control of accumulating stock pollution by heterogeneous producers abstract this paper presents a framework to determine optimal resource allocation over time for the production of a good by heterogeneous producers who generate a stock externality we analyze the optimal intertemporal and quality specific combination of abatement strategies at the source source abatement given by a change in the intensity intensive margin of production and in the chosen technology extensive margin and or removal of existing pollution stock stock abatement the results show how the specifications of the production and the emission functions affect technology adoption and the design of the optimal intertemporal combination of source and stock abatement strategies moreover the paper shows that regulation at the intensive margin cannot be considered as a substitute for a regulation at the extensive margin the paper employs the so called two stage solution approach for solving the resulting quality distributed intertemporal optimal control problem

finite horizons and the non neutrality of money abstract this note re examines the issue of monetary super neutrality in an optimizing model with finite horizons mortality makes agents less patient and thus affects negatively the process of capital accumulation this distortion can be reduced by increases in monetary growth

money capital and real liquidity effects with habit formation the money in utility model is reconsidered in the presence of endogenous labour and habits with standard assumptions about preferences and a policy rule that sets the nominal interest rate by adjusting the growth rate of money the model exhibits superneutrality in the steady state nevertheless habits give rise to real liquidity effects in the short run after an increase in the nominal interest rate employment falls resulting in a fall in capital accumulation and in the short and long term real interest rates the adjustment of the capital stock is non monotonic employment and the short and long term real interest rates may also adjust non monotonically jel classification e22 e52 e58 monnaie capital et effets reels de liquidite quand il y a formation d habitudes on re examine le role de la monnaie dans un modele d utilite quand travail et formation d habitudes sont endogenes dans le cadre des postulats usuels a propos des preferences et d une regle de politique qui definit le taux d interet en ajustant le rythme de croissance de la monnaie le modele fait preuve de super neutralite en regime permanent neanmoins les habitudes entrainent des effets reels de liquiditea court terme apres un accroissement dans le taux d interet nominal l emploi chute ce qui entraine un ralentissement dans l accumulation du capital et une chute des taux d interet reels a court et a long terme l ajustement dans le stock de capital n est pas monotone l emploi et les taux d interet reels a court et a long terme peuvent aussi ne pas s ajuster de facon monotone

inflation and growth impatience and a qualitative equivalence this paper studies the role of an endogenous time preference on the relationship between inflation and growth in the long run in both the money in utility function miuf and transactions costs tc models we establish a qualitative equivalence between the two models in a setup without a labor leisure tradeoff when the time preference is decreasing or increasing in consumption and real balances both the miuf and tc models are qualitatively equivalent in terms of predicting a negative or positive relationship between inflation and growth in a steady state both a decreasing and an increasing time preference in consumption are consistent with the arguments found within the literature while a decreasing time preference in real balances corroborates with empirical evidence there is no evidence in support of an increasing time preference in real balances

monetary and fiscal policy in an optimising model with capital accumulation and finite lives this paper considers the effects of monetary and fiscal policies in an optimizing model with capital accumulation and a pos itive birth rate an increase in monetary growth leads to a reduction in the real interest rate and a boost of capital and total consumpti on however the superneutrality result still prevails when open mark et operations are used to increase monetary growth and preferences ar e separable a tax financed fiscal expansion reduces capital and crow ds out consumption by more than 100 percent a bond financed fiscal e xpansion increases capital by less and crowds out consumption by more than a money financed fiscal expansion copyright 1988 by royal economic society

driving to opportunity local rents wages commuting costs and sub metropolitan quality of life we examine variation in local rents wage levels commuting costs household characteristics and amenities within metropolitan areas for 2071 areas covering the united states by density and central city status we demonstrate the sensibility of estimating wage levels by workplace not residence and recover decentralized rent gradients that fall with commuting costs we construct and map a willingness to pay index which indicates the quality of life typical households receive from local amenities when households are similar mobile and informed this index varies considerably within metros and is typically high in areas that are dense suburban sunny mild safe entertaining and have elevated school funding

