wage bargaining central bank independence and the real effects of money the effects of financial capital mobility on monetary policy autonomy are relatively well understood but the importance of particular monetary regimes in distinct national institutional settings is not this article is a theoretical and empirical exploration of the effects of monetary policy regimes on unemployment in different national wage bargaining settings based on a rational expectations two stage game of the interaction between the wage behavior of labor unions and the monetary policies of governments i argue that monetary policies have real employment effects in all but the most decentralized bargaining systems specifically in intermediately centralized bargaining systems a credible government commitment to a nonaccommodating monetary policy rule will deter militant wage behavior with salutary effects on unemployment in highly centralized systems by contrast restrictive monetary policies will clash with unions pursuit of wage distributive goals and produce inferior employment performance only in highly fragmented bargaining systems is money neutral in the sense that employment performance is unaffected by monetary regimes the model has clear consequences for the optimal design of central banks and collective bargaining arrangements and suggests new ways to study institutional change hereunder the causal effect of increasingly globalized capital markets the argument is supported by pooled time series data for fifteen oecd countries over a twenty one year period

are emissions permits regressive grandfathered emissions permits redistribute income to wealthy households by creating firm rents that ultimately accrue to shareholders consequently they can be highly regressive even if the poor do not have large budget shares for polluting goods using an analytical model this paper estimates the burden of emissions permits borne by different income groups under control of power plant emissions of carbon so2 and nox we also compare the burden borne by poor households under permits with that under emissions taxes performance standards technology mandates and input taxes and we show how the social costs of policies differ from efficiency costs when society has aversion to inequality

is the asymptotic speed of convergence a good proxy for the transitional growth path this paper compares transitional dynamics in two alternative r d non scale growth models one with endogenous human capital and the other without we show that focusing only on the asymptotic speed of convergence to discriminate between the two models performance can be misleading our analysis suggests that a careful study of the entire adjustment paths predicted by alternative growth models starting far away from the balanced growth path is required in order to successfully discriminate among them

estimating the general equilibrium benefits of large changes in spatially delineated public goods the purpose of this article is to report a new approach for measuring the general equilibrium willingness to pay for large changes in spatially delineated public goods such as air quality we estimate the parameters of a locational equilibrium model and compute equilibria for alternative scenarios characterizing the availability of public goods within a system of communities welfare measures take into consideration the adjustments of households in equilibrium to nonmarginal changes in public goods the framework is used to analyze willingness to pay for reductions in ozone concentrations in southern california between 1990 and 1995

intertemporal and intratemporal substitution and the speed of convergence in the neoclassical growth model abstract this paper re examines the speed of convergence in a one sector growth model under fairly general conditions with respect to both production and preferences we investigate the response of the rate of convergence to the intratemporal elasticity of substitution in production and to the intertemporal and intratemporal elasticities of substitution in consumption the speed of convergence is highly sensitive to the first two elasticities but not to the third which is reflected primarily in the agent s labor leisure choice small deviations in the elasticities from standard benchmark parameters can lead to significant variations in the rate of convergence encompassing the range of typical empirical estimates

mixed signals central bank independence coordinated wage bargaining and european monetary union plans for the european monetary union emu are based on the conventional postulate that increasing the independence of the central bank can reduce inflation without any real economic effects however the theoretical and empirical bases for this claim rest on models of the economy that make unrealistic information assumptions and omit institutional variables other than the central bank when signaling problems between the central bank and other actors in the political economy are considered we find that the character of wage bargaining conditions the impact of central bank independence by rendering the signals between the bank and the bargainers more or less effective greater central bank independence can reduce inflation without major employment effects where bargaining is coordinated but it can bring higher levels of unemployment where bargaining is less coordinated thus currency unions like the emu may require higher levels of unemployment to control inflation than their proponents envisage they will have costs as well as benefits and these will be unevenly distributed among and within the member nations depending on the changes they induce in the status of the bank and of wage coordination

who wins from emissions trading evidence from california researchers and environmental policy advocates have raised questions regarding the distributional impacts of emissions trading programs a k a cap and trade while previous research has been careful to identify the causal effect of emissions trading on emissions reductions fowlie et al in am econ rev 102 2 965 993 2012 hereafter fhm we argue that existing estimates of differential impacts on demographic groups have relied on unrealistic assumptions regarding pollution dispersion in this paper we estimate the emissions reduction due to the reclaim cap and trade program in southern california following the identification strategy of fhm but we relax the assumption of uniform dispersion surrounding point sources we model the transport of effluents using a state of the science dispersion model to determine the areas impacted by emissions from each source importantly conditional on race and ethnicity we find that higher income areas receive larger reductions in pollution under cap and trade furthermore conditional on income or poverty rates we find that blacks benefit while hispanics lose relative to whites under reclaim

