the interdependence of european russian energy relations abstract the aim of this article is to explore this dynamic interdependent relationship between russia and europe in the field of energy based on the concept of interdependence and perspectives on the political aspects of trade relations we discuss how russia can exercise power based on its energy resources and how the eu can compensate for its lack of power in the energy game with other trade related capabilities in particular we explore the implications of the lack of a full fledged eu foreign energy policy towards russia with the somewhat counter intuitive conclusion that the eu countries on average not necessarily are better off with a common foreign energy policy

optimal fiscal policy in a business cycle model with public capital in this paper a real business cycle model with optimal tax rates government borrowing and productive public capital is analysed a specification that allows for multiple stochastic shocks to technology and preferences can reproduce some key features describing the cyclical behaviour of postwar u s fiscal policy the optimally chosen policy variables fluctuate substantially over the business cycle but they do not operate like automatic stabilizers jel classification e62 e32 politiquefiscale optimale dans un modee de cycle d affaires avec capital public ce m6moire analyse un modele de cycle d affaires r6el avec taux d imposition optimaux emprunts gouvernementaux et capital public productif une sp6cification de ce modele qui enregiste plusieurs chocs stochastiques affectant technologie et pr6f6rences peut reproduire quelquesunes des caract6ristiques d6crivant le comportement cyclique de la politique fiscale d apres guerre des etats unis les variables correspondant a la politique optimale choisie fluctuent substantiellement au cours du cycle mais n operent pas comme des stabilisateurs automatiques

export demand us farm income and land prices 1945 1985 the growing openness of the u s economy has caused world supply and demand conditions to have significant farm level impacts emphasizing the important macroeconomic linkages between capital goods and factor markets in agriculture schuh 1983 this study considers the linkage from the international grain market to u s farm income in the post war period 194985 this linkage suggests that export demand may also have played an important role affecting land and other input prices through the derived demand relationship burt 1986 phipps 1984 and robison lins and venkataraman 1985 have each shown that land prices are closely tied to real and expected net returns to farming this study seeks to supplement their findings by examining the relative role of exports in determining these returns over time empirical results clearly show the export farm income connection the further linkage to land values while present is somewhat less clear

exogenous oil shocks fiscal policy and sector reallocations in oil producing countries abstract previous literature has suggested that different mechanisms of transmission of exogenous oil shocks are responsible for the negative effects on the economic performances of oil exporting countries this paper aims at providing further evidence on the role of sectoral reallocation between private and public sectors in explaining the impact of shocks to oil revenues on the economic growth rates of major oil producing countries namely the gcc gulf corporation council countries the effects of oil shocks and expansionary fiscal policy on the business cycle of oil producing countries are examined the possibility to distinguish between various components of public sector spending policy that is purchases of consumption goods investments in productive activities and compensation for public employees is in particular allowed for a real business cycle rbc model is calibrated to fit the data on an average oil producing country results from the simulation of the theoretical model suggest that the possibility that the expansion of the size of the government due in particular to the increase in the number of employees can explain a large fraction of the negative effects of shocks to oil revenues on the private sector of the economy however since the growth in size of the public sector more than compensate for the reduction in size of the private sector an increase in oil revenues has the effect to boost total output

optimal taxation in models of endogenous growth we study the problem of optimal taxation in three infinite horizon representative agent endogenous growth models the first model is a convex model in which physical and human capital are perfectly symmetric our second model incorporates elastic labor supply through a lucas style technology analysis of these two models points out the danger of assuming that government expenditures are exogenous in our third model we include government expenditures as a productive input in capital formation showing that the limiting tax rate on capital is no longer zero in numerical simulations we find similar effects on growth and welfare in all three models

optimal taxes without commitment abstract in the problem of optimal taxation in an economy with labor and capital the optimal solution when the government can commit to a sequence of tax rates entails that the tax on capital tends to zero in the limit with all the tax burden on labor it is well known however that this solution is time inconsistent so if the commitment power is not perfect this second best tax plan will not be sustainable we model explicitly the trade off between the cost of revising the tax plan and the benefit of the revision as a result when commitment is not possible both the limit tax rate and the steady state capital are different from their levels in the second best solution limit taxes on capital may be strictly positive but it may also be the case that the only sustainable plan has subsidies to capital the subsidies induce an overaccumulation of capital which becomes a commitment device against revisions of the tax plan journal of economic literature classification numbers h21 c73