rebound effects of new irrigation technologies the role of water rights we study how institutions such as water rights can complement new irrigation technologies in promoting the sustainability of u s agriculture using data from the ogallala high plains aquifer region of kansas we find that water extraction moderately increases after adopting low energy precise application lepa irrigation and this rebound effect is in general higher for farmers with larger water rights about half of the lepa s rebound effects arise because adopters tend to irrigate more land and grow more water intensive crops with the remaining half attributable to more intensive irrigation farmers with greater water rights use more water with two thirds of the effects arising from irrigating larger land areas and one third of the effects attributable to more intensive irrigation a 10 reduction of water rights will reduce water use by 5 in the long run and if the reduction targets the majority of the water rights which lie between 100 and 500 af lepa s rebound effect decreases by 15 4 finally we find that farmers have an incentive to apply a small amount of water in order to preserve their water rights but the associated water waste is insignificant

the estimation of demand parameters in hedonic price models this paper shows that the econometric problem of estimating hedonic demand parameters is not a standard identification problem caused by demand supply interaction as has been often assumed estimation procedures based on this assumption lead to biased results the hedonic estimation problem is instead caused by the endogeneity of both prices and quantities when households face a nonlinear budget constraint an instrumental variables solution to this problem is suggested using instruments that exogenously shift the budget constraint

a forward looking ricardian approach do land markets capitalize climate change forecasts abstract the hedonic pricing method is one of the main approaches used to estimate the economic value of attributes that affect the market price of an asset this method is routinely used in environmental economics to derive the economic valuation of environmental attributes such as air pollution and water quality for example the ricardian approach is based on a hedonic regression of land values on historical climate variables forecasts of future climate can then be employed to estimate the future costs of climate change we show that this approach is only valid if current land markets ignore climate forecasts while this assumption was defensible decades ago when this literature first emerged it is reasonable to hypothesize that information on climate change is so pervasive today that markets may already price in expectations of future climate change indeed we show empirically that agricultural land markets in the united states now capitalize expectations about future climate change we derive a straightforward empirical correction to the standard ricardian approach called the forward looking ricardian approach that can be implemented with readily available data accounting for market beliefs decreases the estimated magnitude of climate change damages by 50 62

the conservation reserve program as a least cost land retirement mechanism mechanism design theory is used to characterize the properties of a least cost crp if marginal land rents decrease with acres farmed then a least cost crp is a set of nonlinear price schedules if marginal land rents are independent of acres farmed then an offer system constitutes a least cost crp the least cost offer system gives a useful estimate of the upper bound of a least cost crp empirical results suggest that a 34 million acre crp should have cost no more than 1 billion per year

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

estimating the willingness to pay to avoid violent crime a dynamic approach the hedonic model which has been used extensively in the environmental urban and real estate literatures allows for the estimation of the implicit prices of housing and neighborhood attributes such as square footage local crime rates and school quality as well as households demand for these nonmarketed amenities a recognized drawback of the existing hedonic literature is that the models assume a myopic decision maker i e households do not look to the future when choosing where to live today in this paper we apply a dynamic hedonic model of demand to estimate the willingness to pay to avoid violent crime the existing literature based on sherwin rosen s seminal 1974 paper estimates households willingness to pay for a given amenity by taking advantage of the first order conditions for utility maximization i e by requiring that the marginal change in price associated with an increase in amenity consumption will be equal to the marginal utility associated with the increase given that these first order conditions are derived from a myopic utility maximization problem and not the maximization of a lifetime utility function the traditional model will yield unbiased estimates only under the assumption that households are not forward looking when they purchase a house considering the substantial transaction costs that are present in the real estate market both monetary and psychological this assumption is unlikely to hold in most real world applications bishop and murphy 2011 expand the existing hedonic framework by allowing households to be forward looking with respect to the amenities of interest in that paper the familiar

do capitalization effects for public goods reveal the public s willingness to pay this article develops a welfare theoretic framework for interpreting evidence on the impacts of public programs on housing markets we extend rosen s hedonic model to explain how housing prices capitalize exogenous shocks to public goods and externalities the model predicts that trading between heterogeneous buyers and sellers will drive a wedge between these capitalization effects and welfare changes we test this hypothesis in the context of changes in measures of school quality in five metropolitan areas results from boundary discontinuity designs suggest that capitalization effects understate parents willingness to pay for public school improvements by as much as 75