money and endogenous growth the ramsey romer model of endogenous growth is extended to allow for holdings of real money balances and government debt as well as capital and for non interconnected generations of households tax financed increases in government consumption and debt depress growth prospects and boost inflation as long as a positive birth rate ensures that future taxes are shouldered by future yet unborn generations debt financed increases in government consumption depress growth and boost inflation even more money financed increases in government consumption depress growth less but increase inflation by more giving subsidies through an increase in monetary growth is non neutral since this increases real growth and thus inflation increases by a lesser amount than monetary growth bond financed increases in monetary growth lead to a larger increase in real growth and a smaller increase in inflation if there are cost adjustment for investment cuts in monetary growth and increases in government debt and government consumption induce an increase in the real interest rate copyright 1994 by ohio state university press

a theory of ambiguity credibility and inflation under discretion and asymmetric information this paper develops a positive theory of credibility ambiguity and inflation under discretion and asymmetric information the monetary policymaker maximizes his own politically motivated objective function that is positively related to economic stimulation through monetary surprises and negatively related to monetary growth the relative importance he assigns to each target shifts stochastically through time his current preference trade off is known to him but not to the public when choosing the state contingent path of money growth for the present and the future the policymaker compares the benefits from current stimulation with the costs associated with higher future inflation expectations current monetary growth conveys information to the public about future money growth because there is persistence in the policymaker s objectives although expectations are rational information is imperfect because monetary control procedures are imprecise as a result the public cannot correctly distinguish persistent changes of emphasis on different policy objectives from transitory monetary control errors the public becomes aware of changes gradually by observing past monetary growth credibility is defined in terms of the speed with which the public recognizes changes in the objectives of the policymaker credibility is lower the noisier monetary control and the more stable the objectives of the policymaker looser monetary control and a higher degree of time preference on the part of the policymaker induce him to produce higher and more variable monetary growth when the policymaker is free to determine the accuracy of monetary control he does not always choose the most effective control available in spite of the fact that monetary surprises always have an expected value of zero the reason is that ambiguous control procedures enable the policymaker to generate positive surprises when he cares more than on average about economic stimulation he leaves the inevitable negative surprises for periods in which he cares more about inflation prevention this result provides an explanation for the fed s preference for ambiguity recently documented by goodfriend 1986 the policymaker is more likely to pick more ambiguous control procedures the more uncertain his objectives and the higher his time preference the paper also provides a theoretical underpinning for the well documented crosscountry positive correlation between the level and the variability of inflation

does hazardous waste matter evidence from the housing market and the superfund program this paper uses the housing market to develop estimates of the local welfare impacts of superfund sponsored cleanups of hazardous waste sites we show that if consumers value the cleanups then the hedonic model predicts that they will lead to increases in local housing prices and new home construction as well as the migration of individuals that place a high value on environmental quality to the areas near the improved sites we compare housing market outcomes in the areas surrounding the first 400 hazardous waste sites chosen for superfund cleanups to the areas surrounding the 290 sites that narrowly missed qualifying for these cleanups we find that superfund cleanups are associated with economically small and statistically insignificant changes in residential property values property rental rates housing supply total population and types of individuals living near the sites these findings are robust to a series of specification checks including the application of a regression discontinuity design based on knowledge of the selection rule overall the preferred estimates suggest that the local benefits of superfund cleanups are small and appear to be substantially lower than the 43 million mean cost of superfund cleanups

multiple wage bargaining systems in the single european currency area little attention in the emu literature has been paid to the interaction between central bank monetary rules and systems of collective wage bargaining analytically and empirically coordinated wage bargaining systems respond with real wage restraint to non accommodating monetary policy since wage determination is dominated by collective bargaining in all the emu member states and wage coordination within the member states has grown since 1980 this is a topic of potential importance in particular the replacement of the bundesbank directly targeting german inflation by an ecb targeting european inflation has removed a major institutional support of wage restraint in germany the consequences of this for emu are worked out under two scenarios that inflation expectations will be generated by ecb monetary policy and that they will reflect german inflation outcomes possible institutional developments are discussed including government union bargains the bundesbank has also played a major role in maintaining fiscal rectitude by targeting excess fiscal deficits in germany again its replacement by the ecb targeting if at all european rather than german fiscal policy loosens fiscal constraints for underlying structural reasons therefore it is possible that germany and other emu countries will move to a period of fiscal activism with wage restraint and low inflation purchased through social contract negotiations