interdependent international relations and the expansion of ethanol production and consumption the brazilian perspective abstract the global production and consumption of ethanol are expected to increase the growing interdependence of markets and nations producers and consumers of biofuels has led actors to seek and devise mechanisms intended to develop the sector this paper aims to analyze the interdependent international relations between brazil and other ethanol biofuel producer and consumer countries to do so the paper explores the theory of complex interdependence and the game theory a quali quantitative study was conducted involving the application of two questionnaires to experts on biofuels and documentary analysis aided by qda miner software the results show that brazil shares highly interdependent relations with the united states an intermediate degree of interdependence with europe and a low degree of interdependence with china the dimensions of those interdependent relations can be ranked according to importance in the following order first the political then the economic technical and finally the social environmental dimensions a number of actions can be envisaged that could lead ethanol to achieve an increasingly strategic position in the diversification of the energy matrix in different countries technological efforts to improve production efficiency the creation of globally integrated policies designed to provide security and develop the production and consumption infrastructure the reduction of international tariffs on the product and the transformation of ethanol into a global commodity with a large number of countries buying and selling the product this paper faced the challenge of integrating approaches and concepts from two complex theoretical areas complex interdependence theory and game theory the research methodology and the insights gained from the ethanol case contribute to the literature on the applicability of these two theoretical approaches

electoral uncertainty fiscal policy and macroeconomic fluctuations abstract in this paper we study the link between elections fiscal policy and aggregate fluctuations the setup is a stylized dynamic stochastic general equilibrium model incorporating both technology and political re election shocks the latter are incorporated via a two party model with elections the main theoretical prediction is that forward looking incumbents with uncertain prospects of re election find it optimal to follow relatively shortsighted fiscal policies and that this hurts capital accumulation our econometric estimation using u s data finds a statistically significant link between electoral uncertainty and policy instruments and in turn macroeconomic outcomes

tax disturbances and real economic activity in the postwar united states abstract this paper investigates the macroeconomic effects of cyclical fluctuations in marginal tax rates it finds that systematically including tax variables in a standard real business cycle model substantially improves the model s ability to reproduce basic facts about postwar u s business cycle fluctuations in particular modeling fluctuations in personal and corporate income tax rates increases the model s predicted relative variability of hours and decreases its predicted correlation between hours and average productivity fluctuations in tax rates produce large substitution effects that alter the leisure labor supply decision

by force of demand explaining cyclical fluctuations of international trade and government spending abstract this paper explores the role of demand shocks as an alternative to productivity shocks in driving both domestic and international business cycles within the international real business cycle irbc framework in addition to those well documented domestic business cycle fluctuations e g the volatility and cyclicality of output consumption investment labor hours and labor productivity and international business cycle properties e g the countercyclical net export and the comovement puzzle this paper focuses on two additional stylized facts in the industrialized countries the procyclical trade openness the gdp fraction of trade volume and the countercyclical government size the gdp fraction of government spending using a parsimonious dynamic stochastic general equilibrium model we show that the model s predictions under productivity shocks are not consistent with these facts instead a demand shock driven model replicates the above facts while matching other domestic and international business cycle properties an estimated version of the model confirms the quantitatively important impacts of demand shocks

marginal income tax rates in the united states a non parametric approach abstract the objective of this paper is to estimate both the u s federal marginal income tax rate and the state and local marginal income tax rates we use the non parametric regression method and data on income and tax extracted from u s individual tax model files for the period 1985 1995 the flexibility of the non parametric approach and the information at the individual level enable us to construct a more reliable time series of the average federal marginal income tax rates and that of the average state and local marginal income tax rates our results suggest that the average federal marginal income tax rate varies from 18 2 to 21 8 and the average state and local marginal income tax rate varies from 4 7 to 5 6 we also find that the state and local income tax accounts for roughly 18 of the total income taxes paid during 1985 1995 moreover our analysis shows that stephenson journal of monetary economics 41 1998 pp 389 409 provides the most consistent tax rate series for use in applications that require estimates of tax rates for years prior to 1985

optimal government spending with labor market frictions abstract we study optimal government spending in a business cycle model with labor income taxes and unemployment due to hiring costs labor market frictions raise the optimal steady state ratio of government spending to private consumption the labor tax rate is higher since profits are taxed that arise from employed workers which save hirings costs for calibrated examples the quantitative effect of labor market frictions on optimal fiscal policy is small in the short run optimal policy involves a strongly procyclical reaction of the tax rate to technology and preference shocks while the ratio of public to private spending is close to flat this ratio is however markedly countercyclical if taxes are constrained to be constant over the cycle

