The public and private provision of pure public goods and the distortionary effects of income taxation: a political economy approach

Abstract .  A pure public good is provided by the government and the voluntary contributions of two types of households. The government finances its contribution by means of income taxation. The latter has distortionary effects. A third type of household never makes contributions. We analyse the effects of changes in the income tax rate on (a) the provision of the public good, (b) the private contributions of the households, and (c) changes in the distribution of income and welfare between contributing and non-contributing households. We derive a simple and testable condition under which the lowering of the income tax entails a Pareto improvement.     

Estimating efficiency spillovers with state level evidence for manufacturing in the US

Unit specific effects are often used to estimate non-spatial efficiency. We extend such estimators to the case where there is spatial autoregressive dependence and introduce the concept of spillover efficiency. Intuitively, we present an approach to benchmark how successful units are at exporting and importing productive performance to and from other units.     

Not just babble: Opening the black box of communication in a voluntary contribution experiment

We let subjects in a voluntary contribution experiment make non-binding numerical announcements about their “possible” contributions and, in some treatments, send written promises to contribute specific amounts. We find that announcements were responded to both by others’ announcements and by real play, for example announcements led to costly punishment when found to be misleading. We also find that adding pre-play announcements to treatments with punishment can increase efficiency by letting cost-free warnings substitute for costly punishment. The threat of punishing false announcements and promises helps reduce false signals, but only when promise statements can be sent is the effect sufficient for achieving greater efficiency.     

The behaviour of relative prices in the European Union: A sectoral analysis

Using multivariate unit root test methods, this paper investigates the Purchasing Power Parity (PPP) hypothesis at the sectoral level across six European countries over the last 17 years. Evidence of mean reversion towards PPP is found for the relative prices of some sectors and countries. Mean reversion in relative prices is explained by cross-country and cross-sectoral characteristics such as the distance between countries, nominal exchange rate volatility, differences in GDP per capita, non-tariff barriers, research and development, advertising, industrial concentration and tradeability of the products.     

Estimating dynamic demand for airlines

This paper uses an original panel dataset with posted prices and sales to estimate a dynamic demand. We find that consumers become more price sensitive as time to departure nears which is consistent with having lower valuations. This result provides empirical support to a key theoretical implication in Deneckere and Peck (2012)—high-valuation consumers purchase earlier. We also find that the number of active consumers increases closer to departure.     

Dynamics of regional unemployment rates in Brazil: Fractional behavior,structural breaks,and Markov switching

This paper investigates unemployment dynamics in Brazil and in its major metropolitan regions using a fractional integration model. Aspects regarding structural breaks and regime switches are discussed as well. To do that, the methods proposed by Hassler and Meller (2009) and Tsay and Härdle (2009) are used. The major results indicate that unemployment rates have two different levels of persistence. The first one is nonstationary whereas the second one is nonstationary but mean-reverting. Based on these findings, the convergence hypothesis of regional unemployment rates was tested. Following the fractional stochastic convergence criterion put forward by Mello and Guimaraes-Filho (2007), it was concluded that regional unemployment rates are convergent.     

On Okun’s law in OECD countries: An analysis by age cohorts

This study investigates Okun’s law in OECD countries by examining estimates for male and female age cohorts for the period 1998–2012. We find that the estimated Okun coefficients are not always statistically significant for each subgroup of the population. Our results also highlight a general common pattern of higher Okun coefficients for the youngest cohorts. This suggests that the young population, and particularly the young male population, tends to be most exposed to the business cycle in both developed and emerging OECD countries.     

Employment changes, the structure of adjustment costs, and plant size

In this paper, we analyze the pattern of employment adjustment using a rich panel of Norwegian plants. The data suggest that the frequency of episodes of zero net employment changes is inversely related to plant size. We develop and estimate a simple “q” model of labor demand, allowing for the presence of fixed, linear and quadratic components of adjustment costs. The econometric evidence supports the existence of purely fixed components, unrelated to plant size. As a result, the range of inaction is wider for smaller plants. The quadratic component of costs is also always important. In most specifications fixed costs are higher for employment contractions. The quadratic component is higher during employment contractions compared to expansions for small plants, while this is not true for larger plants.     

Reference technology sets,Free Disposal Hulls and productivity decompositions

Diewert and Fox (2013) proposed decompositions of a Malmquist-type productivity index into explanatory factors, with a focus on extracting technical progress, technical efficiency change and returns to scale components. A major problem with their decompositions is that it may be difficult to determine the appropriate reference technologies. Using relatively unrestrictive regularity conditions, the paper develops a data envelopment type approach for decomposing productivity growth for a panel of production units into explanatory factors based on the Free Disposal Hull methods pioneered by Tulkens and his co-authors.     

Efficiency in Crime Prevention: A Case Study of the Lisbon Precincts

This paper analyzes the technical efficiency of the Lisbon police precincts in order to investigate its performance. A stochastic cost frontier model is used to generate efficiency scores, assuming that efficiency is time varying. It investigates its efficiency and finds that the results are, at best, mixed since the efficient scores are low and not time varying. Therefore, an alteration of management procedures is proposed in order to enable efficiency to be increased based on a governance–environment framework.Financial support from Fundação para a Ciência e Tecnologia/MCT under FCT/POCTI partially funded by FEDER is gratefully appreciated. The authors also thank the participants at the International Atlantic Economic Conference in Lisbon, Portugal, March 10–13, 2004 for helpful comments. For our mistakes, the usual disclaimer applies.     

An experimental investigation of wage taxation and unemployment in closed and open economies

We investigate experimentally the economic effects of wage taxation to finance unemployment benefits for a closed economy and an international economy. The main findings are the following. (i) There is clear evidence of a vicious circle in the dynamic interaction between the wage tax and unemployment. (ii) Employment is boosted by budget deficits but subsequent tax rate adjustments to balance the budget lead to employment levels substantially lower than theoretically predicted. (iii) A sales risk for producers due to price uncertainty on output markets appears to cause a downward pressure on factor employment. For labor the wage tax exacerbates this adverse effect.     

COMPARATIVE ANALYSIS OF PLANT DYNAMICS BY SIZE: KOREAN MANUFACTURING

A comparative analysis on Korean manufacturing plants is performed by size of plants and sources of TFP growth are decomposed into entry, exit, and survival effects of plants, focusing on the pre- and post-crisis periods. Additional survival analyses investigate internal and external determinants of the survival of plants. The results indicate that the exit of small- and medium-sized establishments (SMEs) with higher productivity is becoming problematic in the post-crisis period. The improvements in large-scale establishments (LSEs) after the crisis appeared to occur generally in high-technology industrial sectors; SMEs in low-technology industries are suffering from a sluggish market selection process.