foreign direct investment and employment home country experience in the united states and sweden we compare the relation between foreign affiliate production and parent employment in us manufacturing multinationals with that in swedish firms us multinationals appear to have allocated some of their more labour intensive operations selling in world markets to affiliates in developing countries reducing the labour intensity in their home production swedish multinationals produce relatively little in developing countries and most of that has been for sale within host countries with import substituting trade regimes the great majority of swedish affiliate production is in high income countries the united states and europe and is associated with more employment particularly blue collar employment in the parent companies the small swedish owned production that does take place in developing countries is also associated with more white collar employment at home the effects on white collar employment within the swedish firms have grown smaller and weaker over time

estimating elasticities of substitution with nested ces production functions where do we stand abstract prompt by an increasing interest by climate change modelers a rich literature estimating elasticities of substitution in a nested ces production framework has recently developed this article reviews such literature we critically describe the nesting structures estimation approaches data sources and aggregation econometric techniques and types of substitution elasticities used by previous literature to offer a comprehensive description of the various options available to a researcher attempting this estimation we also provide suggestions for potential improvements to the estimation process in particular we warn researchers to use ces production functions with caution in empirical applications given their restrictive build in assumptions

income taxes and urban spatial structure abstract this paper examines the impact of an income tax in a monocentric city where households equilibriate their allocation of time between work commuting and leisure an increase in the income tax rate lowers the implicit value of time and hence transportation costs compensated equilibrium comparative statics analysis shows that under certain conditions this results in a larger more dispersed urban area with lower land rents at the city center and less population within any given distance from the center the welfare effect of an income tax rate change is also studied and an expression for the marginal excess burden is derived the income tax produces welfare losses both because it induces substitution in favor of leisure and in favor of travel the latter accompanied by excessive spatial dispersion and consumption of space the marginal excess burden depends not only on the compensated demand elasticity for leisure but also on that for space finally the problem of benefit measurement for transportation projects in this tax distorted spatial economy is examined benefit measures should be deflated to adjust for the fact that further transportation improvements lead to reduction of land use intensity exacerbating the problem of spatial resource misallocation in an already excessively dispersed urban area

the analytics of the pricing of higher education and other services in which the customers are inputs many services provide outputs that depend partially on the customers as inputs the presence of other customers often contributes to the output experienced by each purchaser higher education is the premier example others are legion we provide a simple model that addresses the questions of competitive pricing and allocative efficiency for these types of services prices that charge customers for what they get on net output minus input from the firm both are competitive and support efficient allocations these prices internalize the apparent external effects of customers on each other few examples of such prices exist in the real world

the capital energy controversy further results abstract the significance of capital energy k e relationship in manufacturing is important however the available econometric evidence is contradictory in the sense that support can be found for both k e substitutability and k e complementarity moreover the empirical studies are based mainly on production and cost functions few researchers have examined the k e relationship by assuming a profit function approach the objective of this paper is to investigate the k e controversy by estimating both a cost and a profit function the results should provide a better understanding of the relationship between model used and estimated k e elasticities in addition the two models are compared on the basis of their predictive performance

a knowledge and physical capital model of international trade flows foreign direct investment and multinational enterprises abstract this paper addresses two important issues at the nexus of the literatures on international trade foreign direct investment fdi foreign affiliate sales fas and multinational enterprises mnes first the introduction of a third internationally mobile factor physical capital to the standard 2 2 2 knowledge capital model of mnes with skilled and unskilled labor allows us to resolve fairly readily the puzzle in the modern mne literature that foreign affiliate sales among two identical economies completely displace their international trade intra industry trade and intra industry fdi and fas can coexist for national and multinational firms with identical productivities in identical countries second the introduction also of a third country to the model suggests a formal n country theoretical rationale for estimating gravity equations of bilateral fdi flows and fas in a manner consistent with estimating gravity equations for bilateral trade flows