a normative analysis of public capital a normative analysis of short term public capital investment is carried out using cost benefit analysis this cost benefit approach explicitly incorporates the durability of capital into the computation and thus include an aspect of public capital omitted from previous studies which focus on productivity estimation methods used else where have been improved by properly handling several concerns that have been raised in addition this behavioural model yields many structural equations suitable for estimation which results in highly efficient parameter estimates although a small elasticity is found for public capital the benefit is greater than the cost

optimal state contingent capital taxation when is there an indeterminacy abstract several recent papers on dynamically optimal taxation have derived indeterminacy results regarding state contingent capital taxation in stochastic equilibrium models with state contingent government debt i show that these results rely crucially on the assumption that there is a single aggregate decision about private capital investment in a model with many technologies and many capital goods the need to preserve individual investment incentives imposes as many constraints on government policy as they are intertemporal investment decisions the structure of capital tax rates and the structure of government debt are both restricted in many dimensions

redistributive taxation in a simple perfect foresight model abstract we investigate the redistributive potential of capital taxation in an intertemporal maximizing model of capital formation first even unanticipated redistributive capital taxation is severely limited in its effectiveness since it depresses wages second under any convergent redistributive tax policy which maximizes a paretian social objective the capital income tax will converge to zero independent of the factor supply elasticities these results are independent of workers holdings of capital

indivisible labor lotteries and equilibrium abstract this paper considers an economy where labor is indivisible and agents are identical although the discontinuity in labor supply at the individual level disappears as a result of aggregation it is shown that indivisible labor has strong consequences for the aggregate bahavior of the economy it is also shown that optimal allocations involve lotteries over employment and consumption

effective tax rates in macroeconomics cross country estimates of tax rates on factor incomes and consumption abstract this paper proposes a method for computing tax rates using national accounts and revenue statistics using this method we construct time series of tax rates for large industrial countries the method identifies the revenue raised by different taxes at the general government level and defines aggregate measures of the corresponding tax bases this method yields estimates of effective tax rates on factor incomes and consumption consistent with the tax distortions faced by a representative agent in a general equilibrium framework these tax rates compare favorably with existing estimates of marginal tax rates and highlight important international differences in tax policy

a framework to evaluate security of supply in the electricity sector security of electricity supply soes has become a major concern for regulators and policymakers over the last decade however most work focusses either more generally on energy security or on a single fuel we develop a comprehensive but flexible framework to assess the soes for a single jurisdiction taking into the account the specificities of electricity this framework has two aims i provide a snapshot of the situation to understand current weaknesses and determine what actions are required ii capture the evolution over time to evaluate progress and identify potential problems before they materialise the framework based on an extensive literature review consists of twelve dimensions that are critical for soes we develop metrics that capture the state and evolution of each dimension this framework is intended to be a management information tool for all stakeholders aimed at organising data and structuring its analysis to enable monitoring the evolution of the soes while also functioning as an early warning system by flagging potential future problems

public investment in infrastructure in a simple growth model abstract in this paper we examine the implications for capital accumulation when infrastructure enters as an external input into private production functions in our model infrastructure is nonexclusive but may exhibit varying degrees of nonrivalry revenues from uniform taxes on capital and labor income are used to finance public investment in infrastructure we show that the optimal tax rate is independent of the degree of nonrivalry when production exhibits constant returns to augmentable factors the equilibrium displays constant growth for most parameters the growth rate depends on the population size under decreasing returns the optimal trajectory exhibits monotonic convergence to a steady state level

long run growth and welfare effects of public policies with distortionary taxation abstract in a one sector growth model with infrastructure investment we study the impact of fiscal policies on growth the government collects taxes on labor income and profits the government uses these revenues to purchase infrastructure investment provide utility enhancing government services and to provide transfer payments to the households we show that the balanced growth rate is an increasing function of the percent of government revenues that goes to infrastructure we find that the growth maximizing mix of taxes depends on the elasticity of substitution between inputs in particular with distortionary taxes the growth maximizing tax rate on capital is higher the lower the elasticity of substitution between private physical capital and public capital in addition the growth maximizing size of the government is higher when the elasticity of substitution between public and private inputs is low we also investigate welfare effects of other public expenditures as well depending on the elasticity of substitution in production the welfare implications of different public policies can be substantial

