collusion collective action and protection theory and evidence this paper provides a novel explanation forthe formation of protectionist lobby groupsin imperfectly competitive sectors thelevel of collusion is shown to be a crucialdeterminant of the ability of firms tosustain lobbying we show that greatercollusion reduces firm contributionsto tariff lobbying when the governmentvalues welfare sufficiently and thecross price elasticity between the domesticand foreign goods is sufficiently high the empirical evidence from the u s supports the theory greater collusionreduces the level of pac contributions

energy market liberalization and renewable energy policies in oecd countries abstract this paper investigates the effect of energy liberalization compared to other drivers on policies that support renewable energy in a long panel of oecd countries we estimate this effect by accounting for the endogeneity of liberalization related to joint decisions within a country s energy strategy using regulation in other industries as instruments we find that energy liberalization increases public support for renewable energy the effect of liberalization is the second largest after the effect of per capita income and is mostly driven by reductions in entry barriers while the effect of privatization is unclear this finding suggests that a reduction in the monopolistic power of state owned utilities has a positive effect on renewable energy policies when various types of actors are ensured access to the grid instead of it being provided to only a few large private firms

common agency and coordination general theory and application to government policy making we develop a model of common agency with complete information and general preferences with nontransferable utility and we prove that the principals nash equilibrium in truthful strategies implements an efficient action we apply this theory to the construction of a positive model of public finance where organized special interests can lobby the government for consumer and producer taxes or subsidies and targeted lump sum taxes or transfers the lobbies use only the nondistorting transfers in their noncooperative equilibrium but their intergroup competition for transfers turns into a prisoners dilemma in which the government captures all the gain that is potentially available to the parties

repeated partnership games with imperfect monitoring and no discounting in a partnership game each player s utility depends on the other players actions through a commonly observed consequence e g output profit price which is itself a function of the players actions and an exogenous stochastic environment if a partnership game is repeated infinitely and each player s payoff in the infinite game supergame is the long run average of his expected one period utilities then efficient combinations of one period actions can be sustained as nash equilibria of the supergame even if the players cannot observe other players actions or information but can only observe the resulting consequences

the accumulation of technology capital goods production in developing countries revisited abstract this paper examines theoretical and empirical issues related to the establishment of new capital goods industries in developing countries conventional theoretical approaches emphasize economic growth through allocation of substantial resources to capital goods production an extension of these approaches is proposed to account for the increasingly important role of the sector in innovation and diffusion of technology in addition it is argued that the global diffusion of key value added core components and the imperatives of dynamic information related economies of scale tend to erode comparative advantages from low labor costs in developing countries

output inflation and stabilization in a small open economy evidence from mexico abstract we study the sources of fluctuation in output and inflation for mexico considering fiscal real money growth exchange rate and asset market disturbances which are identified using an estimable equilibrium model incorporating important features of high inflation economies changes in inflation are influenced by all shocks while output growth is explained by real fiscal and asset shocks the results lend strong support to the fiscal view of inflation and to a lesser degree support the balance of payments view we also find that higher inflation and higher budget deficits cause each other to spiral upward

a cross country panel analysis of currency substitution and trade attention that has been directed toward the effect of trade on foreigner s holdings of domestic currency comes exclusiely from time series eidence here we extend a model of currency substitution that incorporates a trade motie for foreigners to hold domestic currency it uses time series and cross sectional information for a panel of 17 industrialized countries testing two way fixed effects models against pooled and random effects alternaties the cross sectional information is significant reealing that pooling of data could result in misleading inferences since country specific effects regional group effects and distance are all important determinants of

political internalization of economic externalities and environmental policy abstract this paper derives the characteristics of endogenous environmental policy in a common agency model of politics and proceeds to show that competition between lobby groups is an important source of internalization of economic externalities our analysis generalizes bhagwati s principle of targeting to the case of distorted political markets moreover we show that the politically optimal structure of environmental taxes incorporates a pigouvian adjustment however since lobby groups care about the distribution of income as well as about efficiency the equilibrium structure of taxes differs considerably from the pigouvian rule