the implications of competition among jurisdictions does tiebout need politics the paper investigates whether compensation among local jurisdiction is by itself sufficient to ensure efficient provision of local public goods jurisdictions have fixed boundaries and each has an entrenched government with the power to tax and supply the public good residents can move costlessly among jurisdictions it is shown that competition among numerous jurisdictions is not sificient to guarantee public sector efficiency though residents can vote with their feet land is immobile hence governments can unsurp some land rents for their own ends increasing the number of jurisdictions limits but cannot completely eliminate the ability to exercise discretionary governmental power

the empirical assessment of technology differences comparing the comparable this paper compares technologies across space and time on the basis of factual and counterfactual substitution elasticities and argues that differences in estimated substitution elasticities should be decomposed into two counterfactual components while the first component is designed to indicate how the ease of substitution is altered by varied economic circumstances the second addresses the question of how technologies would compare under genuinely comparable situations this argument is illustrated by the example of energy price elasticities of capital before and after the oil crisis of the early 1970s

household behavior in a monocentric urban area with a public sector abstract this paper has examined how a public sector alters the model of urban household behavior and its predictions the qualitative housing price and demand location characteristics remain unchanged by the introduction of either an exogenous or endogenous public sector in addition the household s response to tax rate and public service changes depend solely upon the nonlocational demand relationships the major impact of location per se on the household s demand vector is through an additional hicksian price term whether locational effects reinforce or vitiate nonlocational demand changes depends upon the compensated relationship between the good in question and housing this paper also investigated the design of neutral public budgets government budgets using property income or comprehensive sales taxes to finance public services cannot be neutral with respect to housing demand and location of the four types of taxes considered only a narrow based sales tax can finance public services neutrally

comment sequential moment restrictions in panel data 1992 comment sequential moment restrictions in panel data journal of business economic statistics vol 10 no 1 pp 20 26

jurisdictional homogeneity and the tiebout hypothesis abstract in this paper an alternative to the capitalization approach to testing the tiebout model is presented the tiebout foot voting mechanism suggests that households will sort and stratify into approximately homogeneous local public goods jurisdictions at a point in time the efficiency of the sort will be positively related to the number of existing jurisdictions using a measure of homogeneity introduced by theil the relationship between stratification homogeneity within jurisdiction and number of jurisdictions is tested for a sample of school districts within 33 smsas the tiebout stratification hypothesis is confirmed

the impact of bilateral free trade agreements on bilateral foreign direct investment among developed countries previous studies find that a trade treaty positively impacts foreign direct investment fdi but does a trade treaty always have positive effects on fdi what is the effect of bilateral free trade agreement fta on bilateral fdi among developed countries based on the knowledge capital model i hypothesize that bilateral fta has negative effects on bilateral fdi in developed developed country pairs but positive effects in developed developing country pairs to test this hypothesis empirically i conduct the within estimator the difference in difference estimator and the arellano bond estimator with panel data of bilateral fta and outward fdi in 30 oecd countries and 32 non oecd countries between 1982 and 2005 the result supports the hypothesis the existence of bilateral fta decreases bilateral fdi in the oecd oecd country pairs but increases bilateral outward fdi in the oecd non oecd country pairs the finding of negative effects of bilateral fta on fdi is robust to different country classifications by gross national income gni per capita and secondary school enrolment hence the results are consistent with what carr et al 2001 predicts about the effects of trade cost on fdi in developed developed country pairs and in developed developing country pairs

input substitution effect in china s chemical industry evidences and policy implications abstract the chemical industry is one of the six high energy consuming and emission intensive sectors in china and the chinese government has focused its attention on energy saving and emissions reduction in the sector with the aim of contributing to the objective of energy saving and emission reduction in the sector this article studies the external substitution relationship of capital energy and labor energy using the translog production function and ridge regression the results are as follow the output elasticities of energy labor and capital are positive the substitution elasticities of capital labor capital energy and labor energy are positive and stable and their values are close to 1 which indicates that the three factors are substitutes for one another furthermore based on the above function we measure the level of energy saving and emissions reduction under different scenarios in 2012 policy implications of the results are provided

