Policy Makers' Preferences,Party Ideology,and the Political Business Cycle

We generate data on the relative preferences of policy makers for inflation and output stability and reexamine how policy makers and political parties behave for 24 countries by using this new approach. This behavior is essential in both the partisan cycle models and the opportunistic political cycle analysis. Our evidence suggests that right-wing parties exhibit a higher relative preference toward stabilizing inflation than left-wing parties. We obtain mixed results on the opportunistic behavior of incumbent parties. Finally, when we analyze the behavior of left and right ideologies separately, we find overwhelming support for party resemblance in the electoral year and strong evidence of opportunistic conduct by right-wing parties.     

Ownership or Management Problems? A Case Study of Three Indonesian State Enterprises

Public enterprise managers will tend to behave as entrepreneurs, strive for efficiency and achieve profitability if they and the government ministry responsible for their supervision have compatible profit objectives. The adoption of such objectives by both parties will help to shift state enterprises away from political influence and towards a strictly market orientation. In contrast, managers will behave as government representatives and adopt a bureaucratic style of management if the government imposes sociopolitical goals on state enterprises. Agency costs (costs incurred in the relationship between principal and agent) increase as the parties become less cost conscious, and inefficiency tends to be the result. Too great an emphasis on socio-political rather than commercial goals may leave a country facing the problem of a ‘high-cost’ economy. These tendencies are indicated in this study of three Indonesian state enterprises.     

Relating Product Prices to Long‐Run Marginal Cost: Evidence from Solar Photovoltaic Modules

A basic tenet of microeconomics is that for a competitive industry in equilibrium the market price of a product will be equal to its marginal cost. This paper develops a model framework and a corresponding empirical inference procedure for estimating long‐run marginal cost in industries where production costs decline over time. In the context of the solar photovoltaic (PV) module industry, we rely primarily on firm‐level financial accounting data to estimate the long‐run marginal cost of PV modules for the years 2008–2013. During those years, the industry experienced both unprecedented price declines and significant expansions of manufacturing capacity. We compare the trajectory of average sales prices with the estimated long‐run marginal costs in order to quantify the extent to which actual price declines were attributable to reductions in production costs. The trajectory of estimated product costs is then extrapolated to forecast an equilibrium trend line for future PV module prices.     

European Inflation and the New Keynesian Phillips Curve

The majority of macroeconomists who have studied inflation dynamics in Europe argue that the New Keynesian Phillips Curve (NKPC) provides a good way to describe changes in the price level from the 1970 on. However the vast majority of these articles estimate the NKPC using the labor income share as the proxy for real marginal cost. This article argues that the labor share cannot serve as a proxy for real marginal cost because of its countercyclicality and the lack of labor adjustment costs. Once we account for labor adjustment costs, we are able to derive a new marginal cost proxy that is indeed procyclical; however, we find that the NKPC fails to produce coefficients consistent with its underlying structural parameters when a procyclical marginal cost proxy is used. This casts serious doubt whether the NKPC is empirically applicable to Europe or, for that matter, any other country.     

The Social Cost of Carbon and its Policy Implications

The shadow price, or ‘social cost’, of carbon isan important indicator of the global incremental damage doneby emitting greenhouse gases today. Cost–benefit analysiswould set the optimal amount of greenhouse-gas-emission reductionat the point where this social cost just equals the incrementalcost of controlling emissions. The higher the value for thesocial cost of carbon, the more control is warranted. This comparisonassumes that cost–benefit analysis is the correct wayof determining climate-change policy, and many believe thisis not the case because of the very long-term, irreversible,and potentially catastrophic nature of global warming. But,in the short run at least, a comparison of cost and benefitsis required, and, in any event, all decisions imply costs andbenefits. But what is the ‘right’ figure for thesocial cost of carbon? This paper reviews the UK government'sassessment of the cost and concludes that it has been set fartoo high because of a misreading of the integrated assessmentmodels used to balance costs and benefits. Moreover, adoptionof the UK government's shadow price would have formidable implicationsfor energy policy in the UK, and for policies on afforestation.     

A choice‐theoretic analysis of a corporate tax holiday versus a subsidy

This paper attempts to compare the effect of a corporate tax holiday with that of a subsidy on the behaviour of the individual firm. Assuming the subsidy equals the amount of tax paid by a firm operating under the subsidy system, we find that the firm's net profit will be greater under the tax holiday than under the subsidy regime. Similarly, if the subsidy exceeds the tax by an amount that would equalize the profits made by the (“marginal”) firm under the two regimes, then it is found that firms with higher than “average” unit costs would opt for the subsidy system; conversely, firms with a low cost structure would maximize profits by selecting the tax holiday. Finally, a multiperiod analysis of the particular choice facing prospective manufacturers in Ciskei, shows that the firm would normally choose the subsidy system except if the current tax exceeded the subsidy at the output level representing maximum profit under the tax holiday.     