currency substitution portfolio diversification and money demand we extend the thomas 1985 dynamic optimising model of money demand and currency substitution to the case in which the individual has no access to bonds denominated in foreign currency we show that in this case the demand for domestic money is influenced by portfolio decisions contrary to what defended by the portfolio balance approach to currency substitution the results obtained in this paper suggest that the significance of an expected exchange rate depreciation term in the demand for domestic money provides a valid test for the presence of currency substitution the results also suggest that in countries facing monetary instability and currency substitution restricting the availability of interest bearing assets denominated in foreign currency may have a destabilising impact on the money demand

variation in the real exchange rate as a source of currency substitution abstract this paper presents a shopping cost money service model in which it is shown that the real exchange rate influences the desired ratio of domestic to foreign currency bank deposits empirically it is found that if the real exchange rate value of the canadian dollar falls then us dollar deposits of canadians rise relative to canadian m2 this relationship is found to be cointegrated dynamic adjustment analyzed using an error correction model indicates a cyclical adjustment the results provide evidence that variation in the real exchange rate is a source of currency substitution and reinforces the argument that demand side factors influence the money stock jel e41

the epidemiology of corporate pac formation 1975 1984 abstract most work on corporate political action committees pacs accounts for their formation or activity level in terms of market concentration and collective action dilemmas subsidiary concerns include the effects of regulatory burden and the firm s internal organization however these cross sectional designs yield little insight into the dynamics of the process results of logit and event history analyses of panel data on 119 u s firms from 1975 1984 show that changes in corporate profitability pac formation by other firms in a firm s board of directors interlock network and the degree of managerial dominance of corporate governance also affect the likelihood that a firm will form a pac analyses also reveal important differences in pac formation dynamics across different types of firms particularly in their response to pac formation by linked firms

inter industry technology flows in the united states abstract this paper presents for the u s economy a technology flows matrix tracing 1974 industrial r d expenditures from their industries of origin to industries in which the use of resulting products and processes was anticipated the distinction between origin and using industries is crucial to understanding the links between r d and productivity growth a regression analysis reveals high social rates of return and substantial productivity impacts from r d attributed to industries of use

rent seeking and market structure comment if the firms in an industry are to be successful in raising money to influence government two conditions must be met 1 there must be sufficient rents available from government decisions regarding that industry to make such expenditures worthwhile and 2 the industry must be sufficiently concentrated to avoid a free rider problem in fund raising this argument though seemingly intuitively appealing has been under recent empirical attack this paper seeks to restore the parapets

international currency substitution and the income velocity of money abstract this paper presents new empirical evidence on the degree to which international currency substitution destabilizes domestic money demand it also provides an explanation of some apparent discrepancies among previous empirical studies of currency substitution this explanation hinges on the distinction between the elasticity of currency substitution and the cross elasticity of money demand a large small value of one elasticity does not imply a large small value of the other a large cross elasticity is required for currency substitution to destabilize domestic money demand the empirical evidence presented here is consistent with the view that these cross elasticities are typically small

currency substitution in turkey although currency substitution is a widely observed phenomenon in both developed and developing counries most of the studies on currency substitutioin in small open economies have focused on high inflatin south american countries this paper extends the previous analysis to a newly industrializing high inflation economy namely turkey a vector autoregression model has beeb estimated employing the certain policy variables to investigate the dynamics of currency substitution in the economy dynamic impulse responses show that the residents have a preference for substitutiong foregn currencies for domestic currency because of reawl exchange rate depreciations the results suggest that to stop or to reverse the on going currency substition process a plicy aiming to increase the expected real return on domestic assets should be adopted

currency substitution and the real exchange rate the utility maximization approach abstract this paper studies the currency substitution hypothesis with rational expectations in terms of a sidrauski type model where domestic and foreign money enter the utility function it shows that contrary to liviatan 1981 the approach does not necessarily contradict calvo and rodriguez 1977 furthermore the impact of monetary stabilization policy is fully characterized with flexible and pre fixed rates for an extension of dornbusch and mussa 1975 a brief analysis of the optimal quantity of money is also provided

