demand for smokeless tobacco role of advertising while the prevalence of smokeless tobacco st is low relative to smoking the distribution of st use is highly skewed with consumption concentrated among certain segments of the population rural residents males whites low educated individuals furthermore there is suggestive evidence that use has trended upwards recently for groups that have traditionally been at low risk of using st and thus started to diffuse across demographics this study provides the first estimates at the national level of the effects of magazine advertising on st use the focus on magazine advertising is significant given that st manufacturers have been banned from using other conventional media since the 1986 comprehensive st act and the 1998 st master settlement agreement this study is based on the 2003 2009 waves of the national consumer survey ncs a unique data source that contains extensive information on the reading habits of individuals matched with magazine specific advertising information over the sample period this allows detailed and salient measures of advertising exposure at the individual level and addresses potential bias due to endogeneity and selective targeting we find consistent and robust evidence that exposure to st ads in magazines raises st use especially among males with an estimated elasticity of 0 06 there is suggestive evidence that both st taxes and cigarette taxes reduce st use indicating contemporaneous complementarity between these tobacco products sub analyses point to some differences in the advertising and tax response across segments of the population the effects from this study inform the debate on the cost and benefits of st use and its potential to be a tool in overall tobacco harm reduction

do cigarette producers price discriminate by state an empirical analysis of local cigarette pricing and taxation abstract this study analyzes the interactive effects of oligopoly pricing state taxation and anti smoking regulations on retail cigarette prices by state using panel data for the 50 us states between 1960 and 1990 the results indicate that cigarette producers do price discriminate by state though the effect is not large relative to the final retail price there are two further results 1 state taxes are more than passed on a 1 cent state tax increase results in a price increase of 1 11 cents and 2 sellers offset state and local anti smoking laws with lower prices thereby blunting effects of the regulations

financial integration capital mobility and income convergence recent studies have found that capital moves uphill from poor to rich countries and brings little or no growth dividend when it does flow into poor economies we show that europe does not conform to this paradigm in the european experience of financial integration capital has flown from rich to poor countries and such inflows have been associated with significant acceleration of income convergence analysing broader samples of countries we find that downhill capital flows tend to be observed above certain thresholds in institutional quality and financial integration but europe remains different even when allowing for such threshold effects and its experience is similar to that of interstate flows within the united states our findings are consistent with the notion that financial diversification reduces countries incentives to save in order to self insure against specific shocks abdul abiad daniel leigh and ashoka mody

the demand for smokeless tobacco among male high school students in the united states the impact of taxes prices and policies despite the deleterious effects of smokeless tobacco use very little is known about the effects of tobacco control policies on smokeless tobacco demand this paper uses data extracted from the 1995 2001 national youth risk behavior surveys yrbs augmented with tobacco taxes prices and policies to estimate smokeless tobacco demand equations among male high school students the estimates indicate that higher smokeless tobacco taxes would significantly reduce the number of male students who use smokeless tobacco and the number of days smokeless tobacco users use smokeless tobacco moreover smokeless tobacco products and cigarettes were found to be economic complements in consumption

country size and the medium term growth process some cross country evidence abstract this paper summarizes the findings of an empirical study of the influence of country size and remoteness on the sources of growth and nature of the growth process in industrializing countries various hypotheses were investigated in the study in the context of a model of disequilibrium growth which allows for technological spillover between sectors and between countries the model was estimated for a large sample of developing economies for 1973 1985 the stability of the model s parameters for various dimensions of size and remoteness was tested evidence of significant structural breaks permitted inferences to be drawn about how the nature and extent of technological spillovers are influenced by country size this paper reports on the results and implications of the empirical tests

state responses to fiscal crises the effects of budgetary institutions and politics this paper explores the dynamics of state taxes and spending during the late 1980s when regional economic downturns and increased expenditure demands led to substantial state budget deficits more restrictive state fiscal institutions such as no deficit carryover rules and tax and expenditure limitations are correlated with more rapid fiscal adjustment to unexpected deficits political factors are also important when a single party controls the state house and the governorship deficit adjustment is much faster than when party control is divided in gubernatorial election years tax increases and spending cuts are both significantly smaller than at other times