money supply and capital accumulation on the transition path revisited fischer 1979 and asako 1983 analyze the sign of the correlation between the growth rate of money and the rate of capital accumulation on the transition path both plug a constant relative risk aversion utility based on a cobb douglas and a leontief function respectively into sidrauski s model yet return contrasting results the present analysis by using a more general ces utility presents both of those settings and conclusions as limiting cases and generates economic figures more consistent with reality e g the interest rate elasticity of the money demands derived from those previous works is necessarily 1 and 0 respectively

the gains from differentiated policies to control stock pollution when producers are heterogeneous we derive optimal input taxes to control stock pollution problems generated by heterogeneous agents the taxes vary over time and in response to differences of asset quality and technology choice we also derive second best policies and compare them to the efficient policy and also among themselves different policies will affect the timing for when and the extent to which conservation technologies are adopted a numerical example based on the california drainage problem shows significant efficiency gains from the optimal policy compared to no intervention but much of the gains are lost with second best interventions the gains from optimal policies do not always increase with the degree of heterogeneity copyright 2008 oxford university press

learning in a hedonic framework valuing brownfield remediation incomplete information in property value hedonic models can bias estimates of marginal willingness to pay mwtp using brownfield remediation as an application this article recovers hedonic values from a dynamic neighborhood choice framework that allows households to learn about brownfield contamination in a bayesian fashion before choosing where to live i find that ignoring learning yields nontrivial biases to the mwtp estimate this has important implications for hedonic valuation if agents are imperfectly informed estimates are used to calculate information s value had it been withheld from the public and to assess heterogeneity in information s value along site and homebuyer demographics

the un importance of forward looking behavior in price specifications the seminal work of edmund s phelps 1978 john b taylor 1980 and guillermo a calvo 1983 developed forward looking models of price determination that imparted inertia to the price level these models incorporate expectations of future prices and excess demand by imposing constraints typically lag lead symmetry constraints that force future variables to enter the specification in this paper the author tests the empirical significance of future prices in specifications like those of taylor he finds that expectations of future prices are empirically unimportant in explaining price and inflation behavior however the dynamics of a model that includes a purely backward looking inflation specification differ substantially and not altogether pleasingly from those with a forward looking specification copyright 1997 by ohio state university press

agricultural runoff as a nonpoint externality a theoretical development the purpose of this paper is to develop and explore a theory dealing with an important facet of agricultural runoff problems agricultural runoff is a nonpoint externality with notable implications for both research and policy a nonpoint externality exists whenever the externality contributions of individual economic agents cannot be practically measured by direct monitoring without monitoring regulations on emissions cannot be enforced and charges or subsidies cannot be assessed thus policies which are usually suggested for pollution abatement are not available there is great need for a theoretical base that can adequately capture these facts such a theory yields some important implications even before specific empirical applications the economic problem of agricultural runoff can be separated into three distinct categories first the sediment nutrients and chemicals removed by runoff represent a loss of resources to the individual farmer these costs are borne privately by farmers second if the discount rate of the individual farmer is greater than the social discount rate or if the farmer has a planning horizon which is shorter than society s the farmer will mine the soil resource at a rate which is more depletive than is socially optimal this is a temporal externality a third category involves the conservation of mass physical resources lost by the individual farm must appear elsewhere in the environment in sufficient quantities these resources are pollutants since water is the primary transport media for these resources it is water that is polluted by soil nutrients and agricultural chemicals this spatial externality has been the focus of much research here we intend to develop a theory for these issues to employ it to suggest a revised research methodology and to provide some important conclusions about alternative runoff policies only two of the three categories of agricultural runoff problems involve externalities and only the spatial externality is considered here

evaluating the social optimality of durable public good provision using the housing price response to public investment recent empirical work in public finance uses the housing price response to public investment to assess the efficiency of local durable public good provision this paper explores the theoretical justification for this technique it points out that the logic justifying the technique for evaluating non durable public good provision does not translate to the durable case a model in which investment is determined by the interaction between a budget maximizing bureaucrat and a community s residents is used to demonstrate that the technique can falsely predict under provision falsely predict over provision or perform without error

menu costs and the neutrality of money a model of endogenous price adjustment under money growth is presented firms follow s s pricing policies and price revisions are imperfectly synchronized in the aggregate price stickiness disappears and money is neutral the connection between firm price adjustment and relative price variability in the presence of monetary growth is also investigated the results contrast with those obtained in models with exogenous fixed timing of price adjustment