atheoretical macroeconometrics a critique abstract the spurious nature of the restrictions used to identify many macroeconometric models has led some researchers to advocate a style of econometric inquiry that is less dependent on prior theoretical restrictions of the sort that were central to the approach of the cowles commission this development which we call atheoretical macroeconometrics is summarized and evaluated in the current paper it is contrasted with an updated version of the cowles commission approach we conclude that while some of the exercises of atheoretical macroeconometrics are valid those that have attracted the most attention and appear the most innovative exogeneity testing impulse response analysis and policy analysis using estimated vector autoregressions are based on incorrect analysis

seigniorage and the case for national money in countries with high rates of inflation there is typically movement away from the use of the local currency the paper analyzes the costs and benefits of using a local currency with emphasis on the seigniorage foregone by using a foreign money even if it should be desirable for a country to fix its exchange rate it still loses seigniorage if it does not use its own money the case for using a foreign money then turns largely on the superior discipline imposed on domestic policymakers by removing their control over the money supply alternative methods of imposing discipline are discussed estimates of the amount of seigniorage raised by different governments are presented seigniorage amounts in some cases to about 10 percent of government revenue estimates are also presented of both the annual flow and one time stock costs of giving up use of domestic currencies and instead using the dollar the flow cost is typically about 1 percent of gnp and the stock cost is around 10 percent of gnp

currency substitution and the demand for money some evidence for canada recently the possibility that foreign and domestic currencies are substitutes has received considerable attention see 1 2 3 10 19 21 currency substitution has important implications for the working of flexible exchange rates if the degree of currency substitution is high small changes in the money supply would induce large changes in the exchange rate furthermore currency substitution would transmit the effect of monetary disturbances from one country to another indeed significant currency substitution would seriously undermine the ability of flexible exchange rates to provide monetary independence this paper examines the empirical importance of currency substitution in the framework of the demand function for money if currency substitution is important the expected change in the exchange rate should be a significant determinant of the demand for home currency in section 2 we undertake such a test for the canadian demand for money during the recent flexible exchange rate period there is considerable evidence that the forward exchange rate is a good measure of the expected exchange rate our own tests confirm these results for canadian data since 1970

temporary stabilization predetermined exchange rates the paper analyzes the impact of a stabilization policy based on a temporary reduction in the rate of devaluation against a background in which a constant rate of devaluation has no real effects it is shown that the temporary policy does and furthermore that the real effects tend to become bigger in absolute value as the horizon of the temporary policy is shortened the central discussion is carried out in terms of a one good cash in advance model with perfect capital mobility and ramsey type consumers results are extended to account for home goods and variable velocity the roles of capital mobility and banking liberalization are briefly discussed

the influence of market demand upon innovation a critical review of some recent empirical studies abstract a number of recent empirical studies of technical change at the level of the individual firm have concluded that market demand is the dominant influence upon the innovation process calling forth innovations in market economies the pace of innovation in the private sector heavily influences the growth of national output and productivity and these studies and their conclusions have therefore received much attention having been extensively quoted in discussions of appropriate government policy for the encouragement of innovation this paper reviews a number of these studies and concludes that their findings and the interpretations of their findings in the secondary literature are seriously flawed and in many cases invalid the proposition that market demand governs the innovation process is by no means conclusively demonstrated in these studies and they are therefore inadequate and inappropriate guides for the formulation of policy most of the studies examined employ a working definition of demand factors which is so broad as to embrace a range of possible influences upon innovation which should more properly be classified elsewhere the concept of demand utilized in these studies bears little resemblance to the more restrictive and precise definition of market demand found in economics in addition the phenomena analyzed in these studies are a very heterogeneous lot the studies do not address identical empirical questions and their findings are as a result neither uniform nor unambiguous both demand and supply side influences are crucial to understanding the innovation process and it is the exclusive preoccupation with only one set of these forces which is criticized in this paper some implications of the criticism for government policy toward innovation are discussed in the conclusion