small states small problems income growth and volatility in small states abstract small states have attracted a large amount of research in this paper we test whether small states are any different from other states in terms of their income growth and volatility outcomes we find that controlling for location small states have higher per capita gdp than other states this income advantage is largely due to a productivity advantage constituting evidence against the idea that small states suffer from an inability to exploit increasing returns to scale small states also do not have different per capita growth rates than other states small states do have greater volatility of annual growth rates which is in part due to their greater volatility of terms of trade shocks this terms of trade based volatility is in turn due to small states greater openness their greater openness on balance has however a positive net payoff for growth the one differential policy measure that might be relevant for small states is to further open up to international capital markets in order to better diversify risk but the benefits of even that are still unresolved in the literature we conclude that small states are no different from large states and so should receive the same policy advice that large states do

do expenditures on tobacco control decrease smoking prevalence effectiveness of tobacco control programmes in reducing smoking prevalence during 2001 to 2005 is examined tobacco control spending is found to exert no significant effects on smoking prevalence across the 50 states cigarette prices are found to lower prevalence of daily smokers but exert no effect on nondaily smoking prevalence several reasons are suggested for why these results might conflict with previous research these include that most previous studies examined two states california and massachusetts with long standing tobacco control programmes and that most studies examined periods in which many of the states in their samples did not actively fund their programmes another reason may be that unlike most previous studies this study controls for the possibility that tobacco control spending is endogenous when for example states exhibiting relatively low smoking prevalence are also states with relatively high distaste for smoking and accordingly fund tobacco control programmes more generous

testing hypotheses about firm behavior in the cigarette industry data on the effects of excise taxes are used to investigate the level of competition in the cigarette industry a lower bound on the numbers equivalent of firms in the context of the conjectural variations model is derived and estimated results point to at least a moderately high level of competition and in particular allow for the rejection of the perfect cartel model this paper relies on comparative statics results and hence circumvents recent criticisms of a study of monopoly behavior in the cigarette industry

measurement of monopoly behavior an application to the cigarette industry a simple scheme is proposed to measure monopoly pricing behavior the coefficient of the tax rate term in a price equation identifies the ratio of price to marginal cost no direct measurement of costs is required so a major problem for other empirical studies of monopoly is avoided empirical results for cross section time series data support rejection of atomistic competition but also provide evidence against the operation of an effective cartel in the cigarette industry the model represents an alternative interpretation of related results in a recent paper by barzel application of the methodology to other markets is feasible

information shocks and cigarette addiction views from dynamic panels with common structural changes in this article we attempt to evaluate the impact of various information shocks on cigarette consumption in contrast to the existing studies we do not impose any break points a priori we use recently developed techniques for sample splitting in the data on us cigarette demand and find that using a time index as a transition variable can cluster cigarette demand into four distinct regimes in the past four decades a myopic to rational switch in cigarette consumption behaviour was observed in response to various anti smoking information events in particular we find strong evidence in support of the rational addiction model in the 1980s and 1990s moreover in line with the theoretical prediction our estimate of the long run elasticity is twice as large as the short run elasticity our empirical framework should improve policy makers understanding of the dynamics of cigarette consumption in response to various anti smoking campaigns and stress the role of sound policy making in improving smoking con

ultimate recovery of an exhaustible resource under different market structures the recent emergence of several large and powerful resource cartels has prompted economists to worry about the impact of different market structures on the supply of nonrenewable natural resources an attempt has been made to investigate the effect of market organization on the performance of exhaustible resource industries the authors consider imperfectly competitive markets for exhaustible resources where the reserve base is not fixed instead it is determined endogeneously as part of the supply equilibrium a model is presented which considers the polar cases of monopoly and perfect competition as well as a continuum of intermediate structures testable predictions about the extent of resource utilization that occurs under different market structures are derived these predictions have important implications regarding how resource availability is measured as well as how policies are set for resource conservation and for developing resource substitutes

the special problems of small countries abstract the paper describes the characteristics of small economies and discusses the advantages and disadvantages arising from these characteristics it is shown that small economies by their very nature tend to be less diversified and to have relatively high foreign trade risks in spite of these drawbacks a number of small economies have achieved high rates of economic growth some reasons given to explain this success are the relatively small size of the agricultural sector concentration on labor intensive exports and sociological and psychological factors such as the ability to respond in a flexible manner to changes the paper ends with a discussion on whether the drawbacks of small size can be overcome by economic integration it is argued that the experience in this regard is disappointing