testing the rationality of inflation expectations derived from survey data a structure based approach following the inspiration of muth 21 expectations are said to be rational if the subjective probability distribution of expected outcomes coincides with the objective probability distribution of actual outcomes in practical applications however it is common to employ the so called weak form version of this hypothesis which defines rationality as equality between the expected outcome and the objective mathematical expectation conditional on all data available at the time the expectation is formed thus expectations of inflation are said to be weakly rational in muth s sense if

the effects of pricing policies on water conservation and drainage a general model of adoption of input conserving technologies by competitive firms is introduced using drip irrigation as an example an environmental regulation such as a drainage effluent charge is shown to influence adoption early adopters are likely to be producers with less efficient fixed assets land of low quality or antiquated capital higher input costs higher water prices or greater depth to groundwater and in more environmentally sensitive regions simulations show that drainage regulations can be expected to play a major role in adoption of more efficient irrigation technologies in california thus conservation may be a key to solving resource scarcity problems and reducing external environmental costs

overcoming the zero bound on nominal interest rates with negative interest on currency gesell s solution an economy is in a liquidity trap when monetary policy cannot influence either real or nominal variables of interest a necessary condition for this is that the short nominal interest rate is constrained by its lower bound typically zero the paper considers two small analytical models one old keynesian the other new keynesian possessing equilibria where not only the short nominal interest rate but nominal interest rates at all maturities can be stuck at their zero lower bound when the authorities remove the zero nominal interest rate floor by adopting an augmented monetary rule that systematically keeps the nominal interest rate on base money including currency at or below the nominal interest rate on non monetary instruments the lower bound equilibria are eliminated thus allowing an economic system to avoid the trap or to escape from it this rule will involve paying negative interest on currency that is imposing a carry tax on currency an idea first promoted by gesell the administration costs associated with a currency carry tax must be set against the benefits of potentially lower shoe leather costs and lower menu costs which are made possible by the its introduction there are also output gap avoidance benefits from eliminating the zero lower bound trap

the complete complementarity of consumption and real balances and the strong superneutrality of money abstract in the representative agent model with money in the utility function if consumption and real balances are perfect complements steady state capital intensity and real balance holdings are both invariant to monetary growth regardless of the nature of time preferences

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

on the integrability of money demand functions by the sidrauski and the shopping time models abstract this paper investigates which properties money demand functions must satisfy so that they are consistent with lucas s lucas jr r e 2000 inflation and welfare econometrica 68 247 274 versions of the sidrauski and the shopping time models we conclude that shopping time integrable money demand functions are necessarily also sidrauski integrable but that the converse is not necessarily true unless a boundedness assumption on the nominal interest rate is made both the log log with an interest rate elasticity greater than or equal to one and the semi log money demands may serve as counterexamples all the models and results are also extended to the case in which there are several assets in the economy performing monetary functions

money and inflation in the euro area a case for monetary indicators abstract this paper examines inflation indicators for the euro area by studying the relationship between inflation output money and interest rates using data spanning 1980 2001 the central finding is that both the output gap and the real money gap the difference between the real money stock and the long run equilibrium real money stock contain considerable information regarding future inflation in contrast the eurosystem s money growth indicator the difference between nominal money growth and a reference value the prominent first pillar in its monetary strategy contains little information about future inflation and no information beyond that contained in the output and real money gaps the predictive performance of the output gap has improved compared to that in a previous version of this paper most likely because of better estimation methods

irrigation technology adoption and gains from water trading under asymmetric information we develop a water allocation and irrigation technology adoption model under the prior appropriation doctrine with asymmetric information among heterogeneous farmers and between farmers and water authorities we find that adverse selection reduces the adoption of modern irrigation technology we also show that even with asymmetric information incentives for water trade exist and lead to additional technology adoption with gains to all parties this suggests that under asymmetric information a thin secondary market improves the allocation of water resources and induces additional adoption of modern irrigation technologies

valuation of expectations a hedonic study of shale gas development and new york s moratorium abstract this paper examines the local impacts of shale gas development sgd we use a hedonic framework and exploit a discrete change in expectations about sgd caused by the new york state moratorium on hydraulic fracturing our research design combines difference in differences and border discontinuity as well as underlying shale geology on properties in pennsylvania and new york results suggest that new york properties that were most likely to experience both the financial benefits and environmental consequences of sgd dropped in value 23 as a result of the moratorium which under certain assumptions indicates a large and positive net valuation of sgd