international currency substitution and seigniorage in a simple model of money i introduction currency substitution describes the change in the holdings of domestic and foreign real balances in response to fluctuations in the relative prices of these currencies so far the empirical evidence on the strength of currency substitution has been mixed miles 1978 finds evidence in favor of strong currency substitution between the canadian dollar and the u s dollar bordo and choudhri 1982 criticize miles on the ground that miles has a misspecified model and their estimates of a canadian money demand function indicate little currency substitution in a recent paper rogers 1992 finds that dollarization in a high inflation economy such as mexico s is quite strong and statistically significant imrohoroglu 1994 on the other hand estimates the extent of currency substitution between the canadian dollar and the u s dollar using a gmm approach and finds that the elasticity of currency substitution in canada is quite low between 0 29 and 0 43 depending on the instruments used furthermore the estimate of the share of u s dollar denominated deposits in producing canadian liquidity services is on the order of 1 percent to 3 percent the policy implications of currency substitution have been extensively analyzed most of these studies concentrate on the impact of currency substitution on the volatility of exchange rates and the autonomy of domestic monetary policy under a flexible exchange rate regime 1 recently researchers have started to explore whether currency substitution alters the results in the optimal inflation tax literature for example vegh 1989 shows that it may be optimal to resort to the inflation tax under currency substitution since it reduces the distortion introduced by an exogenously given positive foreign interest rate in his model a positive foreign interest rate creates a distortion because it acts as an indirect consumption tax kimbrough 1991 analyzes a small open economy under currency substitution where domestic agents are required to use domestic real balances to purchase the domestic nontraded good foreign real balances to purchase the imported good and either domestic or foreign real balances to purchase the exportable good he finds that it is optimal to follow the friedman rule of a zero nominal interest rate in this setup since money serves as an intermediate good guidotti and vegh 1993 however argue that kimbrough s 1991 result only applies under very restrictive assumptions on the transactions technology and that in general the optimal inflation rate is positive under currency substitution aizenman 1992 considers a multi country money in the utility function model in a common currency area where there are collection costs associated with income taxation he shows that in the absence of a cartel agreement on how to share the seigniorage revenue the optimal inflation rate for individual countries will exceed the optimal inflation rate under a cooperative solution canzoneri and diba 1992 study the role of currency substitution in a two country money in the utility function model under a flexible exchange rate regime where there are collection costs of lump sum taxes they show that the outcome of a noncooperative seigniorage maximization or welfare maximization game is characterized by the friedman rule the cooperative outcome on the other hand includes the inflation tax as part of an optimal tax package since lump sum taxes are costly to collect the theoretical literature summarized above suggests that currency substitution may have important economic implications most of the attention has been on the role of the elasticity of currency substitution the share of foreign real balances in the residents domestic portfolio has largely been ignored laney radcliffe and willett 1984 and joines 1985 emphasize the distinction between the elasticity of substitution and the cross elasticity of money demand and argue that a high cross elasticity is necessary for currency substitution to have a major destabilizing impact on domestic money demand

on the formation of industry lobby groups abstract this paper provides a step towards a more complete theory of lobbying extending the menu auction model of grossman and helpman grossman g m helpman e 1994 american economic review 84 833 850 a new explanation is proposed for why more concentrated industries more easily overcome the free rider problem inherent in political collective action instead of focusing on transactions costs as olson olson m 1965 the logic of collective action harvard university press cambridge ma we show that more collusive industries with higher collusive profits have a greater incentive to form lobby groups and to contribute to industry lobbying moreover more polluting industries also have a greater incentive to form and contribute to a lobby group

fostering the capital goods sector in ldcs abstract the conventional arguments in favour of the production of capital goods by ldcs are based on comparative advantage the possibility of designs appropriate to indigenous factor proportions and the externalities conferred on other sectors these and other arguments are inducing the governments of many middle income countries to more intensively foster the development of the machinery sector this paper examines the analytic and empirical bases of the conventional arguments and finds a considerably more complex picture than that contained in earlier studies

