inefficient credit booms this paper studies the welfare properties of competitive equilibria in an economy with financial frictions hit by aggregate shocks in particular it shows that competitive financial contracts can result in excessive borrowing ex ante and excessive volatility ex post even though from a first best perspective the equilibrium always displays under borrowing from a second best point of view excessive borrowing can arise the inefficiency is due to the combination of limited commitment in financial contracts and the fact that asset prices are determined in a spot market this generates a pecuniary externality that is not internalized in private contracts the model provides a framework to evaluate preventive policies which can be used during a credit boom to reduce the expected costs of a financial crisis copyright 2008 wiley blackwell

credit supply and the housing boom an increase in credit supply driven by looser lending constraints in the mortgage market is the key force behind four empirical features of the housing boom before the great recession the unpreced

the supply of charity services by nonprofit hospitals motives and market structure this article studies provision of charity care by private nonprofit hospitals we demonstrate that in the absence of large positive income effects on charity care supply convex preferences for the nonprofit hospital imply crowding out by other private or government hospitals extending our model to include impure altruism rivalry provides a possible explanation for the previously reported empirical result that both crowding out and income effects on indigent care supply are often weak or insignificant empirical analysis of data for hospitals in maryland provides evidence of rivalry on the supply of charity care

demand for charity donations in private non profit markets the case of the u k abstract this paper presents estimates of the demand for donations for u k charities in 1985 these estimates make demand depend upon price fund raising expenditure a quality index and alternative revenue sources the price elasticity of donations found here shows for the most part an elastic response and is consistent with previous studies using u s data our empirical results suggest that non profits in the u k unlike their counterparts in the u s are net revenue maximisers we discovered no significant evidence that public donations crowded out private donations in our sample of 300 charities

public good provision and ancillary benefits the case of climate agreements several studies found ancillary benefits of the provision of public goods to be of considerable size if these additional private benefits were noticed they would imply not only higher cooperative but also non cooperative provision levels however beyond these largely undisputed important quantitative effects there would be qualitative and strategic implications associated with ancillary benefits public policy would no longer be a pure but an impure public good in this paper we investigate these implications in a setting of non cooperative coalition formation in the context of climate change in particular we address the following question would ancillary benefits if they were taken in consideration increase participation in international climate agreements and raise the success of these treaties in welfare terms

tax policy and aggregate demand management under catching up with the joneses this paper examines the role for tax policies in productivity shock driven economies with catching up with the joneses utility functions the optimal tax policy is shown to affect the economy countercyclically via procyclical taxes i e cooling down the economy with higher taxes when it is overheating in booms and stimulating the economy with lower taxes in recessions to keep consumption up thus models with catching up with the joneses utility functions call for traditional keynesian demand management policies but for rather unorthodox reasons

making investment choices as simple as possible but not simpler target date funds tdfs for retirement also known as life cycle funds are being offered as a simple solution to the investment task of participants in self directed retirement plans a tdf is a fund of funds diversified across stocks bonds and cash with the feature that the proportion invested in stocks is automatically reduced as time passes empirical evidence suggests that a simple tdf strategy would be an improvement over the choices currently made by many uninformed plan participants this article explores a way to achieve even greater improvement for people who are very risk averse and have high exposure to market risk through their labor

why do people give testing pure and impure altruism abstract researchers measure crowd out around one level of charity output to identify whether giving is motivated by altruism and or warm glow however crowd out depends on output implying first that the power to reject pure altruism varies and second that a single measurement of incomplete crowd out can be rationalized by many different preferences by instead measuring crowd out at different output levels we allow both for identification and for a novel and direct test of impure altruism using a new experimental design we present the first empirical evidence that consistent with impure altruism crowd out decreases with output jel d64 l31

on the effects of asymmetric and endogenous taxation in experimental public goods games abstract in our experimental public goods game subjects face exogenously or endogenously determined asymmetric minimum contributions endogeneity does not affect overall contributions if asymmetric contribution levels are approved of endogenously the disadvantaged subjects contribute significantly less than in case of exogenous determination