much ado about two reconsidering retransformation and the two part model in health econometrics in health economics applications involving outcomes y and covariates x it is often the case that the central inferential problems of interest involve e y x and its associated partial effects or elasticities many such outcomes have two fundamental statistical properties y 0 and the outcome y 0 is observed with sufficient frequency that the zeros cannot be ignored econometrically this paper 1 describes circumstances where the standard two part model with homoskedastic retransformation will fail to provide consistent inferences about important policy parameters and 2 demonstrates some alternative approaches that are likely to prove helpful in applications

why are stabilizations delayed when a stabilization has significant distributional implications e g tax increases to eliminate a large budget deficit socioeconomic groups may attempt to shift the burden of stabilization onto other groups the process leading to stabilization becomes a war of attrition each group attempting to wait the others out and stabilization occurring only when one group concedes and bears a disproportionate share of the burden the authors solve for the expected time of stabilization in a model of rational delay and relate it to several political and economic variables they motivate this approach and its results by comparison to historical and current episodes copyright 1991 by american economic association

advertising habit formation and u s tobacco product demand the u s tobacco market has experienced a shift toward noncigarette tobacco products we examined the degree of habit formation and the role of advertising for cigarettes little cigars cigarillos large cigars e cigarettes and smokeless tobacco using market level scanner data for convenience stores from 2009 to 2013 results based on a dynamic demand system show that while all tobacco products are habitual e cigarettes are the most habitual product more choices of flavors less restrictions on its use in public places less documented harmful effects and a higher upfront cost might explain the higher degree of habit formation for e cigarettes we also find that e cigarettes did not substitute for or complement c igarettes the results imply that e cigarettes may serve as a gateway to nicotine addiction but not necessarily to cigarette smoking regarding advertising cigarette magazine advertising did not affect cigarette demand while e cigarette tv advertising increased e cigarette demand with a positive spillover to cigarette demand such results may help explain e cigarettes recent success in sales and imply that e cigarette tv advertising might undermine efforts to reduce cigarette smoking advertising was al so found to affect the degree of habit formation for cigarettes large cigars and e cigarettes

the implications of increasing globalization and regionalism for the economic growth of small island states abstract this paper provides an overview of the implications of globalization and increasing regionalism for small island states in the context of the critical determinants of their economic growth a brief outline of the globalization process is provided followed by a discussion of regionalism and the trend in subnational regional autonomy this is followed by an overview of the empirical literature on the critical factors determining the growth of small states next is an analysis of the implications for small island states of increasing globalization and regionalism in the context of the critical growth factors identified in the preceding section the paper concludes by proposing an agenda for further research into the implications for small island states of the impact of globalization on specific growth factors

tourism and development a recent phenomenon built on old institutional roots is tourism an opportunity for lagging countries in the elusive quest for growth easterly 2002 recent empirical evidence suggests that the answer is a cautious yes aggregate cross country data show that tourism specialization is likely to be associated with higher per capita gdp growth rates than those observed in industrialized countries however this evidence ignores the importance of institutional quality and results are likely to be biased by omitted variable problems in this paper we frame our starting question within the general debate about the importance of good bad institutions as fundamental determinants of economic growth acemoglu et al 2001 and ask whether previous positive results of tourism on growth are in fact driven by the presence of growth enhancing institutions our empirical analysis exploits newly available datasets and controls the robustness of previous results on growth and tourism in the presence of several institutional quality variables by means of descriptive statistics and some simple cross country regressions we confirm that the quality of institutions is important for growth yet our results strongly suggest that the weight of tourism in an economy is an independent and robust predictor of higher than average growth

