capital utilization and capital accumulation theory and evidence a firm may acquire additional capital input by purchasing new capital or by increasing the utilization of its current capital the margin between capital accumulation and capital utilization is studied in a model of dynamic factor demand where the firm chooses capital labour and their rates of utilization a direct measure of capital utilization the work week of capital is incorporated into the theory and estimates the estimates imply that capital stock is costly to adjust while the work week of capital is essentially costless to adjust the estimated response of the capital stock to changes in its price and in the required rate of return is more rapid than found in other estimates

energy disruptions interfirm price effects and the aggregate economy in an economy with many imperfect competitors monopolistic competition firms that pass through higher oil prices during a disruption will affect the demand for firms in other industries firms that charge higher prices for their final product will include the effect on their own final product in their private decisions but will exclude the effect on the final products of other firms although a pecuniary externality these actions will reduce society s welfare unlike the case of a perfectly competitive market this situation creates a societal risk that is much wider than an externality in any single market policy interest shifts from one of punishing persian gulf oil producers to one of cushioning an industrialized economy from sudden disruptions caused by political and military conflicts although the value of reducing oil use depends upon a number of unknown parameters with wide distributions a representative numerical example suggests that it may approach 5 per barrel

how much damage will climate change do recent estimates two reasons to be concerned about climate change are its unjust distributional impact and its negative aggregate effect on economic growth and welfare although our knowledge of the impact of climate change is incomplete and uncertain economic valuation is difficult and controversial and the effect of other developments on the impacts of climate change is largely speculative the authors find that poorer countries and people are more vulnerable than are richer countries and people a modest global warming is likely to have a net negative effect on poor countries in hot climates but may have a net positive effect on rich countries in temperate climates if one counts dollars the world aggregate may be positive if one counts people the world aggregate is probably negative negative impacts would become more negative and positive impacts would turn negative for more substantial warming the marginal costs of carbon dioxide emissions are uncertain and sensitive to assumptions that partially reflect ethical positions but are unlikely to be larger than 50 per tonne carbon

long term bilateral monopoly the case of an exhaustible resource we construct a model of long term bilateral competition between the supplier of an exhaustible resource and a consuming country capable of producing a perfect substitute for the resource the technology for producing the substitute is known and the strategy of the consuming country is to choose an investment program for installing the substitute we derive equilibrium configurations of investment and extraction for the case of linear demand under three scenarios 1 the resource supplier is a von stackelberg leader 2 the consuming country is a von stackelberg leader and 3 buyers and sellers of the resource engage each other period by period a comparison of these cases reveals incentives for long term commitment on the part of one or both parties and also suggests that there may be gains from strategic intervention into resource markets by governments of consuming nations

second best carbon taxation in the global economy the green paradox and carbon leakage revisited acceleration of global warming resulting from a future carbon tax is large if the price elasticities of oil demand are large and that of oil supply is small the fall in the world interest rate weakens this weak green paradox effect especially if intertemporal substitution is weak still social damages from greenhouse gases drop if the fall in oil supply and cumulative emissions is strong enough if the current carbon tax is set too low the second best future carbon tax is set below the first best too to mitigate adverse green paradox effects unilateral second best optimal carbon taxes exceed the first best taxes due to an import tariff component the intertemporal terms of trade effects of the future carbon tax increase current and future tariffs and those of the current tax lower the current tariff finally carbon leakage and globally altruistic and unilateral second best optimal carbon taxes if non kyoto oil importers price carbon too low are analysed in a three country model of the global economy

on the utilisation controversy a theoretical and empirical discussion of the kaleckian model of growth and distribution this paper examines the utilisation controversy around the kaleckian model of growth and distribution we show that the federal reserve data on capacity utilisation which have been used by both sides of this debate are the wrong kind of data for the issue under examination instead a more appropriate measurement can be derived from the data on the average workweek of capital we argue that the long run dynamic adjustment proposed by kaleckian scholars lacks a coherent economic rationale we provide an alternative path towards the endogeneity of the desired utilisation at the micro and macro levels finally we examine the proposed adjustment mechanism econometrically our results verify the endogeneity of the normal utilisation rate