crowding out voluntary contributions to public goods we test the null hypothesis that involuntary transfers for the provision of a public good will completely crowd out voluntary transfers against the warm glow hypothesis that crowding out will be incomplete because individuals care about giving our design differs from the related design used by andreoni in considering two levels of the involuntary transfer and a wider range of contribution possibilities and in mixing groups every period instead of every four periods we analyse the data with careful attention to boundary effects we retain the null hypothesis of complete crowding out in two of three pairwise comparisions but reject it in favour of incomplete crowding out in the comparison most closely akin to andreoni s design thus we confirm the existence of incomplete crowding out in some environments but suggest that the warm glow hypothesis is inadequate in explaining it

monopolistic competition growth and public good provision a normal good in this article i develop a model of public good provision in which private goods are supplied in a monopolistically competitive market in this context increases in the size of the group are increases in the population of a society i find that increases in population lead to reduced public good provision the reason is quite simple as population increases the number of private goods available for consumption also increases this raises the marginal utility of income and increases the opportunity cost of contributing to the public good while the level of voluntary contributions falls in this model the optimal level of provision is shown to increase with population thus there is a growing divergence between the optimal and equilibrium levels of provision of the public good in the standard model with a pure public good individual welfare rises with an increase in population both because of the increase in the level of provision of the public good and the reduced contribution per person that results from the population increase furthermore in the model of monopolistic competition without a public good welfare also increases with population due to the wider of variety of goods which are available in a larger economy however when the models are combined an increase in popu lation has an ambiguous effect on welfare this stems from the reduction in the level of provision of the public good as the population increases the model of monopolistic competition in this article is based on krugman 1980 this model assumes a simple form of increasing returns to scale under which each good may be produced by incurring a fixed set up cost plus a constant marginal cost of production when the population increases the economy can support a broader range of goods and this leads to a higher real income for individuals in the economy thus economic growth arising from a scale effect leads to reduced contributions to the public good in this model economic growth can also be caused by increases in total factor productivity in the model of monopolistic competition used here this would be reflected by reductions the fixed and marginal cost of production it turns out that reductions in these parameters also lead to reduced public good provision

public goods provision redistributive taxation and wealth accumulation this paper presents an extension of a static model of public goods provision with redistributional taxation as described by uler journal of public economics 93 3 4 pp 440 453 as a dynamic model of wealth accumulation intertemporal consumption and saving behavior strongly affect the relation between redistributive taxation and charitable contribution indeed the analyses presented herein reveal that more patience i e higher saving engenders a lower redistributional tax rate however the optimal redistributive tax rate is not zero because redistributive taxation improves the efficiency of providing public goods that are not improved by balanced growth this paper fills the gap separating static analysis and dynamic analysis and generalizes the results presented by static analysis

household heterogeneity and real exchange rates we assume that individuals can fully insure themselves against cross country shocks but not against individual specifi cs hocks we consider two particular models of limited risk sharing domestically incomplete markets di and private information pareto optimal pipo risk sharing for each model we derive a restriction relating the cross sectional distributions of consumption and real exchange rates we evaluate these restrictions using household level consumption data from the us and the uk we show that the pipo restriction fits the data well when households have a coefficient of relative risk aversion of around 5 the restrictions implied by the complete risk sharing model and the di model fare poorly this paper was prepared for the economic journal lecture at the 2006 royal economic society meetings kocherlakota thanks winnie choi for many stimulating conversations about real exchange rates kocherlakota acknowledges the support of nsf 0305833 and 0606695 we thank an associate editor of the journal george alessandria and ivan werning for helpful comments jaromir nosal and sonam sherpa for research assistance orazio attanasio and andrew leicester for help with the fes data and joan gieseke and hakki yazici for editorial assistance the views expressed herein are those of the authors and not necessarily those of the federal reserve bank of minneapolis or the federal reserve system

a theory of impact philanthropy this article develops a new model of altruism called impact philanthropy an impact philanthropist is someone who wants to personally make a difference while that motive is straightforward its logical implications are significantly different from other models of philanthropy for example the contributions of other donors can reduce an impact philanthropist s charitable fulfillment as a result cooperation among impact philanthropists can reduce aggregate giving in addition impact philanthropy can lead to a codependent relationship between givers and receivers in which both benefit from the other finally the model suggests a conflict between charitable organizations and its donors concerning the allocation of charitable gifts in particular a charitable organization prefers to spread a donor s contribution across many goods whereas a donor prefers to target his or her contribution at a specific good d 2003 elsevier b v all rights reserved