sticky prices new evidence from retail catalogs this paper presents new results on the size frequency and synchronization of price changes for twelve selected retail goods over the past 35 years three basic facts about the data are uncovered first nominal prices are typically fixed for more than one year although the time between changes is very irregular second prices change more often during periods of high overall inflation third when prices do change the sizes of the changes are widely dispersed both large and small changes occur for the same item and the sizes of these changes do not closely depend on overall inflation

new keynesian economics and the phillips curve models with sticky prices are an important part of new keynesian economics the author shows that several of the new keynesian models imply a formulation that is similar to the expectations augmented phillips curve of milton friedman and edmund phelps he then presents new estimates of the new keynesian phillips curve the author uses two proxies for price expectations survey based measures and an econometric based measure originally developed by bennett mccallum 1976 overall the results are consistent with the model but the survey based results are more precise suggesting that the surveys may be better measures of actual expectations copyright 1995 by ohio state university press

cost effectiveness of alternative green payment policies for conservation technology adoption with heterogeneous land quality this paper quantitatively analyses the cost effectiveness of alternative green payment policies designed to achieve a targeted level of pollution control by heterogeneous microunits these green payment policies include cost share subsidies that share the fixed costs of adoption of a conservation technology and or input reduction subsidies to reduce the use of a polluting input the paper shows that unlike a pollution tax that achieves abatement through three mechanisms a negative extensive margin effect a negative intensive margin effect and a technology switching effect a cost share subsidy and an input reduction subsidy are much more restricted in the types of incentives they provide for conservation of polluting inputs and adoption of a conservation technology to control pollution moreover they may lead to varying levels of expansion of land under production costs of abatement with alternative policies and implications for production and government payments are compared using a simulation model for controlling drainage from irrigated cotton production in california with drip irrigation as a conservation technology

incentives precision technology and environmental protection abstract this paper calls for a reevaluation of the pollution problem in order to devise efficient strategies for its control it contends that a fundamental cause of pollution is inefficiency in input use during the production process this inefficiency manifests itself as input waste and polluting residues precision technologies can increase the effectiveness of inputs used in production and reduce pollution generation despite their potential economic and ecological benefits adoption of precision technologies has been slow this paper presents a conceptual framework to identify and analyze the specific factors that affect their diffusion among microunits these include various heterogeneous characteristics of microunits prices which do not reflect the relevant scarcities due to distortionary regulatory policies and lack of institutional mechanisms for efficient allocation of inputs and outputs it rationalizes the observed variations in the appropriate choice of technology across microunits and argues for the need to broaden the range of incentive based instruments for environmental protection beyond pollution taxes

the perils of taylor rules abstract since john taylor s 1993 carnegie rochester conf ser publ policy39 195 214 seminal paper a large literature has argued that active interest rate feedback rules that is rules that respond to increases in inflation with a more than one for one increase in the nominal interest rate are stabilizing in this paper we argue that once the zero bound on nominal interest rates is taken into account active interest rate feedback rules can easily lead to unexpected consequences specifically we show that even if the steady state at which monetary policy is active is locally the unique equilibrium typically there exist an infinite number of equilibrium trajectories originating arbitrarily close to that steady state that converge to a liquidity trap that is a steady state in which the nominal interest rate is near zero and inflation is possibly negative journal of economic literature classification numbers e52 e31 e63

sluggish inflation and optimizing models of the business cycle abstract many researchers have added sticky prices to quantitative business cycle models i simulate several of these models in order to evaluate their success at reproducing two features of us data the lagged reaction of inflation to monetary growth and the persistence of inflation

the relative efficiency of voluntary vs mandatory environmental regulations abstract increased use of voluntary programs for environmental protection as an alternative to mandatory approaches raises the issue of the relative efficiency of the two approaches this paper analyzes the efficiency of voluntary programs relative to mandatory programs in agriculture under the voluntary program producers adopt a land conservation practice and in turn the government provides technical and financial assistance the voluntary program is more efficient than a program that mandates adoption if and only if the deadweight losses of government expenditures under the voluntary program are less than the difference between private and public costs of government services plus the additional implementation costs of the mandatory program this necessary and sufficient condition is more likely to be satisfied when a the deadweight loss from raising government revenue is zero or small b government services are less rival c the costs of government services are lower than what farmers would have to pay for equivalent private services d the number of farms in the program is large and e the saving in implementation costs under the voluntary program is large and increases rapidly with program acreage

