The general equilibrium effects of the industrial property tax: Incidence and excess burden

A model of a small, open central business district (CBD) is used to derive the conditions that define the market-equilibrium and rent-maximizing CBD. It is shown that, in general, the market equilibrium CBD radius differs from the rent-maximizing CBD radius. Land-use zoning will, under certain conditions, increase the aggregate net return on CBD land.     

The general equilibrium effects of congestion externalities

This is the second in a series of three articles on the topic of congestion externalities. We use an urban general-equilibrium model to compute two types of cities: the market-equilibrium city, in which congestion externalities occur, and the optimum city. The optimum city has a more dispersed distribution of employment, and a more concentrated distribution of residence. If the population of the city is fixed, the optimum pricing of transportation generates a per capita welfare gain of $3.78 per week. If the population of the city is endogenous, the internalization of congestion externalities causes the city to grow.     

The new view of the property tax A reformulation

The ‘new view’ of the property tax is reformulated within the context of a model with interjurisdictional competition, endogenous local public services, individuals who are segregated into homogeneous communities according to tastes for local public services, a simple form of land use zoning, and a political or constitutional constraint on the use of head taxes by local governments. Expressions for the ‘profits tax’ and ‘excise tax’ effects of the property tax are derived. The effects of a ‘consumption distortion’ away from government services due to local reluctance to tax mobile capital are also examined.     

The long-run effects of a residential property tax and local public services

The long-run effects of a residential property tax and local public services are analyzed in the context of an urban spatial model. An endogenous labor market allows the local wage rate to adjust, in conjunction with residential and business land prices, in response to local fiscal changes.     

The timing of residential land development: A general equilibrium approach

A formal model of the development process is constructed in order to arrive at a better understanding of the land development process, the change in land prices over time, and the effects of public policy on these variables. The relationship between the rate of interest and the rate of price appreciation on land is shown to depend upon development costs, agricultural opportunity costs, market structure, and the level of Ricardian rents on land. The effects of a land tax and a capital gains tax on the rate of development are also analyzed.     

Environmental quality standards: A general equilibrium analysis

The increasing importance of pollution controls as a part of government regulatory activities has motivated considerable concern about the economic impact of these activities. This question is of considerable importance, because environmental quality goals are sometimes in conflict with other objectives such as full employment and economic growth. Policy-makers are thus faced with the task of identifying and measuring the trade-offs between these various objectives. But the measurement of these objectives requires information on their economic impacts. This paper develops a general equilibrium model with pollution specifications which can be used to identify the economic impacts of pollution-control policies. The particular pollution-control policy addressed is an environmental standards approach. The model is based on a technique that combines an explicit representation of consumer demand behaviour vis-à-vis linear aggregate demand functions with activity analysis.     

Macroeconomic scenarios for the south Mediterranean countries: Evidence from general equilibrium model simulation results

The “Arab spring” aftermath calls for a closer look at the developments in the south Mediterranean countries. This paper develops and assesses alternative scenarios for the region up to the year 2030 with the employment of GEM-E3, a computable general equilibrium model. The scenarios quantify three alternative visions of the regional future which assume: (i) south Mediterranean-EU cooperation, (ii) south Mediterranean global opening and (iii) escalation of regional conflicts and failure to cooperate. The scenarios are compared to the baseline scenario, which assumes a continuation of the regional policies observed in the recent past. Assumptions on trade integration, infrastructure, population and governance developments are adopted in each scenario. Infrastructure upgrades and governance improvements within an EU cooperation context are found to benefit the region most. The findings have important policy implications indicating alternatives to be implemented.     

The impact of nuclear power discontinuation in Sweden: A general equilibrium analysis

This study reports on methodology and results of a study of the economic consequences of a discontinuation of the Swedish nuclear program. The analysis is carried out by means of a computable general equilibrium model and is focused on the impact on real income as well as on the sectoral allocation of production and employment. The main result is that provided factor markets function smoothly enough to ensure full employment of the economy's resources, a proposed nuclear discontinuation strategy does not significantly affect the investigated macroeconomic indicators.     

