Money Illusion and the Double Dividend in the Short Run

Abstract. In their seminal paper, Bovenberg and de Mooij (1994) elucidate why an ecological tax reform will not yield a double dividend, i.e. fails to increase the efficiency of the tax system. The present paper slightly modifies the Bovenberg and de Mooij model by introducing money illusion. With this modification, an environmental tax reform that raises the price level may generate a double dividend, since the additional tax on the dirty good does not reduce labor supply. A prerequisite for the double dividend to occur is a sufficiently small elasticity of substitution between clean and dirty consumption. Moreover, accounting for money illusion always reduces the intertemporal gross cost of the tax reform.     

Structural change, Engel's consumption cycles and Kaldor's facts of economic growth

Non-linear Engel-curves for consumer goods cause continuous structural change. Goods are sequentially introduced starting out as a luxury with high income elasticity and ending up as a necessity with low income elasticity. Although this leads to rising and falling sectoral employment shares, the model exhibits a steady growth path along which the Kaldor facts are satisfied. Extending the basic model to the case of endogenous product innovations shows that complementarities between aggregate and sectoral growth may give rise to multiple equilibria.     

Do Natural Energy Endowments Matter? New Zealand and Uruguay in a Comparative Perspective, 1870–1940

Settler economies are characterised by abundant natural resources, but these are not homogeneous between countries. There is very little literature about the economic development of settler economies that identifies differences within the club in terms of natural resources. We look for differences in energy endowments in New Zealand and Uruguay considering coal and suitable conditions for hydroelectric generation. New Zealand and Uruguay were similar in many ways but there were huge differences in income per capita levels. A ‘modern’ production structure requires sufficient energy supply at competitive costs and New Zealand's better energy conditions explain that difference.     

Impact of office layout on communication in a science-driven business

Driving innovation and creativity has relied heavily on new information technologies in the last decade. Human capital has certainly had its importance, but how to coordinate human capital in order to push productivity in research and development without compromising individual initiative is still not well understood. In this paper, we provide results showing that geometry of workspace has indeed an impact on communication patterns and may thus be used as a means to drive both innovation and efficient research. In order to be creative, new knowledge has to be created. Communication facilitates knowledge creation. We try to close the bridge between areas of creation of tacit knowledge and transfer of knowledge highlighted by authors like Nonaka, Takeuchi, Konno, von Krogh and von Hippel with the area of communication patterns pioneered by Allen, Hatch, and Stryker, by considering face‐to‐face (FTF) communication as a first step for socialization, socialization as a means for knowledge creation. In this article, we compare two different office environments within the same site, same activity, same hierarchical level and same company: a traditional cell office area and a new multi‐space office, used by people who used to work in cell offices. We observed FTF communication patterns during 120 h in two areas and measured over 2,000 communication events. We found that people communicate three times more often in a multi‐space area than in a cell‐space area. We also found that the mean duration of communication events decreased from 9 to 3 min when transferring collaborators from a cell‐space to a multi‐space. Finally time spent without communication increased from 5% to 29% when going from cell‐offices to multi‐space areas – leaving more time for people to work and think on their own. And we found that most communication events during work time in the multi‐space took place at the work place and seldom or never in soft sitting areas installed for the purpose of communication.     

Long-term changes in social mortality differentials, Geneva, 1625–2004

In this paper we argue that in order to test competing hypotheses on the emergence of social mortality differentials, one has to adopt a long-term perspective. Studying social inequality in mortality in Geneva from 1625 to 2005, we use historical mortality data published by different authors and contemporary data drawn from an ongoing research project. The comparison over four centuries gives evidence to both the constancy and convergence hypotheses. Mortality is systematically lower-than-average among elites on the one hand, but on the other hand the difference between the top and the bottom of the social ladder is decreasing over time.     

Best practices for implementing experimental research methods

Experimental research methods have a long history across a number of different disciplines—including consumer research. Although experiments are just one of many alternative research methods, experiments are notable because they are the best way to establish causation. This makes experiments a powerful tool when researchers need to show cause and effect relationships. In this article, we provide best practices for implementing experimental research methods in consumer studies. Specifically, we discuss several important topics researchers need to consider when designing experiments, including developing hypotheses, operationalizing the variables (manipulated or measured), deciding on the research design (between-subjects, within-subjects, or mixed), selecting the research setting (laboratory, field, or online), understanding the main effect (via moderation, mediation, or moderated mediation), including manipulation and attention checks, determining the sample size, and choosing participants. We provide recommendations that researchers can use to conduct high-quality experiments in a consumer context.     

Market imperfections, wealth inequality, and the distribution of trade gains

Globalization increasingly involves less-developed countries (LDCs), i.e., economies which usually suffer from severe imperfections in their financial systems. Taking these imperfections seriously, we analyze how credit frictions affect the distributive impact of trade liberalizations. We find that free trade significantly widens income differences among firm owners in LDCs: While wealthy entrepreneurs are better off, relatively poor business people lose. Intuitively, with integrated markets, profit margins shrink — which makes access to credit particularly difficult for the least-affluent agents. Richer entrepreneurs, by contrast, win because they can take advantage of new export opportunities. Our findings resonate well with a number of empirical regularities, in particular with the observation that some liberalizing LDCs have observed a surge in top-income shares.     

Enhancing the Efficiency of Water Supply—Product Market Competition Versus Trade

In most developed countries, the provision of water is organized at a local level. The costs and tariffs vary significantly, even between adjacent water utilities. Such heterogeneity is an obvious indication of the sector??s overall inefficiency and stresses a need for institutional adjustments. We show that cooperation by water trade and the introduction of competition by common carriage between adjacent utilities are valuable alternatives to improve the industry??s efficiency, even when mergers are not feasible. Because both approaches require the physical connection of neighboring networks, they may have similar effects. This paper analyzes and compares the relevant welfare gains and shows that production efficiency and retail prices may differ depending on the initial cost differential, the application of regulations and the distribution of bargaining power. Using a theoretical model, we show that at higher initial production cost differentials, welfare is higher under competitive conditions, even in a lower-bound benchmark case without any regulation.     

Boundary conditions of the effect of customer coproduction: the case of service failure

Research on the relationship between customer coproduction and satisfaction has produced mixed results even after accounting for the role of attribution. This paper extends prior research on boundary conditions and examines the role of customer participation readiness (PR) during encounters that end with service failure. Based on congruence and zone-of-tolerance theories, the two empirical studies suggest that (a) increasing levels of coproduction combined with increasing levels of PR escalates dissatisfaction and weakens attitudinal loyalty; (b) psychological reactance and expectancy disconfirmation mediate these relationships; (c) increasing levels of coproduction combined with increasing levels of external attribution reduce dissatisfaction and mitigate the adverse effect on attitudinal loyalty; and (d) PR interacts with customer coproduction to influence how customers make attributions. Future research should consider the role of PR in service failures. Where feasible, managers should gather and utilise individual-level PR data in order to predict customer attributions and dissatisfaction.