technical change inter factor and inter fuel substitution possibilities in pakistan a trans log production function approach abstract energy consumption in pakistan increased significantly over the last two decades primarily due to industrialization in order to meet the growing energy needs the government adopted short term policies by setting up thermal power projects which are more expensive both in terms of fiscal cost and environmental damages as compared to hydro power projects the former has exposed pakistan to international oil price shocks and environmental degradations this study therefore attempts to analyze technical change using trans log production function by employing non energy factors i e capital and labor and energy factors i e petroleum and natural gas to estimate elasticity of substitution the purpose of the study is to provide policy suggestions to the government on how to achieve high economic growth vis a vis improved energy security and environmental sustainability the results reveal that capital energy and labor energy are substitutes thereby suggesting the need for an increased focus on technological advancement and skilled employment generation to conserve energy and reduce co 2 emission a gradual elimination of energy subsidies which will make energy price reflects its true cost is required to further discourage increased energy consumption and promote capital intensive production methods a scenario analysis based on the elasticity of substitution between capital energy and petroleum gas shows the potential of energy conservation and emission mitigation the results further suggest the importance of a diversified energy supply mix characterized by abundant hydro and other renewable energy resources alongside natural gas

do manufacturing firms react to energy prices evidence from italy abstract the reaction of energy demand to price changes is a key policy issue as it describes the economy s response to changes in market conditions or to policy interventions the issue is even more important for the italian economy highly exposed to energy price changes given its almost complete fossil fuel related energy dependence environmental sensitivity and highly fragmented industrial structure besides the policy issue there is also an important methodological debate concerning the best way to evaluate energy demand elasticities looking at alternative models data and elasticity definitions after a discussion of the main methodological issues and the related empirical literature this paper presents an estimation of factor and fuel demand elasticities for italian industrial firms by using a microeconomic panel in a two stage translog model using cross price and morishima elasticities we obtain information on the magnitude and asymmetry of firms responses to price changes moreover the use of a micro dataset allows the high heterogeneity of italian firms to be considered the results are discussed according to technology intensity sector and firm size our findings show that energy is the most elastic input for all sectors and that capital and energy are substitutes in the low technology sector and weak complements in all others estimated interfuel elasticities show a high degree of demand sensitivity to fuel price changes and the vast majority of cross price elasticities exhibit substitutability appropriate fiscal policies can thus be identified to give an effective impulse in influencing the industrial energy mix by changing relative prices these findings constitute an important foundation for analysing energy demand by italian industrial firms given that empirical literature is particularly rare on the italian case study

facing the truth about separability nothing works without energy abstract separability is a pivotal theoretical and empirical concept in production theory while the standard definition of separability is primarily motivated by the desire to conceptualize production decisions as a sequential process the principal purpose of an appropriate concept of separability in empirical work is to justify the omission of variables for which data are either of poor quality or unavailable this paper demonstrates that this empirical concept needs to be more restrictive than the classical notion of separability is therefore we suggest a novel definition of separability based on cross price elasticities that has clear empirical content because there is ample empirical reason to even doubt the assumption that energy is separable from all other production factors in the relatively mild form of classical separability energy seems to be an indispensable production factor under separability aspects

optimal fiscal policy for a state or local government abstract state and local government services are enjoyed by and taxes borne by two groups residents and non residents this paper addresses the question if state and local governments maximize their residents welfare and cannot distinguish between individual residents and non residents but know the aggregate characteristics of the two groups what set of taxes subsidies and public goods should they choose some of the results obtained are i even when all commodities are taxable and equity is ignored the existence of non resident consumption makes uniform taxation non optimal ii in some cases whether a commodity should be taxed or subsidized is independent of its own price elasticity iii central cities may be subsidized by suburban residents and iv the ability of state and local governments to redistribute is inversely proportional to the openness of the economy