the capital inflows problem revisited a stylized model of southern cone disinflation in the late 1970s countries in latin america s southern cone initiated attempts to lower domestic inflation rates through the progressive reduction of a preannounced rate of exchange rate devaluation the stabilization programs gave rise to massive capital inflows real exchange rate appreciation and current account deficits this paper develops a stylized intertemporal framework in which the effects of a credible preannounced disinflation scheme can be studied it is shown that even when agents have perfect foresight and markets clear continuously the capital inflows phenomenon and the associated real appreciation may result while unanticipated permanent inflation changes are neutral in the paper anticipated inflation is neutral only in exceptional circumstances a preannounced disinflation operates by altering the path of an expenditure based real domestic interest rate that depends on expected changes in the prices of liquidity services and nontradable consumption goods

can foreign currency deposits prop up a collapsing exchange rate regime abstract the flood and garber flood r p garber p m 1984 collapsing exchange rate regimes some linear examples journal of international economics 17 1 13 speculative attack model is extended to consider whether the authorities could forestall an exchange rate collapse by encouraging foreign currency holdings by domestic residents deposits of foreign currency could be held at home or abroad although domestic residents have a home country preference other things equal the paper considers the consequences of a required reserves policy on domestically located deposits which the authorities use to supplement official reserves to defend the exchange rate despite initial findings that suggest the life of the regime can be lengthened in this way the paper shows that such a policy does not postpone a collapse but actually hastens it

the emergence of cooperation among egoists this article investigates the conditions under which cooperation will emerge in a world of egoists without central authority this problem plays an important role in such diverse fields as political philosophy international politics and economic and social exchange the problem is formalized as an iterated prisoner s dilemma with pairwise interaction among a population of individuals results from three approaches are reported the tournament approach the ecological approach and the evolutionary approach the evolutionary approach is the most general since all possible strategies can be taken into account a series of theorems is presented which show 1 the conditions under which no strategy can do any better than the population average if the others are using the reciprocal cooperation strategy of tit for tat 2 the necessary and sufficient conditions for a strategy to be collectively stable and 3 how cooperation can emerge from a small cluster of discriminating individuals even when everyone else is using a strategy of unconditional defection

market structure and campaign contributions does concentration matter a reply economic rents may be obtained through the process of market competition or be obtained by resorting to governmental protection rational firms choose the least costly alternative collusion to obtain governmental protection will be less costly the higher the concentration ceteris paribus however high concentration in itself is neither necessary nor sufficient to induce governmental protection

the currency substitution hypothesis and relative money demand in mexico and canada the author estimates demand for dollars relative to domestic currency in mexico and canada using 1 a multivariate model with a relative money demand equation and 2 single equation models including an error correction representation he also analyzes the models encompassing properties the anomalous correlation between the mexican dollarization ratio and expected peso depreciation implies that convertibility risk was associated with holding mexidollars under this interpretation higher expected depreciation coincides with a drop in relative demand for dollars because there is the possibility that the government will forcibly convert mexdollars when these central bank liabilities rise and foreign reserves run low several testable alternative explanations are rejected copyright 1992 by ohio state university press

temporary foreign exchange subsidies anticipated devaluation and the mexdollar anomaly abstract prior to mexico s economic crisis of 1982 a dramatic drop in the dollarization ratio coincided with higher expected peso depreciation i hypothesize that the anomalous result is due to convertibility risk and provide a formal interpretation using an optimizing model

dollarization in post hyperinflationary argentina abstract this paper analyzes the continued dollarization of the argentine economy which experienced a rapid decline in inflation following its hyperinflations of the 1980s first a measure of dollar currency circulating in argentina is developed thereby improving upon previous studies of dollarization and currency substitution that focused on dollar deposit holdings only second cointegration analysis of peso money demand in argentina finds a negative ratchet effect from inflation the reduction in peso money demand attributable to the ratchet mirrors the estimated stock of all dollar assets held domestically by argentine residents consistent with the hypothesis of irreversible dollarization

