Transferable Licenses Versus Nontransferable Licenses: What is the Difference?

This paper questions the presumption that transferable licenses are worth more and result in higher welfare. We show that the price of a transferable license may be lower than that of its nontransferable counterpart if the underlying quota is not very severe. However, transferability is preferable to nontransferability if consumer surplus and license revenue have equal weight in the welfare function. We also examine whether licenses will be monopolized by domestic producers with market power. The models have implications for several issues, including the design of pollution permits and how to maximize revenue from ticket sales.     

Response to the Comment: “What is Heterodox Economics? Conversations with Historians of Economic Thought”

The comment to “What is Heterodox Economics? Conversations with Historians of Economic Thought” spotlights critical issues in the possibility and probability of articulation and proposes a compelling argument in the explanation of the “inability of heterodoxy to define itself...” The core argument suggests that heterodox groups of economic thought cannot successfully articulate the nature of its varied programs until it recognizes and articulates the metaphysically and ontologically different system of knowledge which serves as the foundation for heterodox thought.     

Oil,Growth, and Health: What Does the Cross‐Country Evidence Really Show?*

We show that previous results from the body of literature on the resource curse have primarily been driven by the collapse in oil prices during the mid‐1980s. By exploiting cross‐country variations in the size of initial oil endowments and the timing of oil discoveries, we find that there is a stable positive relationship between oil abundance and long‐run economic growth. Using dynamic panel data methods, we also find that there is no evidence that higher oil rents hinder growth. However, to focus on material gain means that the welfare gain from oil is understated, because oil‐rich countries benefit more by the reduction in infant mortality and the gain in longevity. Interestingly, such oil‐led health improvements are more pronounced in non‐democratic countries, where initial heath conditions were poor and oil wealth is concentrated among the ruling elites.     

What is the real size of China's economy?

On 20 December 2005, China's National Bureau of Statistics adjusted China's nominal GDP by CNY 2.3 trillion. The bulk of this upward adjustment was attributed to improved coverage of value added by services. The service industry now makes up 40% of GDP. Based on previous studies and other observations, this paper point outs that there is still significant underreporting of the service industry and, hence, China's GDP is likely to be underestimated. We find a plausible share of service industry in GDP to be in the range of at least 45% to 55%.     

What is a recession?: A reprise

This paper draws its title from a paper written over 35 years ago by Geoffrey H. Moore (1967). Why the need for a reprise? First, there would appear currently to be somewhat diverging views as to what properly constitutes a recession. Second, largely as a result of this, in many countries other than the US, there does not exist a single, widely accepted business cycle chronology for the country in question. This paper will argue that, in addition to output, there are other important aspects to aggregate economic activity that need to be taken into account in determining the business cycle, viz., income, sales and employment. As such, our perspective would seem to be at odds with the apparent position taken by some other recent commentators on this issue who argue that GDP is all that is needed to represent a country's business cycle. We will also argue against using the currently popular ‘two negative quarterly growth rate’ rule in dating the onset of a recession.     

What is the optimal design for lottery-linked savings programmes?

In this article, we determine the optimal design of lottery-linked savings (LLS) programmes. LLS vehicles, such as lottery bonds, are financial instruments that preserve depositors’ principal but provide randomized variable returns to these depositors through periodic lottery drawings, in lieu of the regular coupon payments traditionally received by bondholders. This type of asset is very popular in Europe. We note that the framing of LLS instruments is linked to their popularity, and we attempt to elucidate that link and thereby determine the optimal structure of payments for LLS programmes. Our goal is to frame LLS programmes in a manner that both maximizes their investors’ satisfaction and preserves their ability to serve as inexpensive sources of capital for their issuers. We demonstrate that the optimal pay-off structure is characterized by a high level of skewness, as investors are willing to accept a decrease in the small and medium prizes of the lottery in exchange for an increase in the grand prize. Thus, to attract a maximum number of depositors, the issuers of LLS programmes should prioritize the jackpot size relative to the other lottery pay-offs and insist on high skewness for the lottery pay-offs relating to the LLS assets.     

What is the long run growth rate of the East Asian Tigers?

New panel data estimates for the four East Asian Tigers show that the contribution of Total Factor Productivity (TFP) to growth is much higher than past estimates. An extended production function with learning by doing implies that TFP is about 3.5% and these countries will grow at this rate in the long-run.     

Lone Mothers: What is to be done?

