Ecological dumping under foreign investment quotas

In this paper, we examine the discrimination of emission taxes between the export and nontradable sectors in a small open economy. A few articles indicate that there should be no differentiation of environmental policies between sectors in the economy if the government uses indirect instruments such as emission taxes. However, we show that discrimination of emission taxes may occur in an economy that imposes foreign investment quotas. In particular, the possibility that ecological dumping occurs is higher if export goods are more labor intensive than import goods (as in developing countries). Moreover, in the case where import goods are the most capital intensive, both emission tax rates may be lower than the marginal environmental damage, and ecological dumping may occur. It is also shown that easing foreign capital quotas may deteriorate the country’s welfare.     

Welfare implications of strategic economic policy in eastern Europe

This paper evaluates the welfare effects in a block of selected eastern European countries (Bulgaria, Romania, former Czechoslovakia, Hungary, Poland, and former Yugoslavia) emerging from the possibility to participate in the European integration process and to act as strategic players in dynamic games. The results of the cooperative and noncooperative dynamic game scenarios are compared with fixed policy solutions. The McKibbin-Sachs global model (MSG2 model), which incorporates rational expectations, is used as a framework. A global supply-side shock and a fixed exchange rate regime are considered under the alternative policy layouts. It is shown that international economic cooperation may be advantageous over noncooperation. For the anchor currency of the European Monetary Union (EMU), fixing the eastern European block currencies to the EMU may lead to significant destabilization.     

Technical Improvements and Welfare under International Duopoly

It is now common wisdom that a free-trading country with perfectly competitive markets might be hurt by its own technical improvement of that country's export industry, and that an improvement in the import-competing industry never impoverishes the country if no commodity is inferior for that country. This paper examines the welfare effects of technical progress in a perfectly competitive industry and in an internationally duopolistic market in a two-country, two-good, one-factor trading model. It will be shown that the above propositions are severely qualified in our setting with duopolistic industry.     

Welfare effects of short-sale constraints under heterogeneous beliefs

This paper examines the welfare effects of short-sale constraints in an overlapping generations model of a financial economy with heterogeneous beliefs by focussing on the case of rational beliefs in the sense of Kurz (Econ Theory 4:877–900, 1994). To measure the social welfare, we adopt a measure that is based on the ex post social welfare concept in the sense of Hammond (Economica 48:235–250, 1981), instead of the standard ex ante criterion, since heterogeneity in beliefs invalidates it. Simulation results indicate the existence of socially optimal short-sale constraints.     

A welfare analysis of tariffs and equivalent quotas under demand uncertainty: Implications for tariffication

Under market demand uncertainty, we show that quotas can result in a welfare advantage over tariffs for an importing country despite that its government does not capture any quota rents. Specifically, the conditions under which an equivalent quota yields higher expected welfare than a tariff are shown to depend on a set of economic variables. These variables include the initial tariff rate, the relative efficiency in production between home and foreign firms, the probability distribution of random demand shocks that make the quota binding or non-binding under uncertainty, as well as the variance of the stochastic market demand. The analysis of this paper has welfare implications for tariffication.     

Welfare effects of bubbles in an endogenous growth model

This paper examines welfare effects of asset bubbles in an endogenous growth model with overlapping generations. In our model, a steady-state equilibrium with bubbles exists only if the presence of bubbles raises the welfare level of the initial generation. Bubbles can be beneficial to generations born at relatively early dates, whereas they reduce the welfare level of sufficiently distant future generations. Increasing the rate of supply of the useless asset improves the lifetime utilities of future generations.     

Endogenous technology and tradable emission quotas

We study an international climate agreement that assigns emission quotas to each participating country. Unlike the simplest models in the literature, we assume that abatement costs are affected by R&D activities undertaken in all firms in all countries, i.e. abatement technologies are endogenous. In line with the Kyoto agreement we assume that the international climate agreement does not include R&D policies. We show that for a second-best agreement with heterogeneous countries, marginal costs of abatement differ across countries. In other words, the second-best outcome cannot be achieved if emission quotas are tradable.     

Stackelberg竞争条件下的最佳福利关税与最大收入关税

文章考察Stackelberg竞争条件下的最佳福利关税与最大收入关税。分析表明,最佳福利关税与最大收入关税的相对大小主要取决于产品之间的相互关系和国内外企业的成本差异。当产品是互补品时,最佳福利关税总是小于最大收入关税;当产品是替代品时,最佳福利关税与最大收入关税的关系,既取决于产品间的替代程度又取决于国内外企业间的成本差异。产品的替代程度较弱时,最大收入关税总是大于最佳福利关税;产品的替代程度较强时,若国内外厂商间的成本差异越小,则最佳福利关税越有可能超过最大收入关税。     

Welfare cost of inflation in a stochastic balanced growth model

There is a large and growing literature on the welfare cost of inflation. However, work in this area tend to find moderate estimates of welfare gains. In this paper we reexamine welfare costs of inflation within a stochastic general equilibrium balanced growth model paying a particular attention to recursive utility, portfolio balance effects, and monetary volatility and monetary policy uncertainty. Our numerical analysis shows that a monetary policy that brings down inflation to the optimum level can have substantial welfare effects. Portfolio adjustment effects seem to be the dominant factor behind the welfare gains.     