technological change and the superneutrality of money note the study of the effect of the supply of money on real economic variables has had a long history in economic research sidrauski 8 was the first to demonstrate that in the context of an intertemporal maximizing model with real money balances in the utility function the rate of monetary expansion did not influence the steady state capital stock or the real rate of interest this result termed the superneutrality of money contrasted sharply with previous models which did not use such an optimizing framework 1 subsequent studies have shown that the superneutrality result can be altered if some of the assumptions of the sisrauski model are modified if money is a productive input 3 5 or if the labor supply is endogenous 1 then the real rate of interest or the capital labor ratio is not invariant to the monetary growth 2 however no one has yet examined the effect of differing money growth when technological change is present this omission seems especially serious since superneutrality properties apply to the comparative steady state behavior of the economy 3 4 this note attempts to fill this gap by demonstrating that even the simple forms of technological change will in general nullify the superneutrality result and that the real rate of interest and the capital labor intensity will depend on the parameters of the utility function in particular it is shown that only if the utility function is of the class exhibiting constant relative risk aversion in all arguments will the superneutrality of money be valid

water quantity management in a heterogeneous landscape with farsighted farmers agricultural production contributes to many environmental problems in semi arid areas agricultural irrigation causes the so called waterlogging phenomenon this phenomenon is both spatial and dynamic since percolation depends on soil quality summed up in landscape heterogeneity and evolves along time furthermore farmers can be farsighted with respect to their contribution to percolation we study regulation schemes to be implemented to restore the socially optimal spatial and temporal production plan of farmers in such a context we show that both a temporal tax on percolation and a spatio temporal tax on inputs both at the extensive and at the intensive margin are efficient for the restoration of the socially optimal solution furthermore a numerical example demonstrates that the consequences of implementing a fiscal scheme designed for myopic farmers whereas they are farsighted depends on the distribution of soil quality

biofuel economics in a setting of multiple objectives unintended consequences this paper examines biofuels from an economic perspective and evaluates the merits of promoting biofuel production in the context of the policies multiple objectives life cycle implications pecuniary externalities and other unintended consequences the policy goals most often cited are to reduce fossil fuel use and to lower greenhouse gas emissions but the presence of multiple objectives and various indirect effects complicates normative evaluation to address some of these complicating factors we look at a several combinations of policy alternatives that achieve the same set of incremental gains along the two primary targeted policy dimensions making it possible to compare the costs and cost effectiveness of each combination of policies for example when this approach is applied to u s produced biofuels they are found to be 14 31 times as costly as alternatives like raising the gas tax or promoting energy efficiency improvements the analysis also finds the scale of the potential contributions of biofuels to be extremely small in both the u s and eu mandated u s corn ethanol production for 2025 reduces u s petroleum input use by 1 75 and would have negligible net effects on co2 emissions and although eu imports of brazilian ethanol may look better given the high costs of other alternatives this option is equivalent at most to a 1 20 reduction in eu gasoline consumption

slippage in conservation cost sharing we examine whether subsidies for conservation on working farmland induce farmers to expand cultivation on more vulnerable land potentially offsetting reductions in environmental spillovers using a switching regression model with endogenous switching and censored endogenous variables applied to maryland farm level data we find no indication that cost share awards are targeted toward water quality improvements receipt of cost sharing increases conservation practice adoption but not the shares of land allocated to conservation implying little adverse selection in awards cost sharing decreases the share of land allocated to vegetative cover so that environmental quality improvements from conservation are likely offset to some degree

the rigidity of prices this paper uses evidence on individual transaction prices to analyze price behavior the evidence shows that for many transactions pricesremain rigid for periods exceeding one year the rigidity of price ispositively correlated with industry concentration for several productsthe correlation of price changes across buyers is low the paper alsoinvestigates the relationship between price rigidity price change andthe length of time a buyer and seller have been doing business together the author interprets the evidence as emphasizing the importance of nonprice rationing and the inadequacy of models in whichprice movements alone clear markets copyright 1986 by american economic association