existence and transversality conditions for a general unbounded horizon model of the mining firm abstract this paper derives conditions under which optimal programs exist for a general model of the competitive or monopolistic mining firm the model significantly extends and synthesizes previous formulations by including both resource extraction and discoveries of new reserves with stock dependent resource exploitation costs and incomplete resource exhaustion endogenous technical innovation and state dependent resource demand in addition the analysis addresses complications arising from having optimal programs defined over an unbounded horizon with the possibility of either a finite or infinite terminal time and a non zero terminal salvage valuation if the terminal time is finite the necessity of the infinite horizon transversality conditions also is established the paper illustrates a strongly intuitive approach to existence questions for infinite horizon or unbounded horizon control problems with weaker concavity and interiority assumptions than are often encountered in the literature

sequential development and exploitation of an exhaustible resource do monopoly rights promote conservation this paper explores the problem of sequential exploitation of exhaustible resources by a monopolist when a setup cost must be incurred to access the next pool under certain circumstances the monopolist will always follow a more conservationist path of extraction and delay the introduction of new resource pools compared to a social planner however with other forms of consumer demand the monopolist may exhaust the resource more quickly especially if many new options will follow these results may apply especially to depletable resources like antibiotics or biotech products for which significant research and development costs are required followed by monopoly rights conferred by patents

sustainable development in small island developing states agricultural intensification economic development and freshwater resources management on the coral atoll of tongatapu small island developing states sids are vulnerable due to their small size in both biophysical and socio economic senses they are increasingly confronted with the environmental consequences through utilisation of their fragile natural resources for economic development here we illustrate the dilemmas experienced by sids associated with sustainable economic development our focus is the main island of the kingdom of tonga tongatapu located in the south pacific ocean we analyse the intensification of agriculture and the attendant pressures on the islands freshwater resources we combine environmental and economic data tongatapu 256 km 2 is a raised coral atoll and the freshwater resources exist as lenses that float on top of denser salt water underneath the island since 1987 tonga has exported squash pumpkin solely to japan over the last 10 years these exports have accounted for more then 40 of total export earnings and represent 60 to 70 of gdp derived from agricultural export this increase in exports is matched by an abrupt increase in the import and usage of agricultural chemicals the island s freshwater lenses are increasingly under pressure from agricultural intensification in the economic decision process environmental impacts are not taken into account this is partly because of overlapping institutional responsibilities of water management and opaque institutional structures which are highlighted in the paper the environmental consequences experienced by sids in terms of primary production stresses the need of taking natural capital into account when the benefits from international trade are evaluated at the same time pollution will result in irrecoverable losses in terms of tourist potential improved agricultural practices have to be implemented through educational tools to ensure continuing economic prosperity derived from agricultural exports economic development of sids should also focus on the maintenance of kin relationships overseas securing rent incomes and regional cooperative development efforts c 2006 elsevier b v all rights reserved

are alcohol tax hikes fully passed through to prices evidence from alaska on 1 october 2002 the state of alaska increased taxes on malt beverages from 0 35 per gallon to 1 07 per gallon increased taxes on wine from 0 85 per gallon to 2 50 per gallon and increased taxes on distilled spirits from 5 60 per gallon to 12 80 per gallon the net effect is that the tax on a standard serving rose from about 3 cents for beer 2 cents for wine and 4 cents for spirits to a uniform tax of 10 cents per standard serving of each type of alcohol beverage this paper uses primary data on alcoholic beverage prices in alaska to study a very basic question what was the impact of the tax hikes on prices an alcohol tax hike is often viewed as a public health policy tool to discourage excessive alcohol consumption and alcohol related problems such as drunk driving the impact of a tax hike on alcoholic beverage prices is a key link in the chain of the causality from the tax to public health economic theory and previous empirical studies mainly of taxes on goods other than alcoholic beverages do not provide very much guidance on what to expect following a tax hike it is an empirical question to answer the question i conducted telephone surveys just before and a year after the tax hike of on premise and off premise alcohol retail establishments across alaska

small island developing states and their economic vulnerabilities abstract many small island developing states sids face special disadvantages associated with small size insularity remoteness and proneness to natural disasters these factors render the economies of these states very vulnerable to forces outside their control a condition which sometimes threatens their very economic viability the gdp or gnp per capita of these states often conceals this reality in this paper the major vulnerabilities faced by sids are discussed and when possible quantified in the form of an index an attempt is also made to construct a composite index of vulnerability