reducing u s vulnerability to oil supply shocks the 1990 crisis in the middle east has raised concern about the united states s vulnerability to oil supply disruptions in addition a number of trends point to increased us dependence on imported oil oil imports have increased and production has declined in the united states for the last eight years imports now comprise 42 percent of total oil consumption and us dependence on oil imports is projected to increase over the next 20 years the energy modeling forum forecasts imports to be more than twice domestic production by the year 2010 there are many studies examining the effects of various policies to protect us energy security not many consider the strategic petroleum reserve spr which can be a powerful tool in combating energy supply shocks the spr can dramatically increase the domestic short run supply elasticity which has been found to be a key element in the welfare cost of protectionist policies upon examining 5 policies the author finds that the spr together with a protectionist policy works best against a supply disruption 27 refs 3 tabs

dynamic climate policy with both strategic and non strategic agents taxes versus quantities we study a dynamic game where blocs of fossil fuel importers and exporters exercise market power using taxes or quotas a non strategic fringe of emerging and developing countries consume and produce fossil fuels cumulated emissions from fossil fuel consumption create climate damages we examine markov perfect equilibria under the four combinations of trade policies and compare these to the corresponding static games taxes dominate quotas for both the strategic importer and exporter the fringe is better off under taxes than quotas because taxes result in lower fuel prices and less consumption by the strategic importer lowering climate damages

price dynamics among u s electricity spot markets combining recent advances in causal flows with time series analysis relationships among 11 u s spot market electricity prices are examined results suggest that the relationships among the markets vary by time frame in contemporaneous time the western markets are separated from the eastern markets and the electricity reliability council of texas at longer time frames these separations disappear even though electricity transmission between the regions is limited it appears the relationships among markets are not only a function of physical assets such as transmissions lines among markets but by similar and dissimilar institutional arrangements among the markets

dynamically consistent oil import tariffs the standard solution of the open loop optimal import tariff is normally time inconsistent the paper shows why and derives the dynamically consistent markov perfect tariff the two tariffs are compared they differ except for a special class of import demands the time paths of tariffs and the welfare cost of an inability to commit are calculated for a dominant importer the welfare costs of the inability to commit are small if its market share

marginal tax reform externalities and income distribution the paper examines welfare improving and revenue neutral directions marginal policy reforms for an economy with nonidentical individuals and an externality that has a feedback effect on the consumption of taxed goods it considers three types of policy instruments the indirect taxes the uniform poll transfer and public abatement this extends the framework set up by ahmad and stern 1984 bovenberg and de mooij 1994 and schob 1996 the theoretical model is illustrated for a specific externality namely congestion caused by peak car transport

cyclical productivity and the workweek of capital standard specifications of the production function assume that an increase in labor given the stock of physical capital will reduce the capital labor ratio since the stock of physical capital is quasi fixed the elasticity of output with respect to labor should be less than 1 as long as there are constant returns to scale however empirical studies of productivity typically find short run increasing returns to labor but the effective stock of capital should not be regarded as fixed if when labor increases it goes onto a previously inoperative shift labor that works the late shift will have at least as much capital as labor working days hence for increases in labor that are accompanied by increases in the workweek of capital there is no presumption of diminishing marginal product of labor this paper describes briefly a data set that provides a direct measure of the workweek of capital and then investigates its role in cyclical productivity it finds that much of the apparent cyclicality of total factor productivity is accounted for by variation in the workweek of capital

time consistent export quotas in an oligopolistic world market abstract we investigate the strategic behavior between exporting countries that face endogenous terms of trade on the world market in a non cooperative setting if production decisions occur before consumption decisions the ex ante optimal export quota is not time consistent as the ex post elasticity of the residual foreign import demand curve is lower than the ex ante elasticity however we show that the exporters inability to irrevocably commit to their quota may be welfare superior to the precommitment solution if exporters can sell forward a proportion of their exports before production decisions are made they will do so even though in equilibrium it may decrease welfare compared to a situation in which forward markets do not exist moreover the equilibrium with forward markets is welfare inferior to the commitment equilibrium for exporters

the cyclical behavior of the price cost markup countercyclical markups constitute the key transmission mechanism for monetary and other demand shocks in new keynesian models this paper tests the foundation of those models by studying the cyclical properties of the markup of price over marginal cost the first part of the paper studies markups in the aggregate economy and the manufacturing sector we use bils s 1987 insights for converting average cost to marginal cost but do so with richer data we find that all measures of markups are either procyclical or acyclical moreover we show that monetary shocks lead markups to fall with output the second part of the paper merges input output information on shipments to the government with detailed industry data to study the effect of demand changes on industry level markups industry level markups are found to be acyclical in response to demand changes