monetary policy and economic fluctuations in a sticky price model abstract this paper examines a simple monetary optimizing model with sticky prices two types of monetary policy rules are considered constant money growth rules and interest rate feedback taylor type rules in the case of constant money growth rules we show the existence of limit cycles through the hopf bifurcation theorem on the other hand in the case of the interest rate feedback rules we show that active monetary policy leads to the determinacy of equilibrium path while passive monetary policy induces economic fluctuations

the economics of a public fund for environmental amenities a study of crp contracts the problem of targeting crp purchases to buy environmental amenities under productivity and environmental heterogeneity is considered gini coefficients and lorenz curves are used to measure the effectiveness of spending under alternative targeting criteria the environmental benefits considered are water erosion wind erosion surface water quality and wildlife habitat the three alternative targeting criteria examined include purchasing land according to i the benefit to cost ratio ii the level of benefits and iii the level of cost results indicate that the degree of variability and correlation determine the extent to which suboptimal targeting achieves a significant portion of available environmental benefits

research issues in nonpoint pollution control research on nonpoint pollution control instruments has focused primarily on incentives applied either to production inputs that affect nonpoint pollution or to ambient pollution concentrations both approaches may in theory yield an efficient solution however input based incentives will generally have to be second best to make implementation practical design issues include which inputs to monitor and the rates to apply to them the limited research indicates that second best input based incentives can be effective in adjusting input use in environmentally desirable ways alternatively ambient based incentives have theoretical appeal because efficient policy design appears to be less complex than for input based incentives these incentives have no track record nor close analogues that demonstrate potential effectiveness however research on how households and firms might react in response to ambient based incentives is needed before these instruments can be seriously considered

contract design for the purchase of environmental goods from agriculture an environmental stewardship program whereby farmers are paid directly for the environmental goods they provide is developed by combining the microparameter distribution model with mechanism design principles the program overcomes the information asymmetry between farmers and governments and accounts for the deadweight losses from distortionary taxes the characteristics of optimal input and payment schedules of the program are derived these optimal schedules are determined by the tradeoffs between farming profits environmental benefits and deadweight losses from taxes and are second best except under restrictive conditions on deadweight losses from taxes and on the marginal product of inputs and marginal pollution costs

technology as an agricultural pollution control policy in this paper we consider the market level impacts of factor augmenting innovations designed to reduce the use of fertilizers and pesticides first within the context of a simple two factor model and then through a simulation model of the u s corn market in both models the impacts depend on the output demand elasticity and input substitution elasticities the principal conclusion of the simulation analysis is that the potential for new techniques to reduce the use of agricultural chemicals is limited capital augmenting innovations would actually raise fertilizer and pesticide usage land augmenting innovations would also tend to increase pesticide usage

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

the role of monetary policy in eliminating nonconvergent dynamic paths this paper investigates the effects of money growth on nonconvergent dynamic paths in a money in utility model when relative risk aversion is decreasing in money period two cycle and sunspot equilibria are always associated with a high rate of money supply growth however when relative risk aversion is increasing in money it is ambiguous whether they are associated with either high or low rate of money supply growth the paper also investigates the same problem in a transaction cost model the author shows that the results essentially depend on the form of the transaction cost function copyright 1997 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

hedonic prices and implicit markets estimating demand and supply functions for differentiated products in choosing the level of quality to purchase the buyer of a differentiated product also chooses a point on the marginal price schedule for that product hence in general the demand functions for product characteristics cannot be consistently estimated by ordinary least squares market equilibrium results in a matching of characteristics of demanders and suppliers this matching restricts the use of buyer and seller characteristics as instruments when estimating demand and supply functions for product characteristics the paper develops these issues a stochastic structure for hedonic equilibrium models is then proposed identification results are presented and estimation procedures are outlined

incentive payments to encourage farmer adoption of water quality protection practices farmers can be encouraged to voluntarily adopt environmentally sound management practices through the use of incentive payments this paper uses both a bivariate probit with sample selection model and a double hurdle model on data from a survey of farmers to predict farmer adoption of the practices as a function of the payment offer the five management practices addressed here are integrated pest management legume crediting manure testing split applications of nitrogen and soil moisture testing also estimated are models that predict the acreage on which these practices would be applied given the decision to accept the incentive payments estimated