convertibility risk and dollarization in mexico a vectorautoregressive analysis abstract using a general equilibrium model of dollarization in mexico i find a negative and significant relationship between the expected rate of peso depreciation and the dollarization ratio this result seemingly anomalous compared to previous studies of currency substitution is attributed to the convertibility risk associated with holding mexdollars several alternative explanations are either rejected or found to be of secondary importance the results imply that traditional methodologies used to test currency substitution and inferences drawn about the phenomenon should be revised in cases similar to mexico

currency substitution and monetary autonomy the foreign demand for us demand deposits abstract this paper presents new evidence of currency substitution using the two step estimator of cointegrated systems developed by engle and granger 1987 we estimate and find cointegration among variables suggested by the money services model of currency substitution following engle et al 1989 we estimate an error correction model for each of five countries allowing isolation of long term from short term influences on the foreign demand for us demand deposits our results suggest that currency substitution is a potentially significant phenomenon influencing long term monetary policy independence

a traditional interpretation of macroeconomic fluctuations under the traditional interpretation of macroeconomic fluctuations aggregate demand shocks move output and prices in the same direction while aggregate supply shocks move output and prices in opposite directions this paper examines the joint behavior of u s output unemployment prices wages and nominal money and asks whether it is consistent with this interpretation the answer is a qualified yes

interest group size and legislative lobbying abstract we develop a model of legislative decision making in which lobbying and public policy are jointly determined we examine how policy outcomes depend on the sizes of the interest groups while a larger size typically involves favorable effects on policy we also identify threshold levels of interest group size where a lobby will be harmed if it becomes larger this may provide another rationale as to why some interests do not or not fully organize spending limits can remove adverse policy effects of interest group size however this is not necessarily welfare improving moreover we find that endogenous proposal making may turn a second mover advantage in standard legislative lobbying models into a second mover disadvantage

the dollarization of latin america as a market enforced monetary reform evidence and implications monetary reforms are a response to past and present monetary conditions yet what happens when public confidence in the domestic currency is eroded but the government does not declare an official monetary reform it is likely that the public will substitute away from the low confidence domestic currency into a high confidence foreign currency to the extent that such substitutions are possible in other words as confidence in the domestic money declines money demanders will tend to substitute away from domestic money in favor of foreign money this is in effect a market based monetary reform on the demand side in place of an official supply side monetary reform this paper will consider such demand side substitutability in latin america and the official response monetary historians have chronicled many instances of monetary reform when an existing low confidence currency is replaced by a new monetary unit while historical episodes differ in regard to social and political circumstances it is safe to say that the economic circumstances leading to reform can be traced to a high and unstable rate of growth of the money supply for instance on september 29 1975 chile replaced the escudo with the chilean peso where one peso was defined as being equal to 1 000 escudos the chilean money supply had grown at an annual rate of 121 from 1971 to the time of the reform argentina introduced a new monetary unit the peso argentino on june 1 1983 where one new peso argentino was defined as being equal to 10 000 old pesos the argentine money supply had grown at an annual rate of 85 since 1979 these growth rates prior to monetary reform are substantially higher than the average latin american money growth rate over the 1972 83 period of 40

money and its substitutes abstract measurement of the elasticity of substitution between financial assets is an important element in evaluating the role that those assets play in the economy this paper generalizes the model developed by chetty by relaxing the separability conditions while restoring homotheticity to the utility function the general model is found to produce empirical estimates that are statistically superior to the original while substantially reducing the estimated elasticities of substitution consequently the various types of savings accounts no longer appear to be very close substitutes for money balances