exhaustible resources and the dynamics of comparative advantage abstract this paper analyses the role of international differences in factor endowments and rates of time preference in determining the pattern of trade and specialization when one of the factors of production is an exhaustible resource the length of the period over which a country exports the resource is found to be directly related to the fraction of the world s resource stock under its control while the relative endowments of the inexhaustible factor influence only the volume of trade the direction of trade is determined by the rates of time preference with the more impatient country being the first to export the resource effects of trade on factor rewards are also examined

pollution policy and trade liberalization of environmental goods during the doha round at the world trade organization reductions in trade barriers on environmental goods eg were put forward as a means of helping developed and developing countries alike deal with current environmental problems we examine the potential effectiveness of such a strategy in a developing country that imports all its consumption of eg from an imperfectly competitive foreign eco industry we point out that trade liberalization of eg might in fact lead to less stringent pollution taxes which can result in an actual rise in pollution levels we then show that the environmental effectiveness objective of this trade reform can be achieved when the regulator uses quantitative abatement standards as an alternative pollution policy instrument however this environmental achievement comes at the expense of social welfare

vertical relationships and competition in retail gasoline markets empirical evidence from contract changes in southern california comment this study examines how much if any of the differences in retail gasoline prices between markets is attributable to differences in the composition of vertical contract types at gasoline stations in each market the purchase of the independent retail gasoline chain thrifty by arco provides a unique opportunity to examine the effects of changes in different vertical contract types on local retail prices this event caused sharp changes in the market share of i fully vertically integrated stations and ii independent stations differentially affecting local markets in the los angeles and san diego metropolitan areas using unique and detailed station level data this study examines how these sharp changes affected local retail prices the detailed data and the research design based on the thrifty station conversions allow for credible estimation of the effects of the market share of independent retailers and vertically integrated retailers on local market prices controlling for any omitted factors at the station level and the city level over time results for the los angeles and san diego metropolitan areas indicate that a decrease in the market share of independent stations has a significant positive impact on local retail price however a change in the market share of refiner owned and operated branded stations does not have a significant impact on local market price these results have important implications as policy makers consider the regulation of vertical contracts as a means to increase competition in gasoline markets the research design and detailed data also allow for inference on the underlying nature of retail gasoline competition

market integration among electricity markets and their major fuel source markets dynamic price information flows among u s electricity wholesale spot prices and the prices of the major electricity generation fuel sources natural gas uranium coal and crude oil are studied multivariate time series methods applied to weekly price data show that in contemporaneous time peak electricity prices move natural gas prices which in turn influence crude oil in the long run price is discovered in the fuel sources market except uranium as these prices are weakly exogenous in a reduced rank regression representation of these energy prices

on the utilisation controversy a rejoinder and some comments the critique by gahn and gonzalez 2019 of the conclusions in nikiforos 2016 regarding what data should be used to evaluate whether capacity utilization is endogenous to demand is weak for the following reasons i the federal reserve board frb measure of utilization is not appropriate for measuring long run variations of utilization because of the method and purpose of its construction even if its difference from the measures of the average workweek of capital aww were trivial this would still be the case if anything it would show that the aww is also an inappropriate measure ii gahn and gonzalez choose to ignore the longest available estimate of the aww produced by foss which has a clear long run trend iii their econometric results are not robust to more suitable specifications of the unit root tests under these specifications the tests overwhelmingly fail to reject the unit root hypothesis iv other estimates of the aww which were not included in nikiforos 2016 confirm these conclusions v for the comparison between the aww series and the frb series they construct variables that are not meaningful because they subtract series in different units when the comparison is done correctly the results confirm that the difference between the aww series and the frb series has a unit root vi a stationary utilization rate is not consistent with any theory of the determination of capacity utilization even if demand did not play a role there is no reason to expect that all the other factors that determine utilization would change in a fashion that would keep utilization constant

excise taxes on gasoline and suppliers market power a note the present paper argues that in the retail gasoline industry excise taxes by amounting to a substantial part of prices increase the firms degree of market power as demand elasticity is decreased to avoid this market power effect a flexible value tax on gasoline is proposed it yields equivalent tax revenues as the excise tax without disturbing competition in the retail gasoline market