the decline in the number of school districts in the u s 1950 1980 between 1950 and 1980 the number of school districts fell from 83 642 to 15 987 data for the fifty states for 1950 1960 1970 and 1980 are used to identify the factors that contributed to this decline the focus is on the tradeoff between cost savings through scale economies a few large districts and a diverse population s demand for choice in public schooling many small districts we find that much of the decline in the number of school districts has resulted from 1 the decline in the farm population and increase in population density which has made it easier to take advantage of scale economies 2 the growing importance of state aid which reduces quality variation among districts within a state and 3 the increase in the fraction of teachers that belong to the national education association teacher s union which may reflect increased political influence used to lower the costs of organizing

property value maximization and public sector efficiency abstract this paper analyses the efficiency implications of property value maximization communities are open so that utilities are parametric to housing producers and the local government each local government chooses its public good output to maximize aggregate property value in the community ignoring feedback effects on the composition of the housing stock it is shown that this type of government behavior generates an equilibrium in which all communities are internally pareto efficient

the price and income elasticity of china s natural gas demand a multi sectoral perspective abstract natural gas as a clean low carbon energy will play an important role in the world s low carbon energy transformation in this paper research on the elasticity of natural gas demand is surveyed and it is found that the price and income elasticities of natural gas demand in different sectors are distinctive in particular this paper constructs an autoregressive distribution lag model to study the elasticity of natural gas demand in various sectors of china the results show that except for the residents sector the long run price elasticity of natural gas demand in other sectors is greater than 0 which is contrary to the estimates of developed countries the demand for natural gas is complementary to coal in industrial and power generation sectors which is also different from developed countries the elasticity of natural gas demand in residents sector is lack in price elasticity but abundant in income elasticity which is similar to the developed countries the results also shows that natural gas and oil are substitutes for each other in the transportation sector and natural gas and coal are substitutes for each other in service sector

the impact of proposition 13 on house prices in northern california a test of the interjurisdictional capitalization hypothesis it wen institute of business and university of california economic research berkeley center for real estate and urban economics wobkingipaper series these papers are preliminary ature their purpose 39 limul discussion comme h re they are not to be 39 or quoted ny publication without express permission of the author working paper no 80 11 the impact of proposition 13 on house prices in northern california a test of the interjurisdictional capitalization hypothesis by kenneth t rosen

energy substitution effect on transport sector of pakistan based on trans log production function abstract transport sector because of the growing industrialization and urbanization of pakistan is one of fastest growing sector in terms of output energy consumption and co 2 emission its current performance and future outlook has the potential to leave behind problems related to the global issues of energy security and environmental sustainability the extents to which energy and non energy inputs are substitutable are the core issue in planning and designing of energy policies for this purpose we establish a trans log production function for pakistan transport sector and the input factors capital labor and energy are included output elasticities of each factor and the substitution elasticities between these factors have been estimated and analyzed for the sample period of 1980 2013 the results show higher output elasticity and that all pairs of factor inputs are substitutes because of the higher level of substitution elasticities the results suggest that by allocating more capital in the transport sector the relevant energy saving technology could be promoted thereby realizing the substitution between capital and energy and reduction of co 2 emission as a result it further suggest that by continuous upgrading of the capital substitution between energy and labor can also be achieved and the transition of pakistan transport sector from labor intensive to capital intensive can be realized

local income taxation in an urban area abstract this paper indicates the response of a metropolitan area to the levying of a local income tax the analysis is focused on a central city and its surrounding suburbs but allows for migration to and from the metropolitan area of primary interest are the spatial effects of local income taxation and the associated welfare costs derived from additional transportation expenditures the analysis indicates the forms of compensation to central city high income households for the fiscal deficit they bear changes in wage rates and land rentals are derived and the question of full capitalization is considered