philanthropic motives and contribution policy this paper discusses different forms of transfer from a group of rich individuals to a group of poor individuals this transfer is based on the philanthropic motive of the donor who is not indifferent to the use of his contribution in particular the poor individual s vector of consumption is entered as a part in the donor s utility function

public good provision in indian rural areas the returns to collective action by microfinance groups self help groups shgs are the most common form of microfinance in india the authors provide evidence that shgs composed of women only undertake collective actions for the provision of public goods within village communities using a theoretical model this paper shows that an elected official whose aim is to maximize re election chances exerts higher effort in providing public goods when private citizens undertake collective action and coordinate their voluntary contributions towards the same goods this effect occurs although government and private contributions are assumed to be substitutes in the technology of providing public goods using first hand data on shgs in india the paper tests the prediction of the model and shows that in response to collective action by shgs local authorities tackle a larger variety of public issues and are more likely to tackle issues of interest to shgs the findings highlight how the social behavior of shgs can influence the governance of rural indian communities

tax transfer policies and the voluntary provision of public goods abstract the purpose of this paper is twofold first it extends previous models of non cooperative private funding of pure public goods by allowing both for distortionary taxation of private goods and for subsidies based on contributions to the public goods second it clarifies the type of behavioral and informational assumptions which are needed to insure neutrality of both lump sum and distortionary policies the analysis is developed in the context of fiscal federalism

information asymmetry and equilibrium monitoring in education abstract we develop a theoretical and computational model of school choice and achievement that embeds information asymmetries in the provision of education because school effort is unobservable to households and policymakers schools have an incentive to under provide effort this moral hazard affects both public and private schools although public schools are subject to an additional distortion because of limited competition and fixed funding household monitoring of schools can mitigate moral hazard but some households may free ride on the monitoring of others using our calibrated model we simulate two policies aimed at raising achievement public monitoring of public schools and private school vouchers our results indicate that in large scale settings no single tool may suffice the reason is twofold a no tool raises achievement or welfare for all households and b since the extent of moral hazard is endogenous the application of each tool has unintended consequences that limit its own effectiveness results also indicate that setting the policy parameters for public schools at the levels preferred by the majority of households may mitigate the distortions nonetheless the current actual values of these parameters seem to match more closely the preferences of public schools than the preferences of parents

house prices borrowing constraints and monetary policy in the business cycle i develop a general equilibrium model with sticky prices credit constraints nominal loans and asset prices changes in asset prices modify agents borrowing capacity through collateral value changes in nominal prices affect real repayments through debt deflation monetary policy shocks move asset and nominal prices in the same direction and are amplified and propagated over time the financial accelerator is not constant across shocks nominal debt stabilises supply shocks making the economy less volatile when the central bank controls the interest rate i discuss the role of equity debt indexation and household and firm leverage in the propagation mechanism finally i find that monetary policy should not target asset prices as a means of reducing output and inflation volatility

ideals versus dollars donors charity managers and government grants this paper demonstrates how changes in untied lump sum government grants or income from unrestricted endowments will affect the behavior of charities operated by managers with strong philosophical or professional commitments an increase in such funds will reduce the charity s accountability to private donors and lower its fund raising activities the grant will not be spent entirely on raising the quantity of output instead it will permit the charity manager to reduce his or her dependence on the costly solicitation of donors who do not completely share the manager s preferences in order to understand nonprofit charities one must recognize both their diversity and the independent role of their managers in furthering this diversity we will miss much of their special character if we view them as mere conduits seeking faithfully to reify the wishes of their contributors in this paper i demonstrate how an increase or a fall in untied lump sum government grants or income from unrestricted endowments will affect the behavior of charities operated by managers with strong philosophical or professional commitments to some service mixes rather than others an increase in such funds will reduce the charity s accountability to private donors and lower its fund raising activities the grant will not be spent entirely on raising