opec versus the west a robust equilibrium abstract suppose that both opec and the west possess stocks of oil which can be extracted at constant and identical cost consumption takes place only in the west suppose hypothetically that the west behaves as a single agent and more realistically that opec does also each agent makes a strategic choice of the pattern of exploitation over time of its own reserve the nash equilibrium obtained is robust in that it is also a stackelberg equilibrium in which each agent is right for the right reason further the equilibrium obtained is equivalent to that obtained when western oil companies constitute a competitive fringe to the opec monopoly

does britain or the united states have the right gasoline tax this paper develops an analytical framework to assess the second best optimal level of gasoline taxation taking into account unpriced pollution congestion and accident externalities as well as interactions with the broader fiscal system we provide calculations of the optimal taxes for the us and the uk under a variety of parameter scenarios under our central parameter values the second best optimal gasoline tax is 1 01 gal for the us and 1 34 gal for the uk current tax rates are much lower than this in the us and higher in the uk the calculations are moderately sensitive to alternative parameter assumptions the congestion externality is the largest component in both nations revenue raising needs also play a significant role as do accident externalities and local air pollution potential welfare gains from reducing the current uk tax rate are estimated at nearly one fourth the production cost of all gasoline used in the uk even larger gains could be achieved by switching to a tax on vehicle miles with equal revenue yield for the us the welfare gains from optimizing the gasoline tax are smaller but those from switching to an optimal tax on vehicle miles are very large

the grey paradox how fossil fuel owners can benefit from carbon taxation abstract this paper considers the distributional impact of optimal carbon taxation on fossil fuel owners a carbon emitting exhaustible resource competes with a dirtier abundant resource and a clean backstop a time dependent carbon tax is set to optimally use these resources under a cap constraint over co 2 atmospheric concentration as the cap is tightened the dirtier resource becomes less competitive compared to the exhaustible resource the competition effect but the timing and duration of extraction of the exhaustible resource is modified the timing effect we provide analytical expressions of these effects and determine conditions over size of reserves pollution contents extraction costs and demand elasticity such that the exhaustible resource owners profits increase as the ceiling is tightened calibrations for the transport and power sectors suggest that the profits of conventional oil and natural gas owners increase compared to a baseline without regulation for plausible carbon ceiling values

an econometric framework for evaluating the efficiency of a market for transmission congestion contracts abstract the goals of this paper are to 1 simulate the ex ante riskiness of purchasing a tcc and 2 evaluate the efficiency of the tcc market in new york state to determine if there is evidence of under pricing three var models are estimated using only market data available before the auction this model is then used to simulate the daily payouts of a tcc for the following summer a monte carlo procedure simulates the daily summer temperatures the levels of quantity demanded and prices over the summer months the main empirical result is that the market price paid for the most important tcc in terms of volume the hudson valley to new york city is higher than the mean of the simulated payouts even though the actual payout was higher than the market price the market prices for the other two tccs are lower than the means of the simulated payouts and as a result there is no consistent evidence of under pricing in this analysis of the market for six month tccs in the summer of 2006

endogenous growth asymmetric trade and resource dependence the aggregate income of oil exporting countries relative to that of oil poor countries has been remarkably constant in recent decades despite the existence of structural gaps in productivity growth rates this stylized fact is rationalized in an endogenous growth model of asymmetric trade where resource poor and resource rich economies display productivity differences but stable income shares due to terms of trade dynamics the model yields two testable predictions that deserve empirical scrutiny i the asymmetric impact between exporters and importers of national taxes on resource use on income shares and ii the inverse relation between terms of trade dynamics and total factor productivity growth

norwegian climate policy reforms in the presence of an international quota market abstract this study shows that the second best optimal difference between tax rates on goods that generate greenhouse gas emissions and non polluting goods is equal to the quota price plus a ramsey tax on the quota price when emission quotas are traded between governments and the price elasticity of these goods is identical this tax difference exceeds the second best optimal difference between tax rates on goods that generate a negative externality equivalent to the quota price and non polluting goods model simulations show that a unilateral increase in emission tax to above the international quota price generates a welfare gain for norway model simulations also show that an international tax quota price increase generates a welfare gain loss for norway if norwegian imports of oil become substantial marginal in the long run