the impact of political dependence on small island jurisdictions summary this paper examines the connection between political dependence and welfare and development of small island jurisdictions four possible advantages of political dependence are access to foreign aid foreign capital and external labor markets and gains in the tourism industry this study analyzes if political dependence is associated with these possible advantages and the relative importance of each on the welfare and development within the island it is shown that politically dependent islands have achieved significantly higher levels of welfare and development with some of the reasons being due to the large inflows in the form of tourism foreign direct investment labor and aid

the effects of public spending shocks on trade balances and budget deficits in the european union we investigate the consequences of an increase in public spending for trade balances and budget deficits in the european union using a panel var approach whereas the literature tends to treat the trade balance gdp ratio as a single variable we include exports and imports as separate variables this allows us to track in more detail the sources of trade balance movements further we use annual rather than quarterly data this facilitates the interpretation of the shocks and reduces potential anticipation effects of fiscal policy changes however the identification assumptions become stronger and we extensively check their validity according to our baseline estimate a 1 gdp increase in public spending produces a 1 2 on impact with a 1 6 peak rise in gdp rising imports and falling exports are responsible for a fall of the trade balance by 0 5 of gdp on impact and a peak fall of 0 8 in addition the spending increase produces a 0 7 impact and peak budget deficit thereby pointing to the potential relevance of the twin deficits hypothesis for the european union jel e62 h60

fiscal policy and the current account are microstates different this article examines the empirical link between fiscal policy and the current account focusing on microstates defined as countries with a population of less than 2 million between 1970 and 2009 this article employs panel regression and panel vector autoregression pvar on 155 countries of which 42 are microstates panel regression results show that a percentage point improvement in the fiscal balance improves the current account balance by 0 4 percentage points of gross domestic product gdp the real effective exchange rate has no significant impact on the current account in microstates but the coefficient is significant in the global sample pvar results show that an increase in government consumption results in real exchange appreciation but the effect on the current account after an initial deterioration dies out quicker in microstates than in the global sample the result implies that fiscal policy has little effect on the current account in microstates beyond its direct impact on imports overa

harmonization without representation small states the basel committee and the wto summary for many small states the experience with the basel committee and other standard setting bodies has not been favorable as they have been excluded from participation in the formulation of standards that negatively affect them this raises common concerns for small states including lack of representation non transparency discrimination and lack of sovereignty this paper argues that small states which cannot comply with basel standards are effectively placed at a competitive disadvantage and stand to lose potential domestic and international investors it argues that one possible way to address this problem is by formally strengthening the participatory role of small states in the wto

offshore pariahs small island economies tax havens and the re configuration of global finance the stock of wealth held offshore is estimated at us 6 trillion many small island economies sies host offshore finance centers and some sies are highly dependent upon offshore finance extreme examples have over 90 of government revenues derived from finance sector activities since 1998 a series of international initiatives have been launched to combat harmful tax practices money laundering and inadequate financial regulation these initiatives will transform the economies of many sies this paper explores the dependence of many sies upon offshore finance and the barriers to diversification arising from their smallness and unique political economies

a comparison of the economic performance of different micro states and between micro states and larger countries the economic performance of micro states and those sub national regions enjoying a high degree of autonomy is a generally under researched area this paper builds on earlier research armstrong and read 1995 by employing quantitative techniques to test 1 a the extent to which the economic performance of micro states differs by comparing their gnp per capita with that of the region in which they are located and with the countries to which they are adjacent 2 b whether some micro states perform better than others as a result of differences in their economic structure and 3 c whether the rates of growth of micro states have been faster or slower than those of larger countries considerable diversity among micro states is revealed although most exhibit strong economic performance

a nearly global look at the dynamics of youth smoking initiation and cessation the role of cigarette prices this study investigates the role of cigarette prices on smoking initiation and cessation among youth in a sample of eight primarily non western low middle and high income countries with a particular focus on a subsample of 40 low and middle income countries lmics using split population duration models on longitudinally transformed individual data from the global youth tobacco survey gyts the average impact of cigarette prices in the presence of unobserved country heterogeneity and shifting cultural norms within countries is identified by the variation of cigarette prices within countries over time price increases are found to effectively reduce initiation in early youth and girls are considerably more responsive than boys the price elasticity of initiation in lmics is 0 82 for the combined gender analysis 0 46 for boys only and 1 5 for girls only there is some indication that youths in developing countries may be slightly less responsive to price changes than in high income countries no