discrete choice with social interactions this paper provides an analysis of aggregate behavioural outcomes when individual utility exhibits social interaction effects we study generalized logistic models of individual choice which incorporate terms reflecting the desire of individuals to conform to the behaviour of others in an environment of noncooperative decisionmaking laws of large numbers are generated in such environments multiplicity of equilibria in these models which are equivalent to the existence of multiple self consistent means for average choice behaviour will exist when the social interactions exceed a particular threshold local stability of these multiple equilibria is also studied the properties of the noncooperative economy are contrasted with the properties of an economy in which a social planner determines the set of individual choices finally a likelihood function based on the theoretical model is given and conditions for the econometric identifiability of the model are established

keeping up with the zhangs and house price dynamics in china abstract this paper studies the effect of social interactions on house price dynamics in china we first present household level evidence on chinese households tendency to keep up with the home ownership status of their communities keep up with the zhangs by means of a dynamic stochastic general equilibrium model we then study the impact of these housing consumption externalities on housing demand and prices our bayesian estimation and simulation reveal that these externalities significantly increase house prices in the long run steady state and amplify their response to shocks housing tax policies can mitigate the amplification effects

investment shocks and business cycles abstract the origins of business cycles are still controversial among macroeconomists this paper contributes to this debate by studying the driving forces of fluctuations in an estimated new neoclassical synthesis model of the u s economy in this model most of the variability of output and hours at business cycle frequencies is due to shocks to the marginal efficiency of investment imperfect competition and to a lesser extent technological frictions are the key to their transmission although labor supply shocks explain a large fraction of the fluctuations in hours at very low frequencies they are irrelevant over the business cycle this finding is important because the microfoundations of these disturbances are widely regarded as unappealing

media coverage and charitable giving after the 2004 tsunami author affiliation philip h brown department of economics colby college 5246 mayflower hill waterville me 04901 usa e mail phbrown colby edu corresponding author jessica h minty analysis group inc 111 huntington avenue 10th floor boston ma 02199 usa e mail jminty analysisgroup com acknowledgment we are grateful to claudio agostini michael donihue martin farnham rebecca graninger daniel hamermesh melanie siben tom tietenberg andreas waldkirch seminar participants at colby college and two anonymous referees for numerous helpful comments and suggestions we would also like to acknowledge reuters alertnet and chuck lakin for their assistance in identifying data sources and care usa catholic relief services mercy corps surfaid international and four other relief agencies for providing data for the purpose of this research finally philip h brown would like to thank the international food policy research institute for sabbatical support during the preparation of this manuscript 1 introductionrelief workers have long believed in the causal relationship between media coverage of humanitarian crises and charitable giving to relief agencies for example private donations to relief agencies during the early stages of the 1994 rwandan genocide were sufficient to support approximately one million displaced rwandans but after the tribulations of o j simpson and tanya harding eclipsed rwanda in the media funding for relief activities began to decline the perception among many aid workers in the camps for rwandan refugees including one of the authors was that the media had turned its back on the crisis with potentially dire consequences 1while anecdotal evidence abounds few studies have systematically assessed the relationship between media coverage and the behavior of private donors and those that do suffer from important analytical shortcomings for example an analysis undertaken by the institute for philanthropy finds that 14 of 15 surveyed british philanthropists believe that the media has the power to encourage private giving with 11 of the 15 being inspired to make charitable donations themselves breeze 2005 similarly olsen carstenson and hoyen 2003 find a high correlation between the total number of relevant articles in western newspapers and the total amount of humanitarian assistance allocated to victims of the flooding in mozambique in 2000 and the cyclone in eastern india in 1999 unfortunately neither sample is large enough to make generalizations nor is there any attempt to quantify the magnitude of the causal relationship in part the difficulty in quantifying the relationship stems from disentangling the effect of new developments in stories covered in the media from the pure effect of media coverage returning to the rwanda case the former is tantamount to asking what is the combined effect of 10 000 additional deaths and a five minute news story on donations to u s charities while the latter is equivalent to asking given that 10 000 people were killed what is the effect of increasing the news story from five minutes to six in this paper we use the december 26 2004 tsunami as a case study to quantify the causal effect of media coverage on donations to charity specifically we consider the effects of reporting on three nightly network news broadcasts and articles in two prominent newspapers on private donations to seven u s relief agencies to eliminate the time lag between when news reports are seen or read and when donations are received by relief agencies we focus exclusively on donations made via the internet we also control for donor fatigue tax incentives and weekends to better isolate the effect of media coverage finally to alleviate simultaneity concerns and omitted variable bias including new developments in the tsunami story itself we use announcements of casualties among u