air passenger duties as strategic tourism taxation abstract there has been a recent debate on the rationale and economic impacts of air passenger duties apds linked to puzzling empirical results on this topic we argue that an approach from strategic tourism taxation can improve our understanding of these results apd set by origin countries of tourists can be viewed as an instrument for extracting economic rents that would otherwise be retained by tourism destinations a theoretical model of strategic taxation between an origin and two destinations is developed to illustrate this idea we find that countries strategies may end up with winners and losers or with all parties facing welfare losses the game outcome depends on countries market shares of profits and the substitutability between tourism services provided by different destinations the findings suggest that the economic impacts of apds recently evaluated in the literature might be biased because of the omission of other countries potential tax reactions

protectionist oil policies a dynamic comparison for the usa rising us oil imports have spawned a variety of policies for increasing energy security we provide a qualitative comparison of policies using a dynamic optimal control model thirty year price and output paths for opec and the usa are simulated assuming that us producers are competitive and opec is a dominant firm we find that the policies have quite different effects on imports and welfare the tariff reduces imports the most followed by the gasoline tax a per unit tariff and gasoline tax are costly in terms of us welfare whereas an ad valorem tariff can both lower imports and enhance us welfare

market performance and bidders bidding behavior in the new york transmission congestion contract market abstract using publicly available bidder level bids data for transmission congestion contracts tccs and the realized awards of tccs in the nyiso monthly reconfiguration auctions from june 2000 to december 2004 we examine both market performance and bidders bidding behavior in the auctions the data show significant under pricing in the realized awards of tccs theories suggest that under pricing may arise from risk aversion monopsonistic market power or winner s curse our empirical analysis illustrates that all of the three effects play a role in the nyiso tccs market both market performance and bidders bidding strategies can be best explained by the theoretical model with asymmetric information and risk averse bidders

optimal tariffs on exhaustible resources we characterize the markov perfect equilibria of two games in which oligopsonistic importers of an exhaustible resource confront competitive suppliers who have rational expectations the games differ only in the timing of moves or the speed with which participants can adjust their plans the optimal tariff when sellers move first are less flexible differs considerably from that in which buyers move first and sellers retain more control over intertemporal arbitrage opportunities if the initial stock is small buyers suffer a disadvantage from being the first mover this is reversed if the stock is large

available capital utilized capital and shadow prices in inclusive wealth accounting abstract previously accounting for comprehensive or inclusive wealth has focused on the supply side of capital assets however human well being created by capital assets inherently depends on the demand side as well in particular if capital is not utilized at its full capacity then realized or actual human well being may be less affected by available capital than by effective or utilized capital in principle this notion is embodied in a shadow price which is defined as the marginal contribution of capital assets to social well being the shadow price becomes higher if the underlying resource allocation mechanism improves in practice one can account for such underutilization by adjusting shadow prices to reflect only the utilized quantity of the capital in question furthermore capital utilization has different nuanced implications for produced human and natural capital and its implications even vary across some classes of natural capital within this line of theoretical thought we provide empirical estimates of the changes in inclusive wealth and sustainability of selected developing countries in recent years by comparing available and utilized capital assets we find that sustainability assessments may be revised based on utilized capital due to among others human capital underemployment and non renewable natural capital accessibility

the generalized malmquist index and capacity utilization change an application to the italian manufacturing 1989 1994 several indices of plant capacity utilization based on the concept of best practice frontier have been proposed in the literature fare et al 1992 de borger and kerstens 1998 this paper suggests an alternative measure of capacity utilization change based on generalized malmquist index proposed by grifell tatje and lovell in 1998 the advantage of this specification is that it allows the measurement of productivity growth ignoring the nature of scale economies afterwards this index is used to measure capacity change of a panel of italian firms over the period 1989 94 using data envelopment analysis and then its abilities of explaining the short run movements of output are assessed

optimal fossil fuel taxation with backstop technologies and tenure risk abstract the paper derives the global welfare optimizing time path for a tax on fossil fuels causing a negative stock externality climate change under increasing marginal extraction cost and in the presence of an unlimited backstop resource causing no externality in a basic competitive case the optimal tax equals the pigou rate equivalent to the present discounted value of marginal damage costs we consider two separate types of tenure insecurity for resource owners and their impact on the tax implementing the optimal policy when insecure control is with respect to future ownership to the resource competitive extraction is higher than otherwise and the efficiency implementing tax exceeds the pigou rate when tenure insecurity instead implies possible expropriation holdup of investment in extraction capacity it deters extraction and the optimal tax is lower than the pigou rate