This Dialogue presents the views of four authors, from the US, the UK, and Norway, on the best policies to help lone mothers. Lone mothers face an inevitable dilemma in allocating their time between earning income and caring for their children. The low-earning capacity of women in an unequal labor market exacerbates the problem, causing material hardship for many lone mothers and their families. The policy solutions proposed lie along a spectrum, ranging from those that seek to enable all lone mothers to take employment to those that aim to let mothers choose whether to take employment or care for their children themselves. Other policies discussed concern ways to value and support caregiving, improve the low-wage labor market for women, and provide a set of income supports that would both boost income and provide time to care for children.     

“More is less”: the tax effects of ignoring flow externalities

Using a model of non-linear, non-monotone decay of the stock pollutant, and starting from the same initial conditions, the paper shows that an optimal tax that corrects for both stock and flow externalities may result in a lower tax, fewer cumulative emissions (less decay in emissions) and higher output at the steady state than a corrective tax that ignores the flow externality. This “more is less” result emphasizes that setting a corrective tax that ignores the flow externality, or imposing a corrective tax at too low a level where there exists only a stock externality, may affect both transitory and steady-state output, tax payments and cumulative emissions. The result has important policy implications for decision makers setting optimal corrective taxes and targeted emission limits whenever stock externalities exist.     

What is really common in the run-up to banking crises?

Arguing that crises are similar if they are predictable from historical experience, we employ panel logit models to examine similarities in the run-ups to the current global financial crisis and historical banking crises. Asset bubbles are the most common precursors.     

What Is the Worth of “Comparable Worth”?

Should (could) jobs that are of equal value to an organization pay the same amount of compensation? The issues of this hotly debated controversy are carefully explained and evaluated.     

What is the Comparative Advantage of the Service Learning Pedagogy? Insights from Development Economics

We rely on the Kolb learning cycle and the experiences from two development economics class to analyze the comparative advantage of service learning pedagogy. We hypothesize that service learning is uniquely positioned to improve learning outcomes in applied/policy-oriented specializations. We conceptualize learning outcomes from a discipline-specific perspective where service hours are directly linked to the course content. We argue that the sustainability of service learning in applied/policy-oriented disciplines is limited by journal-entry orthodoxy and short-term costs. Emotive journal entries often encourage an “everything goes” response which threatens the credibility of service learning and limits its use in specializations that value objectivity. Service hours imply costs to faculty and students that exceed those of traditional approaches. This can serve as a disincentive for course adaptation, despite the decline in these costs over time, and enrollment. Our analysis encourages instructors to explore alternatives to the widely used journal-entry and to seek opportunities to inform students of the expected long-run benefit/cost tradeoffs. We encourage administrators to support faculty who teach classes that are predisposed to service learning in ways that can reduce short-run costs. With its comparative advantage and the united efforts across the academy, we expect that in the long-run service experiences will routinely be used to complement traditional lectures in applied/policy-oriented classrooms across the academy.     

Children's schooling in Nicaragua: What is the link between educational achievement,borrowing, and gender?

The impact of credit has been widely studied, and yet little is known about the effect of formal versus informal loans. In this paper, we contrast the two and their impact on children's schooling using longitudinal data from Nicaragua. To address endogeneity, we utilize both household fixed effects and locality–year fixed effects. Our results indicate that, on average, children from borrowing households fare worse than children from nonborrowing households, with male borrowers having a disproportionately negative effect on boys, and vice versa for girls and female borrowers. Informal credit is found to have a protective effect on school attendance, but the effects of formal and informal credit on cumulative schooling are found to be statistically equivalent. However, this appears to mask considerable heterogeneity within informal borrowing.     

“劳动力商品” 概念应让位于“人力资本” 吗?*#br#

马克思经济学和西方经济学对于同一事物往往有截然不同的看法。把“劳动力”看作是“商品”而不是“资本”体现了马克思经济学与西方经济学的根本差异。尽管在西方经济学的理论体系中,用“人力资本”来表示劳动的异质性,主张加强人力资本投资来促进经济增长和缩小收入差距有一定的合理性和进步性,但是从马克思经济学的角度来看, “人力资本” 概念是不可能成立的。而那些以“劳动力商品”不能反映人的知识和技能的提高、复杂劳动无法还原为简单劳动、分享经济或知识经济让劳动力成为了资本等错误认识为依据,得出劳动力商品的说法应当被人力资本概念所取代的观点更是荒谬的。