polluters and collective action theory and evidence 1 introductionthe seminal theory by olson 1965 predicts that industries with fewer firms have a greater ability to undertake collective action they organize cooperative political action more easily because greater concentration lowers the cost of political action 1 the empirical evidence is inconclusive however andres 1985 masters and keim 1985 heywood 1988 and humphries 1991 find positive effects of industry concentration on the probability of making political action committee pac contributions see also mckeown 1994 pittman 1976 finds that concentrated industries generate greater contribution levels grier munger and roberts 1991 find an inverted u shaped relationship between the level of pac formation and industry concentration with a maximum political participation rate occurring at a four firm concentration ratio around 0 45 esty and caves 1983 and zardkoohi 1985 report ambiguous effects of concentration on pac contributions 2in this paper we suggest an alternative perspective on firms ability to organize collective action which to our knowledge has been ignored so far the novel argument is that industries that face multiple regulations a greater number of policy issues find it easier to overcome collective action problems and sustain lobbying in particular we focus on the difference between firms in polluting and clean industry sectors using a simple repeated game framework similar to spagnolo 2000 we argue that firms in industries that are naturally polluting because of their input requirements and therefore incur pollution abatement costs will face an additional policy battle compared with other industries everything else equal 3 this enables such industries to sustain greater cooperation and lobbying this is because firms seeking to form a lobby group face a free riding problem due to a limited amount of enforcement power available to punish deviation and ensure cooperation firms that face multiple areas of regulation have an advantage in the formation of lobby groups because they have a greater amount of enforcement power available to reallocate between policy issues when joint lobbying gives large gains in environmental policy this surplus can be reallocated to trade policy for example free riding behavior on trade policy lobbying may more easily be disciplined the prediction that emerges from our theoretical model is that polluting industries are relatively less affected by the free riding problems involved in organizing political action and we thus expect the level of political contributions to be higher in these sectors 4we evaluate this prediction using a cross section data set of u s manufacturing industries our empirical model builds on a multiple equation model by gawande and bandyopadhyay 2000 who test the well established theory of grossman and helpman 1994 on the pattern of protection their theory takes lobby group formation as given we augment gawande and bandyopadhyay s model with an additional equation for environmental policy stringency 5 the empirical results lend support to our theory industry pac contributions and thus the level of lobby group cooperation are greater in industries with larger pollution abatement costs this result is robust to several measures of lobby group formation and environmental policy the present paper contributes to the recent literature on the formation of lobby groups in the area of pollution taxation damania and fredriksson 2000 argue that collusive industries may more easily form lobby groups that oppose such taxes using a related setup damania and fredriksson 2003 discuss the effect of exogenous trade liberalization on environmental policy formation when lobby group formation is endogenous pecorino 1998 and mitra 1999 discuss the formation of trade lobby groups 6 neither of these papers explore the relationship between collective action and the number of policy instruments however

sectoral patterns of production and use of innovations in the uk 1945 1983 abstract based on information on more than 4000 innovations commercialised in the uk between 1945 and 1983 we analyse sectoral patterns and trends in the production and use of innovations a few core sectors chemical mechanical instruments and electronic are of major importance in the production of technology that gets used over a much wider range of sectors including those outside manufacturing similar sectoral patterns of production and use exist in the uk and usa the trend over time in the uk has been toward greater sectoral interdependence in technology and a higher share of uses outside manufacturing reflecting the growth and spread of the electronic based technological cluster any understanding of the nature determinants and dynamics of intersectoral differences in patterns of production and use of technology will require an integration into empirical and theoretical analysis of the characteristics of innovating firms

currency substitution capital mobility and money demand abstract this paper re examines the currency substitution cs issue by specifying a general portfolio balance pb model where domestic residents demand for foreign money is distinguished from their demands for foreign non monetary assets the latter possibility which reflects international capital mobility as opposed to cs per se is already a key feature in the open economy macro literature the inclusion of foreign money leaves the usual asset demand functions unchanged in the pb model that ignores cs at least as far as the appropriate rate of return arguments and their signs are concerned although this suggests that cs is of limited importance in macro modelling it implication for the estimation of money demand functions is pursued an initial attempt is made to empirically isolate the separate efects of high capital mobility and currency substitution for canada germany the united kingdom and the united states the results while not conclusive due to high multicollinearity problems bring into question the empirical as well as the theoretical relevance of currency substitution