the effects of excise taxes and regulations on cigarette smoking abstract we estimate a generalized linear model to examine adult and teenage cigarette demand our analysis focuses on the extent to which exice taxes and regulations restricting smoking in public places affect cigarette consumption the adult results indicate that the price elasticity of demand is unstable over time ranging from 0 06 in 1970 to 0 23 in 1985 these estimates are lower than most found in previous studies the teenage price elasticity does not differ statistically from the estimates for adults additionally regulations restricting smoking in public places have a significant effect on both adult and teenage cigarette demand

an empirical analysis of dynamic nonprice competition in an oligopolistic industry this article develops a dynamic model of nonprice competition in an oligopolistic industry and uses it to analyze advertising competition in the u s cigarette industry the model generalizes existing studies by allowing advertising to affect both firm market shares and the total size of the market the model also allows dynamic conjectural variations to arise from the intertemporal links created by the durability of advertising we use these dynamic conjectural variations to distinguish alternative models of competitive interaction we estimate the complete model of firm production demand and advertising choice by using data for u s cigarette producers the results indicate that firm advertising primarily affects the level of market demand with a firm s effect on rival firms market shares arising through variations in the number of brands sold empirical results on firm behavior suggest that firms act as if their advertising choices will alter the future advertising choices of rival firms in both the high tar and low tar cigarette markets

does increasing the beer tax reduce marijuana consumption previous studies suggest that alcohol and marijuana are economic substitutes so recent policies restricting the availability of alcohol have led to an increase in the amount of marijuana consumed using micro level data from the national longitudinal survey of youth nlsy to estimate individual demand equations for alcohol and marijuana this research finds that alcohol and marijuana are economic complements not substitutes further this research finds that increases in the federal tax on beer will generate a larger reduction in the unconditional demand for marijuana than for alcohol in percentage terms

smokeless tobacco smoking cessation and harm reduction an economic analysis good estimates place hard core smoking rates in the united states at approximately 25 with little change over the decade of the 1990s this paper examines the possibilities of harm reduction with the use of smokeless tobacco specifically using an econometric model we seek to determine whether an increase in the use of smokeless tobacco would lead to reduced smoking rates in the united states applying our model to the nhanes iii national health and nutrition examination survey we find that the use of smokeless tobacco by an average u s male smoker would increase the average probability of smoke cessation by over 10 approximately 3 million additional quits would result for 26 million smokers our study permits an examination of cessation by age groups and we find that males who use smokeless tobacco between 16 and 65 have a 10 14 probability of quitting but that the probability falls beyond age 66 important implications for life extension and health costs would attend these results with u

the short run macroeconomic impact of foreign aid to small states an agnostic time series analysis abstract this paper investigates the short run macroeconomic impact of aid in small developing countries sdcs by using a vector auto regression var model to study the impact of aid on net import absorption and domestic demand spending we focus on average country effects within two country sub groups and find substantial differences between aid dependent sdcs and other sdcs that are more dependent on natural resources tourism or financial services in aid dependent sdcs aid absorption more or less equals spending although only half of the aid flow is absorbed and spent in the non aid dependent group aid does not seem to be absorbed or spent in any systematic fashion

the role of transport costs as a determinant of price level differentials between the isle of man and the united kingdom 1989 the isle of man experiences price levels which for consumer convenience goods are some 10 higher than those in nearby regions of the uk mainland the observed price differentials indicate incomplete economic integration with the united kingdom this paper presents the results of two major research projects undertaken on behalf of the isle of man board of consumer affairs by a team of researchers at lancaster university the research analyzes the role which transport costs to the island play in determining the observed price differentials between the isle of man and the united kingdom transport costs both marine and road haulage were found to account for only a relatively small part of the observed price differentials other major causes of price differentials between the island economy and the mainland were found to include high stockholding and inventory costs the failure to exploit economies of scale fully in the on island wholesaling and retailing sectors as a result of small market size and imperfect competition among island business sectors the study highlights the difficulties faced in integrating island and mainland economies freight transport improvements alone cannot eliminate price differentials