ends against the middle determining public service provision when there are private alternatives abstract public provision of a service coexists with private market provision the quality of public provision is determined by majority vote preferences are not single peaked owing to the presence of private alternatives we identify two cases in one majority voting equilibrium always exists and the median income voter is pivotal in the other a necessary condition for equilibrium indentifies the pivotal voter who must have income below the median when equilibrium exists a coalition of middle income households who consume the public alternative will be opposed by a coalition of rich and poor households with the rich choosing private consumption

the impact of bilateral investment treaties on fdi dynamics this paper investigates the impact of bilateral investment treaties bits on foreign direct investment fdi in transition countries fdi stocks are characterised by sluggish adjustment and a dynamic pattern this leads to biased estimates of the contemporaneous impact of bits on fdi in static models in our application the contemporaneous short run impact of bits amounts to 4 8 per cent and the long run effect to 8 9 per cent in the preferred model copyright 2007 the authors journal compilation blackwell publishing ltd 2007

taxes pollution and optimal abatement in an urban economy abstract a closed urban spatial model is used to examine the impact on consumer renters and on absentee property owners of pollution abatement and alternative means of financing it an explicit utility function and a relatively general pollution or amenity distribution function are used the incidence effects are developed for exogenously financed abatement and for its finance through an income tax and an excise tax note also is taken of the outcome with a property tax the model also is used to consider optimal abatement from various vantage points the results of consumer utility maximization under an income tax regimen are compared with those under an excise regimen and both results are in turn compared with the outcome when a cost benefit approach is applied

empirical assessment of energy price policies the case for cross price elasticities abstract evaluations of energy price policies are necessarily based on measures of the substitution of energy and non energy inputs facing a variety of substitution elasticities the central question arises which measure would be appropriate apparently for a long time this question has not been at issue allen s elasticities of substitution aes have been the most used measures in applied production analysis this paper s main contribution is an instructive survey of the origin of substitution measures and of the trinity of empirical substitution elasticities aes cross price elasticities and the morishima elasticities of substitution mes with particular emphasis on their interpretations and the perspectives that will be captured by these measures this survey clarifies why classical cross price elasticities are to be preferred for many practical purposes berndt and wood s rev econom stat 57 1975 259 frequently applied data set of us manufacturing is used to illustrate why assessments of energy price policies would be better based on cross price elasticities like the energy price elasticity of capital rather than on aes or mes

decomposing energy demand across briic countries energy plays an important role within the production technology of fast emerging economies such that firms reaction to changes in energy prices provides useful information on factor productivity and factor intensity as well as the likely outcome of energy policy initiatives among other things drawing on duality theory this paper decomposes changes in energy demand into substitution and output effects using annual sector level production data for brazil russia india indonesia and china briic for the period 1995 2009 unlike previous studies this study analyzed the economic properties of the underlying production technology results indicate that changes in energy demand are strongly dominated by substitution effects more importantly an intriguing finding that emerges from our analysis is the role of economies of scale and factor accumulation as opposed to technical progress in giving rise to the growth performance of sampled economies

are efficiency and equity in school finance substitutes or complements this paper analyzes cases made for local and centralized school finance and policies such as vouchers categorical aid and equalization aid an ideal system of school finance would achieve efficiency and equity by ensuring every person invests in the amount of schooling that is socially optimal for him the author evaluates the empirical evidence for and the merit and importance of arguments for each policy she concludes that the theoretical arguments for centralized finance not only exaggerate the efficiency equity tradeoff but actually make better arguments for a system combining local school finance with categorical aid and means tested vouchers

