the population the approaches are compared theoritically with reference to summary indices based on the generalised entropy family and to the conditions required to make partial orderings of different redistributions exploratory empirical work suggests there has been a substantial reduction in the horizontal inequity of u k direct taxes between 1976 and 1981 whichever approach is used the sources of the inequity observed are analysed in detail

economic impact of alternative water policy scenarios in the spanish production system an input output analysis abstract this paper analyses the economic impact of alternative water policies implemented on the spanish production system the methodology comprises two versions of the input output price model an average cost formulation and a mark up formulation the input output framework evaluates the impact of the various water policy measures on production prices consumption prices intermediate water use and private real income the results show that a tax on the water used by sectors considerably reduces intermediate water consumption and increases production and consumption prices on the other hand according to jevons paradox improvements in technical efficiency which lead to a reduction in the water requirements of all sectors and an increase in water production raise water consumption the combination of a tax on the water used by sectors and an improvement in the technical efficiency of water in the production sphere takes the pressure off prices and significantly reduces intermediate water consumption

inattentive professional forecasters abstract using the ecb survey of professional forecasters to characterize expectations at the micro level we emphasize two new facts forecasters i fail to systematically update their forecasts and ii disagree even when updating it is moreover found that forecasters have predictable forecast errors these facts are qualitatively supportive of recent models of inattention and suggest a setup where agents imperfectly process information due to both sticky information a la mankiw reis and noisy information a la sims however building and estimating such an expectation model we find that it cannot quantitatively replicate the error and disagreement observed in the data

the effects of fiscal shocks on employment and the real wage we study the transmission of fiscal shocks in the labor market we employ a structural var and base identification on the restrictions that shocks to government consumption investment and employment must raise output and deficits these restrictions hold in both prototype real business cycle rbc and new keynesian models shocks to government consumption and investment increase real wages and employment contemporaneously both at state level and in the aggregate the dynamics in response to employment shocks are mixed increases in government employment raise the real wage and total employment in the aggregate however in one third of the states they reduce total employment

a new measure of horizontal equity in this paper we propose a new measure of horizontal equity that overcomes many of the shortcomings of previous proposed measures our starting point is the observation that a well behaved social welfare function need not evaluate global vertical equity differences in after tax income using the same weights it applies to local horizontal equity differences even though this constraint has been applied in the past following work on the structure of individual preferences we show that a social welfare function can imply different preferences toward horizontal and vertical equity adopting the general approach to the measurement of inequality developed by atkinson 1970 we use such a social welfare function to derive measures of inequality that are decomposable into components naturally interpreted as indices of horizontal and vertical equity in particular the former index measures deviations from the fundamental principle that equals be treated equally finally we apply our new measure to two tax return data sets evaluating the degree to which the horizontal equity of the us personal income tax has changed over time and how horizontal equity would be altered by one version of recent proposals to do away with the so called marriage penalty this abstract was borrowed from another version of this item

the response of asset prices to monetary policy shocks stronger than thought standard macroeconomic theory predicts rapid responses of asset prices to monetary policy shocks small scale vector autoregressions vars however often find sluggish and insignificant impact effects using the same high frequency instrument to identify monetary policy shocks we show that a large scale dynamic factor model finds overall stronger and quicker asset price reactions compared to a benchmark var both on euro area and us data our results suggest that incorporating a sufficiently large information set is crucial to estimate monetary policy effects

input output simulations of energy environment economy interactions in the uk this paper shows how a number of the complex interrelationships between energy environment and economic welfare can be investigated with the aid of a 10 sector input output i o model of the uk with pollution emission coefficients and a european sulphur deposition vector the paper reviews relevant past applications of i o analysis in the energy environment area and describes the endam program and its operation it is used to simulate the effects of a variety of policies and possibilities not only through changes in exogenous variables final demand and income taxes and transfers but also through changes in the structural matrices and their coefficients in each case the full effects direct indirect and income induced can be traced and the changes in comparative static equilibrium values discovered in this way policy issues connected with energy use and environmental impacts employment and economic welfare have been investigated

anti dumping and countervailing duties under oligopoly abstract this paper constructs a conjectural variations model of international oligopoly in which the home country s optimal policy responses to the foreign government s subsidies and foreign firms dumping can be calculated some theoretical support is found for tariffs that countervail part of the foreign export subsidy the optimal fraction depends on the size of own and cross effects in demand and on the extent of market competition however no normative case is found for anti dumping duties

the measurement of horizontal inequality an alternative approach to the measurement of horizontal inequality is developed this measure of inequality is based on an explicit social welfare function which is formulated so as to be consistent with the basic principles of social choice the arguments of the social welfare function are welfare functions that depend on prices total expenditure and the demographic composition of the household the level of horizontal inequality is defined to be the difference between the level of social welfare attained at a perfect horizontally egalitarian distribution of welfare and the level of social welfare attained at the existing distribution of individual welfare the level of horizontal inequality induced by the introduction of commodity taxes is evaluated for the united states over the period 1947 85 copyright 1989 by mit press