政策干预下我国贸易自由化的福利效应

近年来,贸易和环境问题越来越成为各国关注的焦点,传统贸易理论忽视了环境资源的合理使用和保护,给发展中国家带来了严重的环境问题。文章在揭示传统贸易理论在环境资源分析不足的同时,建立了一个政策干预下的发展中国家的自由贸易模型,在此基础上结合我国实际情况分析贸易自由化的福利效应。     

Financing medical specialist services in The Netherlands: Welfare implications of imperfect agency

Since 1995 the financing scheme for medical specialist services in the Netherlands has moved from a fee-for-service scheme to a capitation scheme. This paper analyzes the economic and welfare effects of this policy change. The paper adopts a numerical model that integrates demand and supply considerations and that recognizes the potential roles of moral hazard and supplier-induced demand. The paper finds that the shift in financing regime has been welfare-reducing. The policy change induced medical specialists to lower the supply of the health services which was already lower than optimal before the policy reform.     

Welfare and comparative statics implications of fair social security : A steady-state analysis

This paper examines the steady-state welfare and comparative statics implications of fair social security in an overlapping generations model with uncertain lifetime. The model is designed to capture the effects of lifetime uncertainty extending over the individual's entire lifespan, the effects of intentional and unintentional bequests, and the effects of the earning profile. He shows that the welfare effects depend on the size of the benefits and the structure of the social security tax. In particular, even fair social security may have negative welfare implications if the underlying tax structure is ill-designed. Some comparative statics implications are analyzed.     

Taxes versus quotas for a stock pollutant

We compare the effects of taxes and quotas for an environmental problem where the regulator and polluter have asymmetric information about abatement costs, and environmental damage depends on pollution stock. An increase in the slope of the marginal abatement cost curve, or a decrease in the slope of the marginal damage curve, favors taxes. An increase in the discount rate or the stock decay rate favors tax usage. Taxes dominate quotas if the length of a period during which decisions are constant is sufficiently small. An empirical illustration suggests that taxes dominate quotas for the control of greenhouse gasses.     

The effects of environmental taxes and quotas on the optimal timing of emission reductions under Choquet–Brownian uncertainty

The effects of two environmental policy options for the reduction of pollution emissions, i.e. taxes and non-tradable quotas, are analyzed. In contrast to the prior literature this work endogenously takes into account the level of emissions before and after the adoption of the new environmental policy. The level of emissions is determined by solving the firm's profit maximization problem under taxes and fixed quotas. We find that the optimal adoption threshold under taxes is always larger than the adoption threshold under fixed quota, even in a setting characterized by ecological uncertainty and ambiguity – in the form of Choquet–Brownian motions – on future costs and benefits over adopting environmental policies.     

Market power and compliance with output quotas

This paper examines the compliance behaviour of a dominant firm in an output quota market when the firm is able to exercise market power in both the quota and the output markets. Provided the firm has an initial quota endowment which is strictly positive, under some circumstances the firm may find it profitable to comply or even over-comply in its quota demand, even in the absence of enforcement. The results are compared to those found in the pollution permit literature for a firm with market dominance only in the permit market, to which some additional observations are also added concerning efficiency outcomes under non-compliance.     

Strategic quotas on foreign investment and migration

Summary. A basic two-country, single commodity model is considered to formulate the interactive and retaliative policies with regard to restrictions on foreign investment and labor migration. We model quota retaliations using the contingent threat situation. Under three different strategic environments, we characterize the stable quotas on factor movements. Among other things, we illustrate that either one of the two countries may end up with welfare loss- Ramaswami trap, a concept we introduce in this paper.Received: 28 May 2001, Revised: 5 August 2003, JEL Classification Numbers: F21, F22, C72.I would like to thank Hamid Beladi, Van Ngo Long, participants of Western Economic Association (2001), and an anonymous referee. I am specially grateful to Joseph Greenberg for his invaluable discussions and suggestions.     

The observational implications of Schumpeterian growth theory

This paper obtains and discusses alternative testable implications of the Schumpeterian theory of creative destruction for economic growth.     

Welfare State and Welfare Society

This paper updates and extends my earlier work on how the middle class fares throughout the world based on the microdata sets that comprise the Luxembourg Income Study (LIS). Wave #6 LIS data, recently released and centered around 2004, provides an opportunity to assess what has happened to the size of the middle class around the world in the early 2000s. In contrast to the 1980s and 1990s, there was no noticeable decline in the middle class during the early 2000s. The paper provides further evidence that the size of the middle class in each nation depends mainly on government tax and spending policies. In particular, it shows the key role played by family allowances and paid family leave in supporting a national middle class.