taxation and the tiebout model the differential effects of head taxes taxes on land rents and property taxes on the theory of state and local public finance is the seminal paper by charles tiebout 1956 tiebout constructed a multijurisdictional model in which independent local governments offer a wide variety of expenditure and tax policies and perfectly mobile consumers reveal their preferences for local public goods through their choice of residential community he argued that under such circumstances local public service provision would be efficient the tiebout model has formed the basis of a vast number of subsequent articles in the state and local public finance literature and has also been very influential in urban and regional economics the efficiency properties of various tiebout type models of local public good provision have been examined and the role of politics in these models has been debated at length in this literature of more direct relevance to this paper however is the fact that although tiebout had little to say directly about taxation simply assuming the existence of head taxes subsequent analyses have used adaptations of this model to examine the effects of local head taxes land taxes and property taxes it is the literature on the efficiency and distributional effects of alternative local taxes that is the subject of this survey 1

the distributional effects of pollution regulations do renters fully pay for cleaner air abstract changes in housing prices play an important role in determining the incidence of environmental regulations if the increase in value due to changes in environmental amenities is fully passed forward in the form of higher rental prices renters may receive no net benefit from the regulations to estimate the pass through of the value of an environmental amenity i exploit the reduction in suspended particulate matter pm 10 due to the 1990 clean air act amendments caaa using instrumental variables at varying levels of spatial aggregation i find that the 1990 caaa led to a significant increase in rents but the estimated percentage effect is about half as large as that of owner occupied housing values little of this difference is driven by income differences between renters and homeowners when stratifying by income and comparing the effect of the 1990 caaa on housing values and rents point estimates suggest that half of the increase in value is passed on to renters in the form of higher rents this suggests that pass through may be incomplete but landowners still capture much of the value of the air quality regulations

who benefits from environmental regulation evidence from the clean air act amendments abstract using geographically disaggregated data and exploiting an instrumental variable strategy we show that contrary to conventional wisdom the benefits of the 1990 clean air act amendments caaa were progressive the caaa created incentives for local regulators to target the initially dirtiest areas for cleanup creating heterogeneity in the incidence of air quality improvements that favored lower income households based on house price appreciation households in the lowest quintile of the income distribution received annual benefits from the program equal to 0 3 of their income on average during the 1990s over twice as much as those in the highest quintile

alternative government financing and stochastic endogenous growth abstract this paper addresses a stochastic endogenous model in which the stock of securities both money and bonds are required to finance the government budget we study how the expected rate of real growth the expected inflation rate and economic welfare are influenced by changes in the first and second moments of public spending the analyses will enable us to assess the merits and demerits of mixed financing case of money and bonds relative to financing one of taxes on wealth examined in grinols and turnovsky j econom dyn control 17 1993 1 and turnovsky int econom rev 34 1993 953 in addition we construct a model where government relies on a larger ratio of bonds to money to raise the necessary revenue and show how the consequences of mixed financing are affected by the policy decision of government

wages rents and the quality of life this study focuses on the role of wages and rents in allocating workers to locations with various quantities of amenities the theory demonstrates that if the amenity is also productive then the sign of the wage gradient is unclear while the rent gradient is positive the theory is extended to include the housing market and nontraded goods these extensions require little modification of the conclusion the empirical work on wages shows that the regional wage differences can be explained largely by these local attributes with the use of site price data implicit prices are estimated and quality of life rankings for the cities are computed

dynamic behavior of capital accumulation in a cash in advance model abstract this paper analyzes the dynamic behavior of capital accumulation in stockman s cash in advance model if the cash in advance constraint applies only to consumption then money is superneutral along the transition path as well as in the long run alternatively if the cash in advance constraint applies to gross investment as well as consumption then a permanent increase in the rate of monetary growth reduces the steady state capital stock the effect on the speed of adjustment depends on the sign of a certain simple function of the parameters of preferences and technology

wind electricity subsidies a windfall for landowners evidence from a feed in tariff in germany abstract subsidies for renewable energy sources are increasing around the globe and amounted to more than 100 billion euro in 2013 this study aims to answer whether the subsidies only ensure that green electricity plants are profitable or whether other market participant as for example landowners benefit from the subsidy in the form of windfall gains as well to identify the causal effect of the subsidies we investigate the impact of the introduction of a price guarantee in the form of a feed in tariff for wind electricity in germany on land prices we employ two different approaches both approaches exploit quasi experimental variation in wind strength across 260 non urban counties in combination with the introduction of the subsidies based on a difference in differences design we find that land prices increased by roughly 1100 euro in high wind areas after the introduction of the subsidy further using an instrumental variable estimator we document that around 18 of expected wind turbine profits are capitalized into land prices finally we show that wind turbine subsidies account for 4 of overall agricultural income in 2007