modeling charitable contributions of time and money abstract public goods theory predicts that government spending on charity can perfectly crowd out charitable contributions empirical research has found little support for the perfect crowd out hypothesis however the empirical work only measures part of a contributor s total contribution gifts of money contributors also volunteer labor this article extends the public goods model to the case in which individuals contribute both time and money to a charity that in turn produces a public good the model suggests that charitable contributions of time and money are perfectly substitutable in equilibrium this result offers new interpretations for existing empirical observations and suggests a new test of the crowd out hypothesis the implications of the model are empirically tested using a national survey of charitable activity

pareto optimal redistribution comment occurs in the context of the hochmanrodgers scheme is a function of a people s rate of substitution between the satisfaction derived from retaining income and that derived from giving it and b the initial distribution of earnings which exists before giving occurs whatever the values of a the outcome will differ depending on b such at least will be the case unless everybody s rate of substitution is such that complete equality results pareto optimal redistribution thus constitutes a secondary redistribution which depends on the initial distribu

interior matching equilibria in a public good economy an aggregative game approach abstract if the equilibrium generated by a matching mechanism is to be the desired pareto optimal outcome it is necessary for every player to be at an interior solution at that equilibrium using the aggregative game approach developed by cornes and hartley 2003 2007 this paper analyzes the conditions under which matching mechanisms in a public good economy lead to interior matching equilibria at which all agents make strictly positive flat contributions to the public good in particular we show that the distribution of income among the agents is crucial for both the existence of interior matching equilibria and warr neutrality in the case of matching

optimal tax treatment of private contributions for public goods with and without warm glow preferences abstract tax favored contributions for financing some public goods may be a useful part of optimal nonlinear income tax and expenditure policy there are two sides to the potential gain from subsidized donations first for a given level of public good provision higher private donations from high earners than low earners eases the incentive compatibility constraint for donors and so can raise social welfare this follows since considering a lower paid job includes a perception of a drop in public good provision second private donation reduces consumption easing the resource constraint this paper explores optimal policy using first a model with standard preferences and then a model with a warm glow of giving in addition to showing the conditions for the level of public goods the paper considers the pattern of optimal subsidization across earnings levels analysis of optimal taxation with warm glow preferences is sensitive to the choice of preferences that are relevant for a social welfare evaluation after considering optimal rules with formulations of social welfare which do and do not include warm glow utility the paper considers the choice of normative criterion like the earlier literature this paper assumes that organizing private donations is costless while tax collection has a deadweight burden since private charitable fundraising is very far from costless the paper is an exploration of economic mechanisms not a direct guide to policy

volunteer labor supply abstract we model the supply of volunteer labor which received an explicit wage of zero quantitatively important it constituted over 5 percent of the entire labor supply in the united states in 1980 both consumption and investment models are considered the former positing volunteering as an ordinary consumer good while the latter posits it as a means of obtaining on the job experience empirical estimation based on survey data discloses statistically significant effects of price and income variables on the supply of volunteer labor

the intergenerational transmission of generosity abstract this paper estimates the correlation between the generosity of parents and the generosity of their adult children using regression models of adult children s charitable giving new charitable giving data are collected in the panel study of income dynamics and used to estimate the regression models the regression models are estimated using a wide variety of techniques and specification tests and the strength of the intergenerational giving correlations is compared with intergenerational correlations in income wealth and consumption expenditure from the same sample using the same set of controls we find the religious giving of parents and children to be strongly correlated as strongly correlated as are their income and wealth the correlation in the secular giving e g giving to the united way educational institutions for poverty relief of parents and children is smaller similar in magnitude to the intergenerational correlation in consumption parents religious giving is positively associated with children s secular giving but in a more limited sense overall the results are consistent with generosity emerging at least in part from the influence of parental charitable behavior in contrast to intergenerational models in which parental generosity towards their children can undo government transfer policy ricardian equivalence these results suggest that parental generosity towards charitable organizations might reinforce government policies such as tax incentives aimed at encouraging voluntary transfers