fuel conserving and using production functions abstract this article compares eight production cost functions used or potentially useful for exploring how energy efficiency gains affect energy consumption we show the practitioner s choice of function can inadvertently pre determine results and make recommendations as to which functions are flexible enough to prevent this we also show pre selected factor substitution elasticities can similarly pre determine results to aid the comparison we decompose the energy consumption rebound effect into intensity and output income effects which also delivers insight into the mechanisms of rebound we conclude by recommending practitioners restrict themselves to either the gallant fourier or the generalized leontief symmetric generalized barnett cost functions as being sufficiently rebound flexible the translog cost function may be suitable given certain conditions and a particular form of the ces solow function is a possible but problematic candidate along the way the article provides a general methodology for similarly examining any arbitrarily defined constant returns to scale production or cost function

equity and efficiency in human capital investment the local connection a general model of community formation and human capital accumulation with social spillovers and decentralized school funding is used to analyse the causes of economic segregation and its consequences for equity and efficiency significant polarization arises from minor differences in endowments preferences or access to capital markets this makes income inequality more persistent across generations but the same need not be true for wealth equilibrium stratification tends to be excessive resulting in low aggregate surplus whether state equalization of school resources can remedy these problems hinges on how purchased social and family inputs interact in education and in mobility decisions

modelling energy and non energy substitution a brief survey of elasticities estimating the degree of substitution between energy and non energy inputs is the key for any evaluation of environmental and energy policies yet given the variety of substitution elasticities the central question arises as to which measure would be most appropriate apparently allen s elasticities of substitution have been the most used measures in applied production analysis in line with frondel 2004 this paper argues that cross price elasticities are preferable for many practical purposes this conclusion is based on a survey of classical substitution measures such as those from allen morishima and mcfadden the survey highlights the fact that cross price elasticities are their essential ingredients

endogenous protection foreign direct investment and protection building trade abstract we introduce the possibility of foreign direct investment fdi in a strategic oligopolistic setting with endogenous protection and find that a number of unique subgame perfect equilibria may arise including a new result we call protection building trade this phenomenon occurs in our model when foreign firms locating production in the home country try to increase protectionist pressures in the home country through increased exports to provide larger barriers against other foreign competitors in future periods we discuss how the foreign firm behavior surrounding significant u s protectionist actions including the vers on japanese automobiles may be consistent with protection building trade behavior

rejecting capital skill complementarity at all costs any serious empirical study of factor substitutability has to allow the data to display complementarity as well as substitutability the standard approach reflecting this idea is a translog specification this is also the approach used by numerous studies analyzing the relative capital skill complementarity hypothesis formulated by griliches 1969 according to this hypothesis the degree of substitutability between skilled labor and capital is lower than that for unskilled labor and capital yet the results of empirical studies investigating this hypothesis are controversial this paper offers a straightforward explanation using a translog approach reduces the issue of actor substitutability or complementarity to a question of cost shares our review of translog studies mentioned in hamermesh s 1993 summary on the demand for heterogeneous labor demonstrates that this argument is empirically relevant all these studies can be reconciled with each other on the basis of the cost share argument

equilibrium and inefficiency in a community model with peer group effects public service output depends on input expenditures on own personal characteristics and on the characteristics of the other residents in the community the peer group effect in a community model with public expenditures set by voting with migration between communities and with land price differentials capitalization it is shown that communities may become heterogeneous in composition and second best inefficient this equilibrium occurs when the peer group effect is neither too strong nor too weak the inefficiency arises because an externality is created by migration the land price differential does not play the part of the price of the better peer group but of a transfer payment

tax incentives for import substituting foreign investment abstract this paper constructs a game theoretic model to study host country policy to attract import substituting foreign direct investment fdi investors are assumed to be incompletely informed about local investment conditions and taxes and tariffs are determined endogenously we show that in certain situations countries will offer tax incentives while in others they will impose a tariff wall to induce fdi tax incentives are motivated by the need to signal favorable investment conditions the paper predicts that tax incentives are more likely to be used the larger is the investment risk the smaller is the local market the smaller is the stock of previous fdi and the lower are trade barriers moreover we conjecture that incentives are positively correlated with the number of jobs created by the investment we test these predictions using data from the us department of commerce benchmark survey of us foreign investment and find that they are supported by the empirical evidence