A general equilibrium analysis of strategic arbitrage

We analyze a general equilibrium framework with Cournot arbitrageurs and with price-taking investors who are subjected to restricted participation constraints. Restricted participation may leave some arbitrage opportunities unexploited by investors.We show existence of Cournot–Walras equilibria with an endogenous number of arbitrageurs. The number of arbitrageurs is endogenous since they have to sink entry costs in order to arbitrage across the relevant markets. We characterize equilibria and analyze the effects on equilibrium prices and quantities of increased competition among arbitrageurs due to lower entry costs.     

A dynamic cournot-nash equilibrium in fishery: The effects of entry

A dynamic Cournot-Nash equilibrium of the fish war between two countries has been derived and its steady-state behavior studied by Levhari and Mirman on the basis of a discrete dynamic programming method. In this paper we shall consider an n-country extension of Levhari-Mirman fish war model. We shall derive the Cournot-Nash equilibrium and its steady-state value to analyze the effects of entry (or exit) in fish war. A comparison is made between in dividual management of fishery by each country and joint management by all countries.

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Riassunto In questo lavoro si considera l'estensione, al caso din paesi concorrenti, del modello concorrenziale dell'attività peschereccia proposto da Levhari e Mirman. Viene derivata la configurazione di equilibrio di Cournot-Nash e si calcola il suo valore stazionario per analizzare l'effetto d'entrata (o d'uscita) di un agente nella attività concorrenziale.Viene infine fatto un confronto tra la conduzione individuale della pesca in ogni singolo paese e la conduzione congiunta di tutti i paesi considerati.

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Versione definitiva pervenuta il 17-1-81     

The current non-status of general equilibrium theory

This paper argues that the abandonment of general equilibrium theory by microeconomists was a mistake. It provides counter arguments to two of the reasons for that abandonment—lack of both generality and consistency with methodological individualism in uniqueness and stability analysis of equilibria—and urges microeconomists to refocus some of their attention on it.     

Consumer surplus analysis under uncertainty: A general equilibrium perspective

This paper derives an exact form of partial equilibrium efficiency measure under uncertainty which is consistent with expected utility maximization in a general equilibrium situation with ex-post spot markets for many goods and asset markets which are in general incomplete.We consider that the good under consideration tends to be negligibly small compared to the entire set of commodity characteristics which is assumed to be a continuum, and look into the limit property of preferences over state-contingent consumption of the good and state-contingent income transfer associated to it. We show that the limit preference exhibits risk neutrality, not only that it exhibits no income effect, meaning that the two conditions are tied together. We also show that the marginal rate of substitution between extra income transfers at different states of the world converges to the ratio between the Lagrange multipliers associated to those states. When the asset markets are complete such ratios are equalized between consumers, but it is not the case in general when the asset markets are incomplete. This means that using the aggregate expected consumer surplus as the welfare measure will be in general inconsistent with individuals’ expected utility maximization in the general equilibrium environment or with ex-ante Pareto efficiency.     

The impact of positive property tax differentials on the timing of development

To date, few empirical studies have focused on the location decision by residential developers in response to changes in the property tax. Based on a dynamic time-to-development model by Turnbull, this paper finds, using 17 years of parcel level data from Saint Louis County, Missouri, that higher than average tax rates increase the time-to-development for vacant parcels by between 4 and 11%, all else equal. Additionally this paper finds that the tax differential effect is cumulative, resulting in about a 20% increase in the time-to-development for the parcel facing the average number of years with a higher than average rate. These results support the analytical results by both Turnbull [Turnbull, G.K., 1988. The effects of local taxes and public services on residential development patterns. Journal of Regional Science, 28 (4), 541–562.] and McMillen [McMillen, D.P., 1990. The timing and duration of development tax rate increases. Journal of Urban Economics, 28, 1–18.] that the property tax can distort residential capital markets leading to inefficient urban growth, or sprawl.     