are all the good men married uncovering the sources of the marital wage premium a longstanding and yet unsettled question in labor economics is does marriage cause men s wages to rise cross sectional wage studies consistently find that married men earn significantly higher wages than do men who are not currently married however it is well known that inferring causal relationships from crosssectional analysis is inappropriate because of the biases introduced by unobserved heterogeneity as a means of circumventing this problem this paper uses data on identical twins to control for unobserved heterogeneity our estimates suggest that marriage increases men s wages by as much as 27 and that little if any of the cross sectional relationship between marriage and wages is due to selection in addition we find little evidence that the marital wage premium is a consequence of household specialization

rent extracting tariffs and the management of exhaustible resources this paper examines the interaction between a resource exporting and a resource importing country the exporting country must choose the optimal rate of depletion of an exhaustible resource and also must decide on the allocation of the extracted resource between exports and domestic use optimal management from a national point of view entails inefficiency from a global perspective in that too little resource is exported as the supplying country exploits its monopoly power the importing country however has an incentive to extract some of the resource rent by using a tariff although rent extraction is limited by the exporter s ability to use the resource domestically the optimal tariff is positive and induces greater overall inefficiency

on capturing oil rents with a national excise tax this paper argues that since the supply of oil in the ground is inelastic the incidence of a sales tax on oil maintained forever at a fixed rate would fall entirely on the oil suppliers in the world economy however the elasticity of supply of oil to a single country depends on that country s imports as a share of world output and on the elasticity of demand for that country the paper calculates optimal tax rates for a country as a function of these variables and estimates optimal oil tax rates for the u s for some oecd countries separately and for the u s plus the oecd collectively current u s tax rates are shown to be far below optimal values

economists views about parameters values and policies survey results in labor and public economics specialists in labor economics and public economics at 40 leading research universities provided opinions of policy proposals quantitative best estimates and 95 percent confidence intervals for economic parameters and answers to values questions regarding income redistribution efficiency versus equity and individual versus social responsibility their positions on policy are more closely related to their values than to their estimates of relevant economic parameters average best estimates of the economic parameters agree well with the relevant literature but individual best estimates are usually widely dispersed the individual 95 percent confidence intervals are much narrower than the substantial cross respondent variation in estimates would warrant

time varying threshold cointegration and the law of one price a theoretical model of the law of one price which allows for seasonality in transaction costs and supply and demand conditions between markets is developed bivariate three regime threshold vector error correction models are applied to natural gas markets to examine seasonality in threshold levels results indicate that there are nonlinear adjustments to the law of one price in seven pair wise markets chicago is used as the base market in the natural gas sector dynamic threshold effects relative to the chicago market vary depending on season geographical location and whether the market is an excess producing or consuming market

efficiency inducing taxation for a monopolistically supplied depletable resource author s bergstrom ted cross john porter dick abstract we show that for a depletable resource if the competitive time path of prices is known and if the profit function is concave then there is an easily described time path of taxes and or subsidies that would induce a monopolist to follow an efficient time path of extraction

capital utilization economic growth and convergence abstract optimal decisions by economic agents regarding the utilization of capital lead to empirically plausible speeds of convergence in one sector models of economic growth the relationship between depreciation and capital utilization plays a crucial role in slowing down convergence to the steady state cross country differences in the extent to which the capital utilization decision is internalized along the transition path may lead to differences in convergence rates even for countries with similar initial and terminal conditions finally by assuming a constant depreciation rate and full capital utilization standard growth models may be overstating the magnitude of the steady state equilibrium