subsistence substitutability and sustainability in consumption we propose a representation of individual preferences with a subsistence requirement in consumption and examine its implications for substitutability and sustainability specifically we generalize the standard constant elasticity of substitution ces utility specification for manufactured goods and environmental services by adding a subsistence requirement for environmental services we find that the hicksian elasticity of substitution strictly monotonically increases with the consumption of environmental services above the subsistence requirement and approaches the standard ces value as consumption becomes very large whether the two goods are market substitutes depends on the level of income we further show that the subsistence requirement may jeopardize the existence of an intertemporally optimal and sustainable consumption path our results have important implications for growth development and environmental policy

fdi in space spatial autoregressive relationships in foreign direct investment abstract there are a number of theoretical reasons why foreign direct investment fdi into a host country may depend on the fdi in proximate countries such spatial interdependence has been largely ignored by the empirical fdi literature with only a couple recent papers accounting for such issues in their estimation this paper conducts a general examination of spatial interactions in empirical fdi models using data on us outbound fdi activity we find that estimated relationships of traditional determinants of fdi are surprisingly robust to inclusion of terms to capture spatial interdependence even though such interdependence is estimated to be significant however we find that both the traditional determinants of fdi and the estimated spatial interdependence are quite sensitive to the sample of countries one examines

free trade agreements and foreign direct investment the role of endogeneity and dynamics this article studies the impact of free trade agreements fta on outbound foreign direct investment fdi from one perspective fta may promote fdi since fta aim to promote economic activity between countries however lower trade barriers may lower the incentive of firms to conduct fdi therefore the net impact is an empirical question using a panel of countries for the years 1990 2006 this article effectively controls for participation in an fta when analyzing the impact on outbound fdi the lengthy time series also allows us to examine effectively the dynamic nature of the relationship failing to account for endogeneity and dynamics would likely generate inaccurate conclusions regarding the impact of fta on outbound fdi our analysis finds that outbound fdi is either unrelated to participation in an fta or is negatively affected

energy capital substitutability complementarity the dichotomy abstract changes in the price of energy affect not only the demand for energy but also the rates of capital formation and labour utilization these changes depend on the functional relationship between energy and the primary factor inputs in particular the relationship between energy and capital has been characterized by major conflicting evidence time series data classify the two inputs as complements by contrast pooled cross section studies conclude that capital and energy aresubstitutes in the production process in this case higher priced energy will stimulate the demand for investment while several reconciliation attempts on this disparity deserve marked attention the most prominent explanation is that time series studies reflect short term relationships and cross section analyses capture long term effects

capitalization of intrajurisdictional differences in local tax prices comment in his recent article in this review bruce hamilton attempted to extend peter mieszkowski s 1969 1972 analysis of property tax incidence he correctly notes that mieszkowski s model does not describe a market equilibrium hamilton s model accounts for the tax and benefit incidence of an intrajurisdictional property tax and it delineates the competitive market adjustments due to capitalization effects he then draws several conclusions regarding fundamental urban economic problems however hamilton s model fails to describe a market equilibrium for the identical reason mieszkowski s fails potential supply adjustments generated by capitalization are neglected the purpose of this comment is to correct the hamilton model by including sufficient conditions to obtain a market equilibrium our reformulation of the model indicates that some of hamilton s urban policy conclusions are utterly incorrect while others are valid only under very restrictive assumptions consider a hamiltonian metropolitan area comprised of three jurisdictions 1 a homogeneous high income housing hih community 2 a homogeneous l w income housing lih community and 3 a mixed community consisting of a percent of units of lih and 1 a units of hih in the initial pretax equilibrium property values reflect only resource costs a public service benefit is then provided equally to each house in every community a proportional property tax is levied in each community based on the value of the average property in the jurisdiction there are no net capitalization effects in the two homogeneous communities because the benefit per household equals the tax however the mixed community is characterized by short run intrajurisdictional net benefit differentials inbd the lih receive a fiscal surplus and the hiii incur fiscal burden due to average cost pricing of the public services hamilton concludes that the net benefit differences are capitalized into property values land is assumed to bear the capitalization effects because capital is mobile p 748 fn 9 hamilton defines this posttax capitalization state as efficient in supply of housing and public service because land value differentials exactly reflect the present value of inbd see pp 748 750 752 for hamilton s conclusion to hold we must assume the relative speeds of adjustment i e mobility of capital renters and land differ in that order with capital exhibiting the greatest degree of mobility this assumption is not inconsistent with hamilton s model and is no doubt generally accepted it is essential to note that capitalization requires at least partial immobility of one or more factors assuming nonzero elasticities of factor substitution 2 furthermore the hamilton efficient state implies land is completely immobile and thus bears the full burden of inbd the immobility of land eliminates substitution possibilities so an intrajurisdictional tax imposes only income effects an