time consistent control in non linear models abstract the paper shows how to use optimal control to compute optimal time consistent markovian government policies in nonlinear dynamic general equilibrium models it extends cohen and michel s 1988 results for the linear quadratic case the method involves replacing private agents costate variables with flexible functions of current state variables in the government s maximization problem the functions hold in equilibrium to an arbitrarily close approximation they can be found numerically by perturbation or projection methods a stochastic model of optimal public spending illustrates the technique

prelude to the resource curse explaining oil and gas development strategies in the soviet successor states and beyond the literature on resource rich states leaves a key and prior question unexplored why and how do states choose to develop their natural resources the authors address this gap by explaining the di

food prospects for the developing countries current interest in food prospects for the developing world is based on a set of four relatively straightforward questions upon closer analysis however these questions prove to be successively more complex the first question is quite direct will food production in the third world grow more rapidly than population the answer seems to be a clear yes between 1961 and 1977 the growth of third world production of major food crops averaged 2 6 percent a year slightly higher than the 2 5 percent annual increase in population leonardo paulino forthcoming there is every reason to believe that third world food production in the future will continue to exceed population growth since the processes for accelerated agricultural growth are now in place in so many developing countries and population growth rates are generally declining the clear exceptions are sub saharan africa and the least developed countries these are nearly synonomous even with a change in agricultural policies in these countries there will be considerable time lags before food production growth rates exceed population growth rates the second question is more involved and much more important with respect to its policy implications will ratios of food production self sufficiency increase in the third world in the long run self sufficiency ratios in the third world will indeed increase but that is the long run of decades in the short run of this decade and the next these ratios will just as certainly decline as rapidly accelerating growth in the demand for food in the third world exceeds capacity to accelerate domestic production growth rates this conclusion is reinforced by the tendency for accelerated food production growth to be associated with forces that further accelerate growth in demand the third question is decidedly complex will the real price of food defined in terms of relative shifts in the demand and supply schedules for food shift upwards over the next two decades as compared to the zero or slightly negative trend over the past few decades it is my judgment that it will in the third world demand for food will clearly continue to shift more rapidly than supply it is less certain that the forces in developing countries will overbalance the converse relationship for the developed countries the final question is the most far reaching what will be the impact of these forces on the nutritional status and the degree of poverty of low income people since lowincome people spend 60 to 80 percent of increments to income on food see my 1978 article food prices are a principal determinant of their real income and nutritional status increasing per capita food production and imports allow a rising number of people to eat better preliminary analysis of crosssection data for african countries show that as aggregate per capita food supplies rise the proportion of malnourished children declines see shubh kumar 1981 increased capital intensity and the dynamics of food production itself will raise real wages for much of the laboring class see uma lele s and my 1981 article but for some individuals and particularly for those in countries left out of development processes the situation will be more difficult in the future than in the decades of the 1950 s and 1960 s this i should emphasize is the note of pessimism in this paper

the macroeconomic effects of distortionary taxation abstract prescott 1986 estimates that technology shocks account for 75 of the fluctuations in the postwar u s economy this paper reestimates the contribution of technological change for a standard business cycle model that includes a public sector and fiscal disturbances i find that a significant fraction of the variance of aggregate consumption investment output capital stock and hours of work can be explained by disturbances in labor and capital tax rates and government consumption i also use the model to quantify the welfare costs of capital and labor taxation for both the time series and welfare calculations maximum likelihood estimates of taste technology and policy parameters are used

output growth the real wage and employment fluctuations this paper is an attempt to contribute to the integration of business cycle analysis with long term growth a real business cycle model with endogenous growth is developed and estimated with u s data in the present framework wage movements do not have to be transitory to generate fluctuations in labor effort the reduced form is a constrained bivariate output hours or real wage hours vector autoregressive process the bivariate setup provides a useful framework for analyzing the persistence of output fluctuations given that the theory implies that hours of work contain information about future output movement copyright 1991 by american economic association

stochastic depreciation and the business cycle the authors study a version of the neoclassical growth model in which shocks to both aggregate productivity and the depreciation of capital generate fluctuations around the steady state growth path depreciation shocks induce an inverse comovement between average labor productivity and hours worked when the model is calibrated to u s data it generates a correlation between productivity and hours which is significantly closer to the observed value than that of standard real business cycle models furthermore the addition of depreciation shocks does not cause a deterioration of the predictions of the model concerning other comovements copyright 1994 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