optimal taxes and the structure of preferences if optimal tax theory is to be the basis for calculating tax rates a close understanding is required of the relationship between the structure of preferences and the configuration of optimal tax rates otherwise hypotheses chosen by the econometrician for practical convenience may completely determine the results independently of measurement this paper explores the relationship between various types of separability particularly weak and implicit separability and optimal tax rates in the various models discussed in the literature the use of distance functions and the antonelli matrix provides a significant unification of previously disparate results in the final analysis optimal tax theory should be the basis for actual calculation of tax rates although recently there have been great advances in theoretical results and in our understanding of their meaning we are still some way from a working knowledge of whether uniform commodity taxes are in practice optimal or if not which commodities should be discriminated against present theoretical formulae do not yield clear cut results except in special cases and it has recently become clear that optimal rates depend crucially on the detailed structure of consumer preferences for example atkinson and stiglitz 3 show that with an optimal nonlinear income tax discriminatory commodity taxes are only necessary to the extent that individual commodities are not weakly separable from leisure more recently deaton 6 has shown that a similar result holds for what is perhaps the most interesting of the standard models that where there are many consumers and only a linear income tax and proportional commodity taxes are allowed in this case separability between goods and leisure together with linear engel curves for goods removes the need for differential commodity taxation in consequence nothing can be learned about commodity taxes from consumer demand studies in which commodity demands are explained conditionally on total expenditure and commodity prices and which assume linear engel curves all such studies require separability from leisure as a maintained hypothesis and so are consistent with uniform commodity taxation these results suggest that the prospects for meaningful empirical calculations of tax rates are bleak econometricians estimating commodity demand and labor supply equations make generous use of separability assumptions to enable estimation at all in consequence it is likely that empirically calculated tax rates based on econometric estimates of parameters will be determined in structure not by the measurements actually made but by arbitrary untested and even unconscious hypotheses chosen by the econometrician for practical convenience to remedy this situation and as a prelude to fruitful empirical work it is necessary to have a more explicit understanding of how preference structure affects optimal tax rates such is the object of this paper three different

inventories employment and hours abstract this paper develops a model that integrates inventory and labor decisions we extend a model of inventory behavior to include a detailed specification of the role of labor input in the production process distinguishing between employment hours and effort per worker we estimate jointly the euler equations for inventories and employment a labor compensation schedule and an hours requirement function with the cross equation restrictions imposed the econometric results shed light on several important topics including the shape of the marginal cost of output the role of labor hoarding as an explanation of pro cyclical productivity and the persistence of inventory stocks

endogenous output in an aggregate model of the labor market a common feature to most aggregative studies of the labor market is a marginal productivity expression in which the quantity of labor appears on the left hand side of the equation and the right hand side includes the real wage and output a number of researchers have cautioned that if the output variable is treated as exogenous serious econometric difficulties may result however the assumption that output is exogenous has not been tested in this paper we estimate an equilibrium model of the labor market and use it to test the assumption of output exogeneity we find that the assumption that output is exogenous cannot be rejected by the data

disadvantageous oil tariffs and dynamic consistency a large importer who places relatively greater weight on future than current oil consumption will import less oil in the future than if it were able to commit itself in advance to future tariffs and may find itself worse off than if it were unable to impose tariffs at all futures markets and storage modify these adverse effects and may avoid the problem of dynamic inconsistency copyright 1990 by american economic association

strategic climate policy with offsets and incomplete abatement carbon taxes versus cap and trade abstract this paper provides a first analysis of a policy bloc of fossil fuel importers which implements an optimal climate policy faces a non policy fringe of other fuel importers and an exporter bloc and purchases offset from the fringe we compare a carbon tax and a cap and trade scheme for the policy bloc in either case accompanied by an efficient offset mechanism for reducing emissions in the fringe the policy bloc is shown to prefer a tax over a cap since only a tax reduces the fuel export price and by more when the policy bloc is larger offsets are also more favorable to the policy bloc under a tax than under a cap the optimal offset price under a carbon tax is below the tax rate while under a cap and free quota trading the offset price must equal the quota price the domestic carbon and offset prices are both higher under a tax than under a cap when the policy bloc is small when the policy bloc is larger the offset price can be higher under a cap fringe countries gain by mitigation in the policy bloc more under a carbon tax since the fuel import price is lower

dynamic factor demands under rational expectations we model the industrial demands for structures equipment and blue and white collar labor in a manner consistent with rational expectations and stochastic dynamic optimization in the presence of adjustment costs but allowing generality of functional form we represent the technology by a translog input requirement function that specifies the amount of blue collar labor needed to produce an output level given quantities of three quasi fixed factors nonproduction workers equipment and structures a complete description of the production structure is obtained by simultaneously estimating the input requirement function and three stochastic euler equations we find adjustment costs are small in total but large on the margin and differ considerably across factors

estimating the euler equation for aggregate investment with endogenous capital depreciation this article looks at the empirical consequences of introducing endogenous capital depreciation in the standard neoclassical model with quadratic adjustment costs to this end we formulate an empirical specification that accommodates capital maintenance and utilization in the euler equations for aggregate investment the empirical estimates with data from the canadian survey on capital and repair expenditures show that in contrast to the existing literature the performance of the euler equations is improved when we account for the impact of variable capital depreciation