do government subsidies increase the private supply of public goods we study three different models in which public goods are supplied by private contributions in one of these models tax financed government subsidies to private contributions will definitely increase the equilibrium supply of public goods in the other two models government subsidies are neutralized by offsetting changes in private contributions we explain why it is that these models lead to opposite conclusions and we argue on the basis of our first model that a government that wants to use taxes and subsidies to increase total provision of public goods will be able to do so indeed our model yields a surprisingly decisive comparative statics result if public goods and private goods are both normal goods then an increase in the subsidy rate will necessarily increase the equilibrium supply of public goods

neighbourhood effects and housing demand in this paper we estimate a model of housing demand with neighborhood eects we exploit special features of the national sample of the american housing survey and properties of housing markets that allow us to create natural instruments and therefore identify the impact of social interactions we find evidence of both endogenous and contextual neighborhood eects we report two alternative sets of estimates for neighborhood eects that dier in terms of the instruments we use for estimating the model when the endogenous neighborhood eect is large the respective contextual eects are weak and vice versa the elasticity of housing demand with respect to the mean of the neighbors housing demands the endogenous eect ranges from 0 19 to 0 66 and is generally very significant the contextual eects are also very significant a key such eect the elasticity with respect to the mean of neighbors permanent incomes ranges from 0 17 to 0 54

do immigrants and their children free ride more than natives the main goal of this paper is to analyze the differences between immigrant and native households in their volunteer contributions and private transfer behavior as well as their receipt of assistance from nongovernment sources in addition we examine how the immigrant native differences evolve over time as immigrant households accumulate us experience finally we examine the voluntary contribution behavior of second generation immigrants and children in immigrant households to gain insight into the long term impact of immigration we do not find evidence that immigrant households free ride more than native born households first immigrant households when compared to similar native born households are less likely to receive assistance from nongovernment sources second immigrant status has no statistically significant impact on monetary contributions toward public good provision we also find that the immigrant native differences in monetary and time contributions tend to diminish over time as immigrants acquire us experience finally we find no significant differences between the second generation of immigrants and third or higher generations of americans in their voluntary contributions of money and time we obtain similar results for children in immigrant households they are not significantly different from children in native households in their time contribution and in their enrollment in federal meal programs the results are robust to various income and wealth controls do immigrants and their children free ride more than natives

do public grants to american theatres crowd out private donations this paper examines the relationship between public support and private donations by disaggregating the crowding effect into two components one determined by level of public support and one determined by changes in public support levels the analysis of a panel of american non profit theatres shows that the crowding effect induced by the level of public support takes an inverted u shape at low levels public support crowds in private donations while at higher levels it displaces them the change in total public support in the past year produces a constant crowding in effect on the level of private donations the paper finally illustrates how federal and state support have a crowding in effect at all levels while local support has a similar impact to total public support

labor supply flexibility and portfolio choice in a life cycle model abstract this paper examines the effect of the labor leisure choice on portfolio and consumption decisions over an individual s life cycle the model incorporates the fact that individuals may have considerable flexibility in varying their work effort including their choice of when to retire given this flexibility the individual simultaneously determines optimal levels of current consumption labor effort and an optimal financial investment strategy at each point in his life cycle we show that labor and investment choices are intimately related the ability to vary labor supply ex post induces the individual to assume greater risks in his investment portfolio ex ante

the social multiplier aggregate data is often used to make inferences about individual level behavior if there are social interactions in which one person s actions influence his neighbor s incentives or information then these inferences are inappropriate the presence of positive social interactions or strategic complementarities implies the existence of a social multiplier where aggregate relationships will overstate individual elasticities we present a brief model and then estimate the size of the social multiplier in three areas the impact of education on wages the impact of demographics on crime and group membership among dartmouth roommates in these contexts there is a significant social multiplier jel ho jo co