realistic cross country consumption correlations in a two country equilibrium business cycle model abstract a well known feature of one good multi agent arrow debreu economies with edentical additively separable homothetic preferences is that the consumptions of all agents are perfectly correlated such economies are widely used in interpreting business cycles but seem to be inconsistent with observed cross country correlations of aggregate consumption this paper provides an example of a two country real business cycle model in which preferences are not separable between consumption and labor supply the model has a simple closed form solution closed form solution and allows for fluctuations in labor supply in equilibrium moreover it generates correlations between national consumption rates which are close to some of those observed in historical data jel f41

optimal fiscal policy public capital and the productivity slowdown abstract this paper develops a quantitative theoretical model for the optimal provision of public capital we show that the ratio of public to private capital in the us economy since 1925 evolves in a manner that is broadly consistent with an optimal transition path derived from a simple growth model the model is used to quantify the conditions under which an increase in the stock of public capital is desirable and to investigate the degree to which nonoptimal fiscal policies can account for the us productivity slowdown

economic interdependence bargaining power and political influence bargaining theory is used to evaluate the proposition that asymmetrical economic interdependence among states is a source of political power it is shown that asymmetrical economic interdependence does not imply that less dependent actors will be able to exercise political influence over more dependent ones the use of economic interdependence for political influence requires instead that the exchange of economic resources for political concessions make both parties to a relationship better off than they would be if they bargained over the distribution of the gains from the economic relationship alone whether this is true is independent of the degree of asymmetry in the economic relationship or its direction an explanation is given for the fact that other scholars have reached different conclusions and the implications of these results for our understanding of a variety of types of relations among governments are derived

is public expenditure productive abstract this paper considers the relationship between aggregate productivity and stock and flow government spending variables the empirical results indicate that i the nonmilitary public capital stock is dramatically more important in determining productivity than is either the flow of nonmilitary or military spending ii military capital bears little relation to productivity and iii a core infrastructure of streets highways airports mass transit sewers water systems etc has most explanatory power for productivity the paper also suggests an important role for the net public capital stock in the productivity slowdown of the last fifteen years

has fiscal policy helped stabilize the postwar u s economy abstract in this paper i consider whether postwar fiscal policy has helped stabilize the u s economy i do this by adding to the stochastic growth model fiscal policy feedback rules estimated from postwar data these rules allow fiscal policies to respond to current and lagged output and labor hours i use the estimated policy rules to see if postwar fiscal policy reduces output volatility and or lengthens expansions and shortens recessions i find that fiscal policy in general provides little stability on either count i also find that the endogenous feedback links by themselves can provide some stabilization

fiscal policy in general equilibrium this paper studies four classic fiscal policy experiments within a quantitatively restricted neoclassical model the authors main findings are as follows 1 permanent changes in government purchases can lead to short run and long run output multipliers that exceed one 2 permanent changes in government purchases induce larger effects than temporary changes 3 the financing decision is quantitatively more important than the resource cost of changes in government purchases and 4 public investment has dramatic effects on private output and investment these findings stem from important dynamic interactions of capital and labor absent in earlier equilibrium analyses of fiscal policy copyright 1993 by american economic association

the scarcity syndrome that may affect us profoundly in years ahead after half a century of conventional wisdom that the farm problem was one of surplus today s perception is that the problem is shortage i call this the scarcity syndrome it has seeped into farmer attitudes economic analyses and legislation it has helped escalate farmland prices and the demand for credit it will probably profoundly affect commodity programs during the 1980s we are not sufficiently aware of the far reaching effects of this new attitude in this note i examine the scarcity syndrome its validity and effects

will the european commission s policy hinder gas supplies to central and eastern european countries opal case decision abstract natural gas has become one of the most important sources of energy the liberalization of the gas sector in the last decades brought a dynamic development of the energy infrastructure in the eu thus it must be underlined that the liquidity of the gas market is dependent on the outside supplies the study examines the european commission s policy taking into consideration specifically its decision on the exemption of opal gas pipeline from eu rules the main question is what would be the long term effect of such policy in the authors opinion there are several serious doubts whether the commission has made an appropriate decision the major one concentrate on the impact of the decision which according to the commission refers only to germany and czechia gas market nevertheless an analysis of gas flow based on the entsog leads to a conclusions that decision could have a substantial influence on slovakia and poland if so under the eu provisions the investment can not be excluded form the eu rules therefore the authors will analyze step by step the commission decision and present its possible future impact on the internal energy market