is public expenditure productive abstract this paper considers the relationship between aggregate productivity and stock and flow government spending variables the empirical results indicate that i the nonmilitary public capital stock is dramatically more important in determining productivity than is either the flow of nonmilitary or military spending ii military capital bears little relation to productivity and iii a core infrastructure of streets highways airports mass transit sewers water systems etc has most explanatory power for productivity the paper also suggests an important role for the net public capital stock in the productivity slowdown of the last fifteen years

the evolution of the scientific productivity of highly productive economists this paper studies the evolution of research productivity of a sample of economists working in the best 81 departments in the world in 2007 the main novelty is that in so far as a productivity distribution can be identified with an income distribution we measure productivity mobility in a dynamic context using an indicator inspired in an income mobility index suggested by fields 2010 for a two period world productivity is measured in terms of publications weighted by the citation impact of the journals where each article is published in the periodical literature we study the evolution of average productivity productivity inequality the extent of rank reversals and productivity mobility for seven cohorts as well as the population as a whole we offer new evidence confirming previous results about the heterogeneity of the evolution of productivity for top and other researchers however the major result is that contrary to what was expected for our sample of very highly productive scholars the effect of rank reversals between the two periods on overall productivity mobility offsets the effect of an increase in productivity inequality from the first to the second period in the youngest five out of seven cohorts jel a11 a12 b41 d63 i32

redistributive effect progressivity and differential tax treatment personal income taxes in twelve oecd countries this paper decomposes the redistributive effect of the personal income taxes pits of twelve oecd countries into four components i an average rate effect ii a departure from proportionality or progressivity effect iii a horizontal equity effect and iv a reranking effect the product of i and ii indicates the vertical redistribution associated with the pit and the sum of iii and iv indicates the impact on the distribution of income of differential tax treatment the average tax rate is found to be low in france and high in the nordic countries and the pit is found to be most progressive in france ireland and spain and least progressive in denmark and sweden taking i and ii together denmark and the us achieve broadly similar levels of vertical redistributive effect differential treatment is found to have a much smaller effect on income redistribution as a proportion of redistributive effect than the vertical redistribution caused by progressivity though there are differences between countries these differences appear to be due principally to a different emphasis on deductions such as tax deductibility of mortgage interest payments and insurance premiums and on local income tax

price uncertainty and the price discriminating firm in international trade the firm operating in an uncertain environment was initially analyzed in detail by sandmo 1971 and by leland 1972 since these early papers many extensions to the analysis have been explored by such writers as batra and ullah 1974 mayer 1975 hartman 1976 holthausen 1976 stewart 1978 paroush and kahana 1979 anid katz and paroush 1979 this paper investigates the optimal policy of a pr ice discriminating firm which operates under pr ice uncertainty in one of two markets the main motivation for the analysis comes from the problems of a firm which sells its output both domestically and abroad such a firm often has nearly full information about the domestic market b ut faces uncertainty in foreign markets in particular the firm which has its utility defined over profits denominated in terms of domestic currency will regard the profits on its foreign sales as uncertain given excha nge rate variability even if it has full information about all other conditions in the foreign market hence the paper may be regarded both as an extension to the above mentioned analyses of the firm under uncertainty and as an attempt to throw light on the activities of firms involved in international trade the treatment being essentially of a mricroeconomic nature is clearly different from that of such writers as batra 1 975 and helpman and razin 1979 which are essentially macroeconomic treatments

measuring the influence of energy prices in the price formation mechanism abstract environmental economics has proposed taxation on energy as a way of mitigating the pollution caused by the production and use of energy based on fossil fuels however it is generally assumed that energy is an important component of production costs and that taxes on energy have a detrimental impact on the economy this paper provides a method of analysing the extent to which energy prices influence the price formation mechanism the model used is based on a social accounting matrix sam the sam price model identifies the role of energy prices in the cost and price definition processes the empirical application is for the catalan economy and shows that energy prices have a considerable influence on both production and final prices and that different forms of energy exert asymmetric impacts on costs for sectors and consumers

utilitarianism and horizontal equity the case for random taxation this paper establishes that far from being able to derive the principle of horizontal equity from utilitarianism the principle is actually in consistent with utilitarianism in a variety of circumstances we derive conditions under which a it is optimal to impose random tax schedules ex post randomization and b it is optimal to randomize the tax schedules imposed on a set of otherwise identical individuals ex ante randomization the implications for optimal tax theory are discussed more generally it is shown that there are a number of potentially important economic situations with which the principle of horizontal equity may be inconsistent not only with utilitarianism but even with pareto optimality this abstract was borrowed from another version of this item