spending retirement on planet vulcan the impact of longevity risk aversion on optimal withdrawal rates corrected july 2011 recommendations from the media and financial planners regarding retirement spending rates deviate considerably from utility maximization models this study argues that wealth managers should advocate dynamic spending in proportion to survival probabilities adjusted up for exogenous pension income and down for longevity risk aversion

strategic information acquisition and the mitigation of global warming abstract we consider the strategic role of uncertainty and information acquisition for the mitigation of global warming before the countries decide on their contribution to a mitigation of global warming they may invest in information about the country specific benefit of reductions of the emissions of greenhouse gases we show that information acquisition has a substantial strategic value countries may prefer not to learn their benefit of climate protection even if information acquisition does not involve a direct cost this strategic information choice may further decrease the efficiency of the public good provision

public goods hidden income and tax evasion some nonstandard results from the warm glow model abstract a large literature explores crowd out in situations where public goods are jointly provided work in this area typically depicts a tax system where individuals take taxes as given but in some settings such as those in developing economies efforts to evade or avoid taxes may be widespread using the canonical warm glow model this paper considers joint public good provision in a setting where individuals can evade taxes by hiding their income the model s implications change significantly in this setting with hidden income stronger warm glow will lead to greater crowd out not less using research on crowd out and inter family transfers i present suggestive evidence that the model s results may help to reconcile divergent estimates of crowd out in the literature

a signaling explanation for charity this article examines a novel but plausible motive for charitable giving charitable donations which are observable can signal wealth or income the signaling equilibrium of charitable donations has attractive properties donations increase proportionally with population size governmental funding for public goods affects private charity only through an income effect crowding out need not be complete income redistribution is generically nonneutral increasing the spread between the poorest and richest person in a community tends to increase private donations our theory are based on the assumption that people are willing to make charitable donations even if they will not increase provision of the public good the data on charitable giving support the hypothesis that donors donate at least partly for signaling purposes rather than only to aid the recipient or to obtain satisfactions unrelated to status though charitable organizations usually report donations within categories thus not allowing perfect revelation for analytical tractability we shall consider an equilibrium with perfect revelation and a continuum of types as characterized in george j mailath 1987 and norman j ireland 1994

the relative efficiency of private and public transfers this paper develops a model for comparing the relative efficiency of private versus public financing of transfers a distinctive feature of the analysis is explicit recognition of important weaknesses and strengths of each form of financing a collective consumption good our results show that the preferred financing method is ultimately an empirical issue with the answer depending critically on donor motives and the government s ability to correctly ascertain donors tastes

the tullock bastiat hypothesis inequality transfer curve and the natural distribution of income conventional wisdom has long held that public policy has worked to reduce income inequality in contemporary america or that at least it has the real capability of achieving that goal thurow 1971 for example the evidence is strong that there was a pronounced decline in measured inequality during the 1930s and 1940s a period of greatly increased governmental intervention on both the tax and expenditure side designed to reduce inequality lindert and williamson 1980 increased government expenditures went or so it was argued largely to alleviate the plight of the poor and thus greater federal public aid expenditures brought about greater equality similarly it commonly has been maintained that higher and more progressive federal taxes serve to further reduce inequality in america there is another view however which holds that governmental intervention in markets may have a different impact while he believes the modern welfare state has clearly reduced incomes for the extremely wealthy tullock 1983 has suggested that many government transfers are not transfers from higher to lower income groups but rather transfers within the middle class allowing at least the possibility that governmental transfer activity might not in the aggregate increase income equality in any significant manner perhaps the citizenry are interested in promoting income equality but only to some limited extent in that regard evidence compiled by lebergott 1975 is interesting since the midnineteenth century there has been a remarkable rough constancy in government payment levels to the poor relative to wage levels of common laborers to be sure there have been some periods of increased support for the poor such as during the heyday of the war on poverty in the late 1960s but as tullock has expressed in private correspondence with us the body politic has spasms of feeling more than usually charitable and then goes back to normal the conventional wisdom had previously been questioned by reynolds and smolensky 1977 and for that matter by bastiat 1848 1964 who said that the state produces more poverty than it cures along similar lines lebergott 1975 15 speaking of poor elderly americans observed they are not impoverished in spite of the american capitalist welfare state they are in poverty because of it

