Finding Sensitivity to Scope in Nonmarket Valuation

Data limitations frequently prevent using actual consumer behavior in determining natural resource values, so stated preference methods are used. Whether value estimates show sensitivity to the scope of resource valued is a key test for their validity, which several studies fail. Developing a correlated panel mixed logit model of households' water quality valuations in California, we show that false negatives in scope tests can result when individual preference variation and correlation are ignored and split‐sample comparisons are used. Monte Carlo simulations further demonstrate potentially prevalent false rejections of scope sensitivity even when within‐subject comparisons of willingness to pay portray strong scope sensitivity. Copyright © 2013 John Wiley & Sons, Ltd.     

Finland’s great depression of the 1990s: Lessons about financial reform based on econometric macro evidence

The paper re‐examines the Finnish Great Depression of the 1990s, based on an open macro model, with specific dummy variables to identify the initial effects of liberalized financial markets and capital mobility, and of the Russian trade collapse. It is shown that the explosive credit expansion resulting from the simultaneous liberalization of the financial markets and international capital movements in 1986 has played the most important role in explaining the uncontrolled growth and the subsequent depression in 1989 in real economic activity in Finland. Their effects were strengthened by a vicious circle between the financial and asset markets. The Russian trade collapse in 1991 had a smaller partial effect on economic activity than did any other explanatory variable. The results suggest that some of the present day problems in the euro area, especially those occurring post‐2008 in the “Club Med” countries, are very alarming. In many cases, they are results of expansionary policies based on unsustainable capital imports, made possible by the introduction of the euro, and the consequences resemble in many ways those during the 1990s Great Depression period in Finland.     

‘Humour is Serious’ as a Geopolitical Speech Act: IMDb Film Reviews of Sacha Baron Cohen's The Dictator

Humour is a manifold cultural institution through which society and space become politicised. In this paper, the political nature of humour is discussed by dissecting the IMDb film reviews of Sacha Baron Cohen's comedy, The Dictator (2012), a parody of democracy in which the topics of racism, political incorrectness and sexism, as well as their relationship to the discourses of Neo-Orientalism and the Global War on Terrorism, are present. The reviews are perceived as speech acts, which establish broader interpretative patterns through which audience may approach the questions related to the serious and political aspects of humour. The analysis focuses on how the ‘humour is serious’ claim and similar arguments are expressed in order to condemn or support the use of ‘immature’ and sophomoric humour within the context of politically sensitive issues. Similarly, the paper scrutinises how IMDb functions as a stage on which opportunity for political participation becomes accessible.     

Tariff‐tax Reforms in Large Economies

This paper studies tariff‐tax reforms in a two‐region global New Keynesian model composed of a developing and an advanced region. In our baseline calibration, a revenue‐neutral reform that lowers tariffs in developing countries can reduce domestic welfare. The reason is that the increase in developing countries welfare due to higher output is dominated by the welfare losses stemming from the deterioration of the terms of trade. On the other hand, the reform increases output and welfare in the advanced countries and in the world as a whole. The effects that we highlight have not been studied in previous contributions to the literature, which looks at tariff‐tax reforms using a small open economy framework. Nominal rigidities have important implications for adjustment dynamics in our model. In the case of a ‘point‐for‐point’ reform, for example, price stickiness implies that the international dynamics of output is reversed compared to a revenue‐neutral reform.     

Transmission lags and optimal monetary policy

The credibility problems of monetary policy are enlarged by transmission lags whenever the welfare criterion consists of arguments with differing transmission lags. If, as usually argued, prices react to monetary policy with a longer lag than output, the discretionary bias is substantially increased under a consumer welfare maximizing policy criterion (flexible inflation targeting) in the prototype New Keynesian model. Money growth targeting can significantly reduce the discretionary bias, but is not robust to other specifications of welfare with higher valuation of output stability.     

The value drivers of high-tech consumer products

Abstract

This study investigates the influence of the customer-value hierarchy model and social network on the perceived economic value of high-tech consumer products. This quantitative empirical study was conducted among Finnish households in early 2008 using the form interview method. The non-probability quota sampling method was applied. The data consisted of 453 completed questionnaires. Hypothesis testing was conducted by linear multiple regression analysis. Goal-, consequence-, and attribute-level value perceptions were found to have a positive effect on the perceived economic value of high-tech consumer products. Attribute-level value had the strongest effect on the formation of perceived economic value. Although the network effect was found to contribute positively to perceived economic value, the opinions of others in the consumer's social network had a negative effect. Consumers seem to rationalise the buying decision with personal factors, while social factors have a background effect on value perceptions.     

TAXATION AND CENTRALISED WAGE SETTING: THE CASE OF ENDOGENOUS LABOUR SUPPLY

The implications of centralised wage setting for the relationship between taxation, wages and employment are studied allowing for endogenous adjustment in work hours. We show that centralisation promotes wage moderation, makes wages and employment less sensitive to changes in wage taxation and reduces the hours worked. With an individual supply of working hours, a wage tax can even improve employment if wage setting is centralised and marginal utility from a public good is sufficiently high. Moreover, if a profit tax is used to finance public expenditure, higher tax reduces wages and improves employment.     

Fiscal policy and direct crowding-out in a small open economy

This paper analyses the welfare effects of fiscal policy in a small open economy, where private and government consumption are substitutes in terms of private utility. The main findings are as follows: fiscal policy raises output, bringing it closer to its efficient level, but is not welfare-improving even though government spending directly affects private utility. The main reason for this is that the introduction of useful government spending implies a larger crowding-out effect on private consumption, when compared with the ‘pure waste’ case. Utility decreases since one unit of government consumption yields less utility than one unit of private consumption. In any case, the marginal rate of substitution between private and government consumption is a key parameter in governing the welfare effects of fiscal policy.

International welfare effects of monetary policy

In this paper, I examine the international welfare effects of monetary policy. I develop a New Keynesian two-country model, where central banks in both countries follow the Taylor rule. I show that a decrease in the domestic interest rate, under producer currency pricing, is a beggar-thyself policy that reduces domestic welfare and increases foreign welfare in the short term, regardless of whether the cross-country substitutability is high or low. In the medium term, it is a beggar-thy-neighbour (beggar-thyself) policy, if the Marshall-Lerner condition is satisfied (violated). Under local currency pricing, a decrease in the domestic interest rate is a beggar-thy-neighbour policy in the short term, but a beggar-thyself policy in the medium term. Both under producer and local currency pricing, a monetary expansion increases world welfare in the short term, but reduces it in the medium term.