production factor returns the role of factor utilization abstract short term increasing returns to production factors are usually found in empirical studies we argue they can be due to omitted variables particularly the intensity of factor utilization thanks to original french firm level data 1992 2008 we show how increasing returns to scale disappear when working time capacity utilization rate and particularly capital operating time are introduced in the production function

a model of trade in exhaustible resources what distinguishes exhaustible resources from most other goods is not only their non renewable nature but also a combination of two other important characteristics related to their economic functions in their role as an input resources serve as an esseptial factor in the production of final goods moreover because their usefulness remains intact until they are consumed in the process of production they may also serve as a store of value in the absence of other types of marketable assets this latter characteristic enables the owner of the resource to achieve through optimal resource management his desired time profile of consumption corresponding to these two economic functions are two possible motives for international trade in exhaustible resources first in connection with their role as a productive input trade in resources promotes efficiency in the allocation of factors of production throughout the world economy on the basis of this motive for trade countries with a relatively high per capita endowment of the resource should be expected to export the resource in exchange for final goods second in connection with their asset function trade in resources may be viewed as a means of achieving efficiency in the intertemporal allocation of consumption goods among countries economies with a relatively high rate of time preference desire a relatively high ratio of current to future consumption accordingly impatient countries might be expected to import consumption goods in exchange for the resource in the present and export consumption goods in the future the interaction between these two motives for trade is examined in the present paper within a simple two period two country model traded objects are assumed to be an exhaustible resource and a single consumption good although the possibility of trade in consumption loans is also considered later in the paper the consumption good is produced in both countries with the aid of labor and the resource because the latter has the dual role of being a productive input as well as a store of value in the model international trade is viewed both as a means of reallocating the world s endowment of the resource so as to ensure

optimal taxation of a monopolistic extractor are subsidies necessary abstract this note reconsiders the optimal taxation problem when extraction of an exhaustible resource is monopolistic in a standard model i explicitly characterize and examine all the efficiency inducing paths of taxes subsidies on the resource consistently with the literature there is a family of such optimal paths in contrast with im 2002 it may not be necessary to subsidize the monopoly at any date within the family of optimal paths of taxes subsidies there may exist some paths along which the regulator raises positive revenues at all dates this illustrates how the static trade off between inducing efficiency and raising tax revenues in the presence of market power is relaxed under exhaustibility

toward an optimal u s ethanol fuel subsidy abstract enhanced environmental quality fuel security and economic development along with reduced prices of ethanol gasoline blends are often used as justifications for the u s federal excise tax exemption on ethanol fuels however the possible effect of increased overall consumption of fuel in response to lower total price mitigating the environmental and fuel security benefits are generally not considered taking this price response into account the optimal u s ethanol subsidy is derived estimated values of the optimal subsidy reveal that the subsidy s environmental and security benefits are questionable however positive environmental and security benefits from the ethanol tax exemption subsidy may be obtained if the subsidy is combined with an increase in the excise tax on gasoline

coase and hotelling a meeting of the minds in this paper we tie together the two literatures of durable goods monopoly and exhaustible resource pricing we show that the intertemporal no arbitrage condition that arises if the durable good monopolist seller can commit to a price path mirrors the intertemporal no arbitrage condition if the monopsonist buyer of an exhaustible resource can commit to a price path the intuition is that the durable good monopolist initially announces high future prices to get high valuation buyers to buy early and subsequently lowers the price to attract additional buyers on the other hand the monopsonist buyer of the exhaustible resource initially announces low future prices to encourage sellers to supply their units early and subsequently as the stock of the resource declines raises the price to call forth additional supply as the period of commitment shrinks to zero the durable good s price drops to its marginal cost and the exhaustible resource s price jumps to its choke level all in a twinkling of the eye a

optimality and consistency in a differential game with non renewable resources abstract imperfect competition amongst buyers for a non renewable resource is modeled as a stackelberg differential game the buyers may act as a cartel or behave non cooperatively in setting tariffs which the sellers take as given the buyer s optimal policy is not consistent when extraction costs depend on the stock level both optimal and consistent unit and ad valorem tariff s are analyzed when a buyers cartel uses a consistent tariff the sellers may prefer to behave as perfect competitors or a monopolist depending on the functional form of demand and cost non cooperative buyers who are constrained to act consistently are unable to extract any rent from competitive sellers