a simple time series test of endogenous vs exogenous growth models an application to the united states this paper presents evidence supporting endogenous growth models that emphasize public structural capital the authors apply a simple test of endogenous vs exogenous growth models in exogenous growth economies temporary innovations to policy variables lead only to temporary changes in gnp levels while in endogenous growth economies the innovations can lead to permanent changes in gnp levels of the seven u s policy variables they examine only non military equipment capital and non military structural capital have a statistically and economically significant effect upon long run gnp levels further estimation suggests that the non military equipment capital result is not robust and that several disaggregate components of structural capital contribute significantly copyright 1996 by mit press

the energy union and security of gas supply this paper discusses and contrasts the proposals for an energy union in the european union and its impact on security of gas supply based on an examination of historical east west gas trade and by revisiting energy security concepts the paper analyzes how problems with dependency on energy imports can be reduced the paper discusses how the positions of central and eastern european countries ceec where security challenges are especially evident and the positions of countries in western europe where they are less acute interact and conflicts in making a common energy security policy as part of the energy union the paper argues that the mainly confederative structure of the eu and diverging national situations make it difficult to unify positions into an effective common energy policy however with the ceec in the eu the eu is also changing and an increased focus on energy security may be accepted extended interconnectedness within and to the ceec appears to be the central issue that would mitigate albeit not solve contemporary security of gas supply problems as it would also bring the internal energy market closer to reality it could in addition help the energy union to become a unifying project merging the interests in the east and the west despite their different security of gas supply concerns with russian gas

optimal tax rules in a dynamic stochastic economy with capital abstract this paper investigates optimal taxation in a disaggregated neoclassical growth model optimal tax rules for a government which must finance an exogenous stochastic stream of spending are investigated many locally optimal rules are found and two principles which provide useful guidance into interpreting them are described these principles state that high steady state investment and small investment volatility are desired a persistent income tax policy suggested by judd 1989 is found to be among the best policies although some policies with complicated dynamic implications have similar welfare levels because of its simplicity the persistent income tax rule is recommended

optimal tax debt and expenditure policies in a growing economy abstract this paper employs an endogenous growth model to analyze the role of a consumption tax in enhancing growth and welfare provided government expenditure impacts directly on the decisions of private agents two fiscal instruments are necessary to replicate the first best optimum the tradeoff between consumption and income taxes to achieve this outcome is discussed and shown to depend upon the degree of congestion associated with the public good and the level of government expenditure relative to its social optimum in general the analysis suggests a potentially important role for a consumption tax as part of an overall optimal fiscal package

solving for optimal simple rules in rational expectations models this paper presents algorithms that solve for optimal simple monetary policy rules in rational expectations models with precommitment and discretion the algorithms are applied to the models in fuhrer j money credit banking 29 1997 214 clarida et al j econ lit 37 1999 1661 and rudebusch econ j 112 2002 402 to examine the efficiency properties of operational policy rules we show that optimized taylor type rules preform well in these models but that aside from the fuhrer moore model this result is sensitive to whether the central bank can respond to current period shocks taylor type rules that are operational in the sense that they do not respond to current period information are found to be highly inefficient in the rudebusch model and in the clarida et al 1999 model

to react or not technology shocks fiscal policy and welfare in the eu 3 this paper develops a dynamic stochastic general equilibrium dsge model to examine the quantitative macroeconomic implications of counter cyclical fiscal policy for france germany and the uk the model incorporates real wage rigidity and consumption habits as the particular market failures justifying policy intervention we subject the model to productivity shocks and allow policy instruments to react to the output gap and the debt to output ratio a welfare analysis reveals that the most effective instrument target combination is to use public consumption to stabilize the output gap moreover welfare gains from counter cyclical fiscal policy are much stronger in the presence of wage rigidities compared with consumption habits finally since active policy and automatic stabilizers are substitutes it is possible that relatively undistorted economies may be in need of countercyclical fiscal action due to inadequate automatic stabilizers

cheap food policy fact or rhetoric abstract the term cheap food policy has frequently been used as a descriptor for us commodity programs by those who contend payments to farmers ultimately result in lower food costs for consumers more recently farm policy has been criticized for contributing to the obesity problem in the us by making large quantities of fattening foods widely available and relatively inexpensive this paper econometrically evaluates the impact of direct government payments on the affordability of food in the us in the aggregate and across specific food groups the models find direct payments do not significantly affect the affordability of food either in the aggregate or across specific food groups