health scare excise taxes and advertising ban in the cigarette demand and supply the cigarette industry is a fascinating laboratory for industrial economists because of its concentrated market structure and history of conflicts over health and tax issues the industry has been the focal point of many economic studies most of the recent studies have concentrated on the demand side of the market for example bass schmalensee hamilton and fujii deal with the impact of advertising and the health scare on cigarette demand 4 15 10 8 barzel johnson and sumner ward assessed the importance of the excise tax or ad valorem tax on consumers cigarette demand 3 12 16 on the supply side vernon rives naylor developed an econometric model of the tobacco industry 20 which however is more concerned with the agricultural aspects of the product than the industry s market organization a careful review of the above studies suggests serious shortcomings which appear to limit their application to policy formulation or market analysis first the variables are introduced in an ad hoc fashion without reference to existing demand or supply theories second none of the above studies recognizes explicitly the interactions among the variables in the demand and the supply equations in the context of the determination of market equilibrium this paper has three objectives 1 to apply the standard neoclassical market theory to the cigarette industry 2 to identify the interactions between cigarette demand and supply using a simultaneous equations approach the first such attempt in a cigarette industry study and 3 to evaluate the effects of cigarette taxes advertising and health scare issues on the industry s output based on the empirical results obtained from the simultaneous equations analysis the judicious selection of explanatory variables careful data

tiny poor and war torn development policy challenges for east timor abstract following its decisive vote for independence on 30 august 1999 east timor will soon become the world s newest country the country has a particularly tragic history centuries of portuguese colonialism and neglect 24 years of troubled occupation by indonesia and the horrific violence and massive destruction of infrastructure which occurred in the wake of the 1999 vote for independence the country will start from one of the lowest points conceivable on the scale of socioeconomic development extremely low income very limited bureaucratic capacities barely functioning institutions and potentially hostile elements in its giant neighbor the formidable development policy challenges facing this new country are the subject of this paper

oligopoly structure and the incidence of cigarette excise taxes abstract a model of oligopoly price behavior and tax incidence for the u s cigarette industry for the period 1955 1990 is presented a cost function is estimated and shows manufacture to be subject to increasing returns to scale the mean price elasticity of demand is 0 71 the model indicates that competition among manufacturers has been decreasing since 1980 a simulation shows that an increase in the federal excise tax causes a greater increase in price and a greater decrease in consumption than does the same increase in the average of state and local tax rates

monopoly extraction of an exhaustible resource with two markets although much has been written about monopoly extraction of natural resources the case of a resource being sold in two separate markets has escaped notice we find that a monopolist facing two different iso elastic demand schedules extracts more rapidly than the social planner whether or not arbitrage prevents price discrimination between markets jel classification d42 q3 extraction monopoliste d une ressource epuisable quand il y a deux marches meme si l on a ecrit beaucoup a propos de l extraction monopoliste de ressources naturelles epuisables il semble que le cas d une ressource vendue dans deux marches separes n a pas ete traite on decouvre qu un monopoleur faisant face a deux cedules de demande iso elastiques differentes extrait la ressource plus rapidement que le planificateur social que l arbitrage entre les marches empeche ou non la discrimination par les prix

twin deficit or twin divergence fiscal policy current account and real exchange rate in the u s abstract in spite of concerns about twin deficits fiscal and the current account deficits for the united states economy empirical evidence suggests that twin divergence is a more usual feature of the historical data i e when fiscal accounts worsen the current account improves and vice versa this paper empirically studies the effects of fiscal policy government budget deficit shocks on the current account and the real exchange rate during the flexible exchange rate regime period based on var vector auto regression models we identified exogenous fiscal policy shocks after controlling for business cycle effects on fiscal balances in contrast to the predictions of most theoretical models the u s results suggest that an expansionary fiscal policy shock or a government budget deficit shock improve the current account and depreciate the real exchange rate increases in private savings and declines in investment contribute to the current account improvement while a nominal exchange rate depreciation as opposed to a relative price level change is mainly responsible for the real exchange rate depreciation the twin divergence of fiscal balances and current account balances is also explained by the prevalence of output shocks i e output shocks more than fiscal shocks appear to drive the co movements of the current account and the fiscal balance