the isolation paradox and the discount rate for benefit cost analysis one argument used to justify a rate of discount for benefit cost analysis below the market rate is based on a divergence of private and collective behavior known as the isolation paradox in this paper we reexamine this argument using a three period general equilibrium model incorporating the intergenerational structure of benevolence assumed by earlier writers we show that in this model the appropriate rate of discount is the market rate regardless of the existence of the isolation paradox in the absence of other market distortions no shadow pricing of capital inputs is necessary in the calculation of net present value

the strategic advantage of being poor private and public provision of public goods when people know that a public good is to be privately provided in the future economic behaviour may change in periods before the one with the private provision game individuals have a distortionary incentive to reduce their disposable income so as to shift the burden of provision to others the incentive is eliminated if the government provides a sufficient amount of the public good in a second best world private provision of public goods has been claimed to be a reasonably good alternative to public provision this claim needs to be reconsidered in the light of these results

the impact of investment behaviour for individual welfare the industrialized world has experienced a demographic shift that is straining public pension systems employer sponsored pension plans change from defined benefit to defined contribution more emphasis is put on individually managed retirement funds one concern with this movement is the potential negative effect on individual welfare if households investment behaviour is suboptimal using micro level us data we compare the optimal utility computed using a lifecycle model with the actual utility as reflected in empirical asset allocation choices average estimated welfare costs are below 3 of households endowment assets and human capital yet specific population groups experience higher welfare costs

family policy with non cooperative families we consider a non cooperative model of a family s time allocation between market work and providing a home produced family public good such as child care or care for the elderly the model predicts underprovision of the public good because of crowding out this does not necessarily warrant public provision in contrast to other approaches in family economics we find that attempts to redistribute between spouses may alter the final distribution within the marriage and that such a policy may be pareto improving we also find that some degree of progressivity of the income tax can be welfare improving

additionality and reverse crowding out for pollution offsets in water quality trading market based environmental policies frequently include offset provisions that allow polluters who are not subject to a binding cap to participate in trading programs when offsets are used for compliance it is important that they are additional in the sense that the payment from the trading program induces environmental benefits that would not occur without the program in this paper we analyze a water quality trading program in ohio u s to estimate the extent to which the offsets are additional using data from the program and a farmer survey we estimate the number of additional conservation practices that are adopted by farmers who participated in the trading program relative to the counterfactual outcome without the program using matching methods we find no statistically significant increase in the number of conservation practices due to the trading program we also examine whether the trading program may have crowded out government funding we also do not find significant evidence for such crowding out instead finding some evidence that the trading program may have led to greater participation in federal cost share programs

sub optimal saving and the shadow price of labor the public good argument abstract one argument for the incorporation of a premium on saving into calculations of the shadow price of labor has been the claim that aggregate inter generational savings are a public good and the individual savings decisions lead to sub optimal provision of savings this paper shows that even if this claim was true the incorporation of a premium on savings into benefit cost analysis calculations would be inappropriate the shadow price of labor relative to project output shoud still be set at the relative effects on aggregate income of hiring a worker on the one hand and producing output on the other

pareto optimal redistribution and private charity abstract when private charity exists and is motivated by utility interdependence a non pareto optimal outcome the free rider problem typically arises nevertheless incremental fiscal redistribution cannot achieve a paretian welfare improvement so long as private charity continues at positive levels donors respond to incremental fiscal redistribution by reducing their voluntary contributions by exactly a dollar for every dollar transferred in this way no net transfer is achieved unless incremental fiscal redistribution is pursued to the point where private contributions have been driven to zero alternatively a net transfer may be achieved by fiscal measures which affect donors marginal incentives to donate

on the efficiency of a global market for carbon dioxide emission permits type of externality and timing of policymaking we demonstrate that global permit markets are pareto efficient despite the externality type production or consumption when income redistribution occurs after regional environmental policymaking ex ante income redistribution is neutral if emissions affect production only but non neutral if emissions affect consumption 2008 elsevier b v all rights reserved