how constraining is capital mobility the partisan hypothesis in an open economy a growing literature argues that international financial integration has eliminated the possibility for distinct partisan macroeconomic strategies i test this hypothesis by reformulating the partisan hypothesis in an open economy context and conducting pooled timeseries analysis of budget balances real interest rates and capital controls for fourteen oecd countries between 1970 and 1994 the analysis provides little evidence that financial integration has eliminated distinct partisan macroeconomic policies under fixed exchange rates leftist governments run larger deficits than rightist governments and use capital controls to reduce interest rate premia under floating exchange rates leftist governments pursue looser monetary policies than rightist governments while partisan distinctions do weaken in the 1990s in countries with fixed exchange rates this is attributed to the recession of the early 1990s and to important institutional changes in the european union international financial integration therefore does not prevent governments from pursuing distinct partisan macroeconomic policies

central bank independence and macroeconomic performance some comparative evidence this note uses information on a sample of sixteen oecd countries to assess the relationship between central bank independence and macroeconomic performance as previous work suggests politically controlled central banks are more likely to pursue policies that lead to high and variable inflation however the authors find little evidence that political control of central bank policy has any impact on measures of the level or variability of growth unemployment or the ex ante real interest rate copyright 1993 by ohio state university press

room to move international financial markets and national welfare states a central research question in international political economy concerns the influence of financial markets on government policy outcomes to what extent does international capital mobility limit government policy choices i evaluate the relationship between international financial markets and government policy outcomes with a focus on the government bond market in developed democracies evidence includes interviews with financial market participants and a cross sectional time series analysis of the determinants of interest rates this evaluation suggests that governments of developed democracies face strong but narrowly defined financial market pressures financial market participants are concerned with a few macroeconomic policy indicators including inflation rates and government deficit gdp ratios but not with micropolicy indicators such as the distribution of government spending across functional categories in these areas governments retain policymaking autonomy i conclude by exploring the role of financial market influences within domestic politics and offering suggestions for further research

the effect of power plants on local housing values and rents abstract this paper uses restricted census microdata to examine housing values and rents for neighborhoods in the united states where power plants were opened during the 1990s compared to neighborhoods with similar housing and demographic characteristics neighborhoods within 2 miles of plants experienced 3 7 decreases in housing values and rents with some evidence of larger decreases within 1 mile and for large capacity plants in addition there is evidence of taste based sorting with neighborhoods near plants associated with modest but statistically significant decreases in mean household income educational attainment and the proportion owner occupied

monopolistic competition and the effects of aggregate demand how important is monopolistic competition to an understanding of the effects of aggregate demand on output we ask the question at three levels can monopolistic competition by itself explain why aggregate demand movements affect output can it together with other imperfections generate effects of aggregate demand in a way that perfect competition cannot if so can it give an accurate account of the response of the economy to aggregate demand movements the answers are no yes and yes

the intertemporal elasticity of substitution in consumption in the united states and the united kingdom as robert e hall 1988 notes the magnitude of the intertemporal elasticity of substitution in consumption is one of the central questions of macroeconomics do higher expected real interest rates lead to deferred consumption the authors extend hall s methodology and model and compare results for the united sta tes and the united kingdom in both cases they directly estimate the mo ving average process that temporal aggregation might induce in the random disturbances and take account of consumers who do not follow the lif e cycle permanent income model of consumption copyright 1992 by mit press

inflation wealth and interest rates in an intertemporal optimizing model abstract this paper analyzes the relationship between the growth of the money supply and capital accumulation in a monetary optimizing model under certain conditions we show that a large intertemporal elasticity of substitution makes the nominal rates of interest undershoot its long term value that a low elasticity gives rise to overshooting while a unitary elasticity is shown to make the nominal rate of interest a constant these considerations plus explicit attention paid to the income and substitution effects induced by the changes in the nominal rates of interest provide us with an understanding of the correlation between growth of money and capital accumulation

anticipated inflation and the capital stock in a cash in advance economy abstract an economy is constructed in which the steady state capital stock is inversely related to the rate of inflation as a result that is directly opposite the usual conclusion

the nonneutrality of monetary policy with large price or wage setters monetary rules matter for the equilibrium rate of employment when the number of price wage setters is small even when assuming rational expectations complete information central bank precommitment and absence of nominal rigidities if the central bank is nonaccommodating sufficiently large unions bargaining independently have an incentive to moderate sectoral money wages and thereby expected real wages the result is an increase in the real money supply and hence higher demand and employment this does not hold with accommodating monetary policy since unions wage decisions cannot then affect the real money supply a similar argument holds for large monopolistically competitive price setters