Potential impacts of the devaluation of Nepalese currency: A general equilibrium approach

This paper measures the potential impacts of the devaluation of domestic currency of the small, developing, landlocked and transition South Asian economy of Nepal, which is lagging behind in policy studies. The impacts on growth, distribution, price changes in factor and product markets, and on selected macroeconomic features are measured. Using a computable general equilibrium model applied to social accounting matrix data, we conclude that devaluation is expansionary but mostly benefits the rich, thus leading to a more uneven income distribution. In general, the expansion of economic activities occurs in agricultural and industrial sectors, whereas services activities contract. However, when the rate of devaluation is high, the agricultural sector also starts contracting. To this typical developing economy, devaluation causes an improvement in saving investment and export/import ratios, whereas the budget deficit widens.     

Formation of expectations: A model in temporary general equilibrium theory

The paper studies, in a temporary general equilibrium framework, the way expectations of agents can be formed along time through some learning mechanism. One is then faced with a set of coupled equations from which the time evolution of both the state of the economy and the individual expectations have to be derived. Three main results are proven, for an open dense set of economies. First, there actually exists a recurrence which allows to determine, locally around some stationary temporary equilibrium, the time dependant dynamics for the states and the time dependant expectations. Next, sufficient first-order conditions are given for the dynamics and expectations to converge to some limits when time goes to infinity. Last, additional sufficient first-order conditions guarantee that the chosen stationary temporary equilibrium has definite stability properties for the time dependant dynamics.     

Bilateral trade between India and Bangladesh: A general equilibrium approach

India and Bangladesh have pursued policies of trade liberalization since the early 1990s. However, owing to the differential speeds of opening up, Bangladesh's bilateral trade deficit with India widened substantially over the years. This aggravated the economic and the political tensions between the economies. It has been held that promotion of free trade between the two economies may enhance the trade and hence economic cooperation between them. Against this backdrop the present paper proposes a theoretical framework that provides a general equilibrium determination of the commodity pattern of trade and hence locates the comparative advantages of the economies. The empirical implementation of the model considers trade in 25 sectors comparable in the input–output tables of the economies. The study isolates the gains from free trade accruing to either economy. The paper also explores the pattern of bilateral trade when each economy produces goods by utilizing their own as well as the other country's technology. The gains from this trading arrangement are also isolated.     

Stock prices and monetary policy shocks: A general equilibrium approach

Empirical literature documents that unexpected changes in the nominal interest rates have a significant effect on real stock prices: a 100-basis point increase in the nominal interest rate is associated with an immediate decrease in broad real stock indices that may range from 2.2 to 9%, followed by a gradual decay as real stock prices revert towards their long-run expected value. We assess the ability of a general equilibrium New Keynesian asset-pricing model to account for these facts. We consider a production economy with elastic labor supply, staggered price and wage setting, as well as time-varying risk aversion through habit formation. We find that the model predicts a stock market response to policy shocks that matches empirical estimates, both qualitatively and quantitatively. Our findings are robust to a range of variations and parametrizations of the model.     

The incidence of metropolitan property tax base sharing and rate equalization

The incidence of metropolitan property tax base sharing and rate equalization is analyzed in a two-jurisdiction model of a metropolitan economy. Analytical results indicate how the effects of this reform proposal can be separated into efficiency gains, redistributions among metropolitan residents, and redistributions among residents and nonresidents of the metropolitan area; the effects of enactment on suburban housing prices are also analyzed. Numerical results suggest that enactment of metropolitan base sharing and rate equalization would result in fairly small efficiency gains even with significant factor reallocations and would be accompanied by sizable income redistributions among city and suburban landowners.     

Labor mobility and the incidence of the residential property tax

This paper analyzes the incidence of the residential property tax in an economy with two communities. Workers are perfectly mobile so that their utility levels are equal in the two communities in equilibrium. The property tax is modeled as an ad valorem tax on housing services.