innovative development strategies from non sovereign island jurisdictions a global review of economic policy and governance practices summary the world s sub national island or mainly island jurisdictions constitute a timely valid and valuable category of political and economic analysis on the basis of a global largely inductive and discriminant analysis five economic and four political capacities are suggested as being characteristic of the innovative development strategies practised today by various island autonomies extant mainland island relations can provide insights to other smaller non island as well as larger players beyond the strictures of both economic vulnerability and sovereignty

tax incidence with strategic firms in the soft drink market abstract because soft drink sd consumption is considered to be a contributor to the epidemic of obesity there is a growing interest in evaluating the impact on sd consumption of alternative tax policies in this paper we propose a methodology to evaluate the impact of taxation of a food market taking into account the strategic price response of both manufacturers and retailers we apply this methodology to the french sd market and simulate the impacts of ad valorem and excise taxes we find that firms behave differently when facing an ad valorem tax or an excise tax an excise tax is overshifted to consumer prices while an ad valorem tax is undershifted to consumer prices we find that an excise tax based on the sugar content of sd is the most effective at reducing sd consumption our results also indicate that ignoring strategic pricing by firms leads to misestimations of the impact of taxation by between 15 and 40 depending on the products and the tax implemented in the short term that is ignoring positive long term health effects a 9 cents l excise tax has a small negative welfare effect about 1 person year

a paradigm shift to a new strategy for small island economies embracing demand side economics for value enhancement and long term economic stability abstract the article answers three interrelated questions pertaining to small island economies and tourism development under the condition of globalization 1 why is tourism relevant for small island economies 2 why is a supply perspective inappropriate for these economies and 3 why is a demand perspective more appropriate for small island economies in the era of globalization empirical realities indicate that small islands have performed well in specializing as tourist destinations despite their size constraints and resulting disadvantage in economic terms the caribbean region is an appropriate proxy for small island economies however globalization may be taking its toll on sectoral specialization in the caribbean as a development strategy the supply side strategy seems to have lost its effectiveness to reverse this trend the study proposes the implementation of new tourism strategies based on a demand focused approach to sustain value enhancement these strategies have important managerial and policy implications

taxation regulation and addiction a demand function for cigarettes based on time series evidence this work analyzes the effects of prices taxes income and anti smoking regulations on the consumption of cigarettes in california a 25 cent per pack state tax increase in 1989 enhances the usefulness of this exercise analysis is based on monthly time series data for 1980 through 1990 results show a price elasticity of demand for cigarettes in the short run of 0 3 to 0 5 at mean data values and 0 5 to 0 6 in the long run we find at least some support for two further hypotheses that antismoking regulations reduce cigarette consumption and that consumers behave consistently with the model of rational addiction

twin deficits squaring theory evidence and common sense in this paper we reconsider the twin deficit hypothesis that fiscal shocks generating budget deficits also worsen external trade both from a theoretical point of view and by analyzing data for australia canada the uk and the us first we assess the joint dynamics of budget and trade deficits along the business cycle uncovering a strikingly recurrent s shaped relation between the two the correlation is actually negative suggesting twin divergence this observation however cannot rule out the possibility that government spending expansions and or tax cuts may cause trade deficits as the overall correlation is likely to be dominated by cyclical factors second we reconsider the transmission of government spending in a standard two country two good model we find that openness and the persistence of fiscal shocks are major determinants of the magnitude or even sign of the response of the trade balance to fiscal shocks for a given persistence of the fiscal shock the closer an economy the larger the crowding out effect on investment the lower the deterioration of the trade balance third we take this insight to the data investigating the transmission of fiscal shocks in a var framework in the four countries in our sample our empirical findings tend to support our view in the us and australia which are relatively less open than canada and the uk and where government spending shocks are less persistent we find that the external impact of fiscal policy is rather limited instead private investment responds substantially the reverse is true for canada and the uk these findings confirm and put into perspective earlier results whereas fiscal expansions in the us are found to have on average a negligible effect on the country s trade balance however we emphasize that these results are consistent with a call for a us fiscal retrenchment to address global imbalances the impact of budget cuts on the us external trade is muted by their positive effect on domestic investment strengthening the us ability to generate resources against future interest and debt repayment