amenity benefits and the optimal allocation of land agricultural land often yields sig nificant amenity benefits that may not be re flected in the prevailing allocation of land be tween agricultural and nonagricultural uses this paper introduces a simple supply demand model that incorporates these benefits in the de termination of optimal land allocation three stage least squares and county level data are used to estimate the supply and demand param eters these estimates confirm the plausibility of the conceptual model results from the con tingent valuation literature illustrate the extent of underallocation of land to agriculture due to existing institutional conditions some correc tive measures and their distributional effects are discussed and quantified jel q24

infrastructure alternative government finance and stochastic endogenous growth abstract this paper constructs a stochastic version of an endogenously growing economy with a public good that raises the productivity of private capital we explore how growth and welfare are influenced by changes in the mean and variance of productive public spending under two alternative financing methods mixed money bond financing and wealth tax financing in addition to evaluate the differences between money financing and bond financing we consider mixed money bond financing under which a larger ratio of bonds to money is utilized to finance a given increase in public spending

contested economic institutions the politics of macroeconomics and wage bargaining in advanced democracies anthony j mcgann reviews torben iversen contested economic institutions the politics of macroeconomics and wage bargaining in advanced democracies cambridge uk cambridge university press 1999

the speed of convergence and alternative government financing abstract in this paper we are concerned with the speed of convergence in the sidrauski monetary optimizing model sidrauski am econ rev 57 1967 534 in which the steady state capital stock is not influenced by a change in public spending the paper studies how different the speed of convergence to the steady state is affected by a change in government spending under the various ways of financing in exploring the transitional adjustment to the public policy shock it will be convenient to focus upon the degree of relative risk averse

central bank independence centralization of wage bargaining inflation and unemployment theory and some evidence abstract this paper proposes a conceptual framework to investigate the effects of central bank independence of the degree of centralization of wage bargaining and of the interaction between those institutional variables on real wages unemployment and inflation in a framework in which unions are averse to inflation this aversion moderates union s wage demands as they attempt to induce the central bank to inflate at a lower rate an increase in the degree of centralization of wage bargaining a decrease in the number of unions triggers two opposite effects on real wages unemployment and inflation it reduces the substitutability between the labor of different unions and therefore the degree of effective competition between them this reduced competition effect raises real wages unemployment and inflation but the decrease in the number of unions also strengthens the moderating effect of inflationary fears on the real wage demands of each union this strategic effect lowers real wages unemployment and inflation for sufficiently inflation averse unions the interaction between those two effects produces a calmfors driffill type relation between real wages and centralization the paper analyzes the effects of central bank independence on the position and the shape of this relation as well as on inflation and unemployment the paper features two mechanisms one of which is novel through which monetary institutions have real effects the model implies that if there is a single union social welfare is maximized when the central bank attaches a zero weight to inflation but when the number of unions is larger than one this result is no longer true in general empirical evaluation of some of the theoretical implications using data from 19 developed economies is for the most part supportive of those implications

alternative government financing and aggregate fluctuations driven by self fulfilling expectations abstract using woodford s finance constrained model woodford m 1986 stationary sunspot equilibria in a finance constrained economy journal of economic theory 40 128 137 with external effects in production as in barinci and cheron 2001 sunspots and business cycle in a finance constrained economy journal of economic theory 97 30 49 this paper investigates the effects of alternative government financing methods on the range of values of increasing returns leading to an indeterminate steady state it will be shown that indeterminacy may easily arise at a wide range of values of increasing returns if constant government expenditure is financed through labor income taxes and with difficulty if constant government expenditure is financed by taxes on capital in addition we explore how the consequences of endogenous income taxes are changed if tax rates on labor and capital income are kept constant and government expenditure is endogenously adjusted to satisfy the budget constraint

a discrete choice equilibrium approach to valuing large environmental changes abstract this study develops a discrete choice locational equilibrium model to evaluate the benefits of the air quality improvements that occurred in the los angeles area following the 1990 clean air act amendments caaa the discrete choice equilibrium approach accounts for the fact that air quality improvements brought about by the 1990 caaa will change housing choices and prices the study also provides new evidence for the distributional welfare impacts of the 1990 caaa in the los angeles area findings suggest that the air quality improvements that occurred in the los angeles area between 1990 and 2000 provided substantial general equilibrium benefits to households the analysis reveals noticeable differences between partial and general equilibrium welfare gains demonstrating that ignoring equilibrium effects will likely misrepresent the benefits of large environmental changes in addition we find that the equilibrium welfare impacts of the 1990 caaa in the los angeles area varied significantly across income groups