MOVEMENTS IN THE AVERAGE AGE OF THE CAPITAL STOCK

ADOPTING an approach suggested by Richard Nelson (1964), thepaper reports a model which both identifies the (proximate)determinants of the average age of the capital stock and whichmay be used to obtain an index number series for the averageage from readily available data. The method is illustrated byapplying it to data for the Net Capital Stock in the U.K. overthe period 1948–1981. Oxford Econ. Pap., March 1985, 37(1), pp. 64–70.     

EFFICIENCY EFFECTS OF CHANGES IN COMMONWEALTH GRANTS TO THE STATES: A CGE ANALYSIS*

This paper describes CSF, a general equilibrium model encompassing factors of relevance to economic efficiency in Federal/State funding including: interstate differences in tax bases and unit costs of State‐provided goods; factor mobility; congestion; State‐government behaviour incorporating the possibility that governments in subsidised States embark on expenditures with low benefit/cost ratios (flypaper effects); fiscal externalities; and non‐discretionary expenditures in each State associated with special national responsibilities. The model is applied to Australia where Federal/State funding is a major political and economic issue. Welfare effects of moving from the present Australian funding system based on fiscal equalisation to a system of equal‐per‐capita grants are calculated. CSF implies that the welfare gain from this move would be small. The most important source of potential welfare gain is a reduction in flypaper effects. The recognition of congestion externalities can eliminate the small welfare gain, but only under seemingly extreme assumptions. The results are not very sensitive to variations in assumptions concerning population mobility and fiscal externalities.     

Australian Poverty Quantified by a Family-Based Poverty Index*

We postulate a family-based poverty index (JD) possessing focus, symmetry, monotonicity and decomposability properties commonly required of individualistic indexes. JD also satisfies reformulated distribution and transfer sensitivity axioms which take account of differences between families in their sizes and poverty lines. We introduce a new axiom, substitution sensitivity, which is satisfied by JD but not by the well-known FGT index. Using JD, we describe Australian poverty in the 1980s. We find that head-count ratios and average income gaps dominate the explanation of differences in poverty across family types and across time. Differences in the distributions of poor incomes make minor contributions.     

Can We Explain Inflation Persistence in a Way that Is Consistent with the Microevidence on Nominal Rigidity?

This paper adopts the impulse-response methodology to understand inflation persistence. It has often been argued that existing models of pricing fail to explain the persistence that we observe. We adopt a common general framework that allows for an explicit modeling of the distribution of contract lengths and for different types of price setting. We also evaluate how far the theories are consistent with recent evidence on price and wage rigidity. We find that allowing for a distribution of durations can take us a long way to solving the puzzle of inflation persistence, but not all the way yet.     

The Effects of Reallocating General Revenue Assistance among the Australian States*

The Australian government distributes about 4 per cent of GDP to the State governments in the form of general revenue assistance. The distribution formula, which favours the less populous States, is a source of resentment in Victoria and NSW. We use two general equilibrium models to analyze the regional employment, output and efficiency effects of proposed changes in the formula     

RESTRICTING EMPLOYMENT OF LOW‐PAID IMMIGRANTS: A GENERAL EQUILIBRIUM ASSESSMENT OF THE SOCIAL WELFARE IMPLICATIONS FOR LEGAL U.S. WAGE‐EARNERS

This paper builds on earlier work that used a general‐equilibrium model to show that reducing employment of unauthorized immigrants in the United States through a tighter border‐security policy lowers the average income of legal residents. Here we exploit further the detail available in the general‐equilibrium model to look at distributional effects, recognizing that the policy increases wage rates for low‐paid legal workers. We assess the social welfare effect on legal workers using a constant elasticity of substitution social welfare function. We contrast our general‐equilibrium approach to immigration analysis with the more commonly used partial‐equilibrium, econometric approach. (JEL D63, J61, C68)     

A Measure of the Incidence of the Costs of Structural Change: The Experience of Birth place Groups in the Australian Labour Force during the Seventies*

During the 1970s there were some marked shifts in the occupational composition of the Australian workforce. It is sometimes argued that these had a particularly adverse effect on migrants. However we conclude that the structural pressures of the early 70s had only a minor impact on the relative labour market performances of different birthplace groups in Australia. The analysis involves the construction of a measure of the incidence of the costs of structural change. The correlation between the measure applied to birthplace groups and various indicators of their labour market performances is found to be low.     

Margins,Concentration and Oligopolistic Interdependence*

In this paper we examine the relationship between margins, elasticities of demand and the Hirschman-Herfindahl index of concentration for Australian manufacturing. Our main aim is to estimate the degree of collusion in various manufacturing sectors in the years 1968-69, 1972-73 and 1977-78. There appear to be marked differences in the apparent degree of collusion between industries. It is argued that once sub-optimization is allowed the Cowling-Waterson model will yield biased estimates of the degree of collusion.