heterogeneity stratification and growth macroeconomic implications of community structure and school finance this paper examines how socioeconomic stratification and alternative systems of education finance affect inequality and growth agents interact through local public goods or externalities school funding neighborhood effects and economywide linkages complementary skills knowledge spillovers sorting families into homogeneous communities often minimizes the costs of existing heterogeneity but mixing reduces heterogeneity faster integration therefore tends to slow down growth in the short run yet raise it in the long run a move to state funding of education presents society with a similar intertemporal trade off local and global complementarities play major roles in determining the efficient social and educational structures copyright 1996 by american economic association

how do banks adjust to changing input prices a dynamic analysis of u s commercial banks before and after the crisis abstract the 2000 2013 period was characterized by substantial regulatory monetary and technological change especially after the onset of the global financial crisis this study assesses the total impact of these policy shifts and technological changes on u s commercial banks short run and long run substitution elasticities an endogenous break test divides the sample into a pre crisis period and a post crisis period during the former period banks inputs tend to be inelastic substitutes after the onset of the crisis particularly the long run substitutability of most input factors decreases to even lower levels due to changes in both cost technology and economic conditions at the same time banks response to input price changes becomes more sluggish hence especially after the onset of the crisis banks have little flexibility regarding input factor usage and are thus sensitive to input price changes from a cost perspective

opportunity cost estimation of ecosystem services land use changes rank among the most significant drivers of change in ecosystem services worldwide the enhancement of important services such as biodiversity and carbon sequestration requires modifications in land use that can lead to the decline in other ecosystems services targeting the most suitable areas for particular land uses based on comparative advantages requires opportunity cost information across large regions this is a demanding task because the input output relations are ill defined and determined by spatially heterogeneous operational and environmental conditions to address this methodological challenge this paper presents a two stage semiparametric technique that enables multi dimensional production possibility frontiers to be estimated from data provided by biophysical models specific advantages of the proposed frontier approach are its flexibility with regard to assumptions on the convexity of the production possibility set and its freedom from any separability assumptions for the input output space and the space of the heterogeneous background variables the method is illustrated for a case study of 18 central and eastern european countries results show that opportunity costs of changes in ecosystem services provision differ substantially between regions those areas having already relatively high levels of carbon sequestration have a comparative advantage in sequestering carbon opportunity costs of biodiversity are generally positively related with the level of biodiversity up to a turning point after which they are negatively related to illustrate the policy consequences of the observed economies and diseconomies of scope we compare two management regimes to illustrate the potential gains from smart land management

trade policy and productivity abstract previous studies on the determinants of productivity emphasized the role of trade and institutions but omitted trade policy due to endogeneity concerns this paper considers the role of one important element of trade policy free trade agreements ftas based on recent work on the determinants of ftas we suggest an instrument which is based on the propensity to enter an fta due to exogenous geographical characteristics we find that differences in institutional quality and trade due to variations in geography and trade policy have a sizeable effect on productivity and can explain the huge variation in per capita income across countries