Intertemporal production and asset pricing: a duality approach

This paper analyzes a firm's intertemporal optimization problemunder uncertainty and presents a new asset pricing model fromthe vantage point of the production side of the economy usingthe duality principle. The intertemporal profit-maximizationproblem is formulated using the familiar cost function, andthe production Euler equation that encapsulates the joint behaviorof production and asset returns is derived. An asset's riskis measured by its covariance with the stochastic discount factorrepresented by the ratio of discounted marginal costs. The riskpremium is determined by the conditional covariances of assetreturns with output growth scaled by the degree of scale economiesand with input price changes weighted by the cost share of aninput. The proposed model has the standard structure of a multibetapricing model and suggests four economic risk factors–outputgrowth, the return on human capital, the return on physicalcapital, and technology shocks–for use in empirical analysis.     

基于电动车研发成本补贴的回报共享制度研究

从制度设计的角度论证电动车企业研发行为与政府补贴的关系。以电动车企业研发行为为例将回报共享制度应用其中,建立基于成本补贴的回报共享制度模型,推导出电动车企业在有无成本补贴情况下的个体效用最大下的最优研发努力水平。研究表明,具有成本补贴的回报共享制度下的个体企业研发努力水平要高于单纯的回报共享制度下的个体研发努力水平。此时调整研发成本补贴系数能够实现改进的回报共享制度下的个体企业研发努力水平最优值与群体收益最大的努力水平最优值相等。     

Subsidies for influenza vaccination,vaccination rates,and health outcomes among the elderly in Japan

Vaccination against infectious diseases produces externalities, and providing subsidies is one way of internalizing the externality. The effect of subsidies as a policy tool depends on individual's response to the cost of vaccine. However, there have been few studies on the effects of vaccine costs on vaccination uptake. Using regional variations in vaccination subsidy amount within Japan's current immunization program, we examined the impact of subsidies for the cost of influenza vaccine on the vaccination rates and on two health outcome measures. Our results show that an increase in the subsidy amount by 1,000 yen (10 USD) leads to a one percentage point increase in the vaccination rate among the elderly, suggesting that vaccination rate is responsive to the costs of vaccination. On the other hand, we found no substantial effects on health outcomes.     

Cross-border mergers with flexible policy regime: The role of efficiency and market size

This study provides a theoretical and empirical framework for understanding the determinants of cross-border mergers. Past literature has focused on the effect of trade liberalization as the key factor triggering international mergers. We introduce the idea of flexible policy regime in which optimal policies are sensitive to whether a cross-border acquisition has taken place or not. In a free-trade model given asymmetries in marginal cost, we find that optimal subsidies decline when firms acquire inefficient foreign firms while optimal subsidies increase when firms acquire efficient firms. We also find that as the efficiency of the acquirer increases, the profitability of the acquisition and hence the likelihood that it takes place also increases. We find that the role of market size in triggering cross-border acquisitions may be limited even with free trade.     

Existence and uniqueness of marginal cost pricing equilibrium

This paper considers a regulated monopoly that is subject to a marginal cost pricing policy. A marginal cost pricing equilibrium is a price-subsidy combination for which price equals marginal production cost and any losses are offset by the lump-sum subsidy. Employing basic degree theoretic results, conditions are established under which a marginal cost pricing equilibrium exists and is unique.     

SOCIAL SECURITY REFORM BY THE CARDOSO GOVERNMENT OF BRAZIL: CHALLENGES AND LIMITATIONS OF REFORM TEN YEARS AFTER “DEMOCRATIZATION”

This article has two purposes. The first is to analyze politically why the Cardoso government's social security reform could not be completed. Though democratic political systems (election and political party systems) were reintroduced after the re‐democratization in 1985, Brazil continued to suffer from elements of its traditional political culture such as corporatism, clientelism, nepotism, etc. These were the stumbling blocks for Cardoso's reform. The second purpose is to deepen understanding of Brazilian democracy by casting light on the behavior of political actors (the government, congress, and political parties) over social security reform issues under the Cardoso and Lula governments.     

民主党派参政议政与党的整合能力的研究

现代国家政治是一种政党政治,政党制度往往与政治制度直接相关。我国的政党组织结构模式是中国共产党领导的多党合作制。而在当前民主党派在性质、作用等方面都发生了新变化。面对新形势,要正确处理"执政"与"参政"的关系,民主党派充分履行参政议政职能等问题,要求执政党必须对整合社会能力进行开拓创新。     

Incentives for cost misrepresentation in supply chains

This paper investigates sequential manufacturer–retailer price determination and channel performance under possible misrepresentation by one member of its privately known cost. To the standard double marginalization game, we add a preliminary stage where the manufacturer (alternately the retailer) announces its privately known constant marginal cost. We prove that the manufacturer has no incentive to misrepresent its cost, and we give respective sufficient conditions on the demand function for the retailer to overreport and to underreport costs. Depending on the shape of the demand function, opportunistic behavior by the retailer may lower or raise the manufacturer’s profit and channel performance.     