market structure and political influence new data on political expenditures activity and success this paper utilizes new data to evaluate the determinants of the political influence of thirty five manufacturing industries on the u s congress during 1976 80 several measures of influence serve to distinguish between political activity and success seller concentration and geopolitical dispersion increase both activity and success but neither industry size nor leading firm size proves significant we test whether political expenditures facilitate obtaining the favors conferred on an industry by its market structure or by influence independent of that strurture statistical inference strongly confirms both roles

the political economy of pollution taxes in a small open economy abstract this paper develops a positive theory explaining pollution tax policy outcomes in a small open economy the equilibrium tax rate depends on lobby group membership the relative importance of lobbying activities and the tax elasticity of pollution the equilibrium properties are investigated the model is extended to incorporate pollution abatement and a pollution abatement subsidy we show that total pollution may be increasing in the pollution abatement subsidy rate this effect arises because the equilibrium pollution tax rate may be decreasing in the subsidy rate due to altered political influence of the lobby groups in the political equilibrium

currency substitution in mexico the dollarization problem the term dollarization will be interpreted in this paper as the degree to which real and financial transactions are performed in dollars relative to those realized in domestic currency an obvious choice for measuring the degree of dollarization in the economy is the proportion of dollars to domestic currency circulating at any point in time this concept of dollarization is closely related to the literature on currency substitution which explains the conditions under which foreign money balances will be held and adapted to expected changes in relative risks and returns among the various currencies the general idea of several representative recent papers see 6 9 12 is that monetary policy will be ineffective in a country where foreign currencies are regarded as good substitutes for domestic currency an implication of this hypothesis is that the elasticity of substitution between domestic and foreign currencies is likely to increase in periods when the exchange rate is floating hence if the issue of currency substitution is empirically relevant one of the stronger arguments for floating exchange rates greater national monetary independence is seriously weakened

trade policy reform endogenous lobby group formation and environmental policy abstract this paper explores the effects of trade liberalization on environmental policy outcomes when collective action is endogenous the polluting industry s ability to undertake lobbying is shown to depend on the degree of competition in the product market establishing a new link between trade and environmental policies if trade liberalization causes industry collective action to become harder to sustain the stringency of the environmental policy is likely to rise these results highlight the role of trade liberalization on product market competition and its consequent impact on the incentive to lobby for less stringent environmental policies

general equilibrium tax incidence under imperfect competition a quantity setting supergame analysis the incidence of various taxes is analyzed in a model with competitive and oligopolistic sectors friedman s grim trigger strategies support collusion with firms producing output to maximize joint profits subject to the constraint that no firm desires to cheat the sustainable level of output depends on the capitalized value of future retaliation therefore tax induced changes in the net return to capital the discount rate affect the output mix through their impact on the sustainability of collusion this collusive pricing effect is isolated and analyzed one result is that a general factor tax on capital but not labor is shifted

portfolio theory and currency substitution one of the major reasons friedman 1953 and johnson 1972 advocated flexible exchange rates was to eliminate supply side monetary substitutability which can incapacitate domestic monetary policy however contributors to the currency substitution literature including miles 1978 girton and roper 1981 and mckinnon 1982 have argued that when economic agents hold both domestic and foreign monies variations in foreign interest rates or expected future exchange rates can make domestic money demand functions unstable as economic agents shift resources in response to changes in prospective relative returns as a result they and others have claimed that flexible exchange rates may not secure domestic monetary autonomy l the major purpose of this paper is to demonstrate the conditions under which foreign and domestic monies are substitutes in demand when economic agents have motives to hold both and to contrast the determinants of currency substitutability with those of the more general concept of asset substitutability importantly it is demonstrated that the usual portfolio theoretic justification for including opportunity cost variables such as foreign interest rates foreign inflation rates or expected

theory and relevance of currency substitution with case studies for canada and the netherlands antilles textabstractabstract this paper develops the theory of currency substitution from a choice theoretic point of view the main result offers a simple relationship between the relative amount of currencies held and their opportunity costs i e interest and capital gains our hypothesis is tested by case studies for canada and the netherlands antilles in contradistinction with other studies we conclude that the elasticity of currency substitution is very small and negative it is shown how the omission of the interest term in other studies biases the elasticity of currency substitution considerably