POLITICAL DEMOCRATIZATION AND KMT PARTY‐OWNED ENTERPRISES IN TAIWAN

This article will study how the existence of KMT party‐owned enterprises (POEs) and their development are related to Taiwan's democratization. POEs are profit‐making enterprises managed by the KMT, the former ruling party. All previous studies about the relationship between democratization and POEs only draw attention to the economic resource aspects of POEs. But the POEs were also KMT political resources in the form of enterprises and became policy tools to the ruling party. This study will argue that the existence of the POEs was a factor that maintained the KMT government and supported its stable management during the process of democratization. Moreover, POEs as political resources enabled Lee Teng‐hui as KMT chairman to demonstrate strong leadership and push ahead with the completion of democratization. But Lee's political mobilization of POEs expanded money politics and perpetuated these enterprises as one of the “authoritarian legacies” in Taiwan's democratic politics.     

Taxicab regulation in Japan

This paper proposes a model of a cruising taxicab industry under laissez faire pricing and free entry, and compares it with alternative regimes including collusive fare setting, collusive restrictions on entry, or both. In the model, under laissez faire, prices are determined by Nash bargaining with complete information and lie above marginal costs. Under laissez faire pricing and free entry the average number of vacant cabs need not be efficient and could be either higher than optimal or less, depending upon the relative bargaining power of individual cabs and potential customers. Under collusive control of entry, the average number of vacant cabs will be set at the efficient level given the prices, which if set collusively will be above the laissez faire prices. These findings shed new light on the political success of cartelizing regulation of the cruising taxicab industry such as that observed in Japan. J. Japanese Int. Economies 20 (2) (2006) 288–304.     

Has Leviathan Been Bound? A Theory of Imperfectly Constrained Government with Evidence from the States

This paper develops a formal theory that combines power-maximizing “Leviathan” political parties with well-defined imperfections in the political process. The model implies that both parties tend to make government larger as their likelihood of electoral victory increases. Empirical tests on state-level data confirm this prediction. Racing the Leviathan hypothesis against alternative theories of party motivation indicates that both the Leviathan and the “contrasting ideologies” views have some degree of validity.     

寻利还是寻租——补贴制度对企业投资的影响

文章首先根据现有研究对市场中存在的功能性、选择性两种类型的政府补贴进行区分,并运用固定效应、logit与tobit模型研究了我国A股上市公司2008-2016年政府补贴对企业投资决策的影响,发现选择性补贴具有明显的人际关系化交换特征;通过对企业是否具有寻租行为与政治联系的分样本检验,发现在人际关系化下,选择性补贴具有寻租性,会占用生产性资本,表现为投资不足,而功能性补贴具有寻利性,普遍易使生产投资过度;在产业层面,通过研究两类补贴的分布特征对行业结构的影响,发现选择性补贴会更大程度地降低市场竞争性,通过logit中介效应模型与交互项检验,发现前期选择性补贴由于提高了企业投资不足的概率,增加了市场份额下降的可能性,从而市场竞争性降低;然而,尽管投资不足会增加企业退市风险,但寻租下的选择性补贴会减少企业退出市场的可能性,因此,市场竞争机制易被人际关系化下的选择性补贴扰乱。     

The Economic Impact of Brexit: Evidence from Modelling Free Trade Agreements

This paper assesses the economic implications of the United Kingdom (UK) leaving the European Union (EU). The basic data on trade in goods and services and investment between the two parties suggest that the cost of “Brexit” could be substantial. Trade between the UK and the EU-27 is large and of a similar order of magnitude as transatlantic trade (between the EU and the U.S.). The precise nature of the (hopefully free) trade agreement UK-EU-27 is still being negotiated. All available studies concur that a significant disruption of trade links will impose economic costs on both sides. However, the EU-27 would bear only a disproportionally small share of the total cost, not just because it is about five times larger than the UK in economic terms, but also for fundamental reasons such as greater market power of its enterprises. Other studies on different free trade arrangements confirm the general proposition that the smaller party has more to gain from eliminating trade barriers (and more to lose from imposing them). This implies that the EU will have a stronger negotiating position.     

面向帕累托最优的零售资产优化模型

当前国内银行业受利率市场化和互联网金融崛起挑战，面临利差持续收窄、经营成本上升等风险。零售银行业务因为风险分散、可以提供稳定低成本的资金而逐渐受到重视，银行业纷纷发力零售经营转型。聚焦零售业务常见的客户资产配置场景，提出一种在客户资产配置中可平衡银行和客户的价值分配和优化的方法，以客户价值度量零售客户通过持有银行的金融产品而获得的价值，以关系价值度量零售客户给银行带来的价值，给出客户价值和关系价值处于帕累托最优状态的资产配置方案。结果表明，该优化方案可以在满足客户或银行一方利益的前提下，实现另一方的收益最大化，有助于提升客户满意度，降低零售业务成本收入比，实现银行与客户双赢。