Modelling multi‐period inflation uncertainty using a panel of density forecasts

This paper examines the determinants of inflation forecast uncertainty using a panel of density forecasts from the Survey of Professional Forecasters (SPF). Based on a dynamic heterogeneous panel data model, we find that the persistence in forecast uncertainty is much less than what the aggregate time series data would suggest. In addition, the strong link between past forecast errors and current forecast uncertainty, as often noted in the ARCH literature, is largely lost in a multi‐period context with varying forecast horizons. We propose a novel way of estimating ‘news’ and its variance using the Kullback‐Leibler information, and show that the latter is an important determinant of forecast uncertainty. Our evidence suggests a strong relationship of forecast uncertainty with level of inflation, but not with forecaster discord or with the volatility of a number of other macroeconomic indicators. Copyright © 2006 John Wiley & Sons, Ltd.     

Zoning and fiscal interdependencies

Although there are strong theoretical reasons to regard optimal zoning and fiscal policies as simultaneous decisions, most empirical studies have focused on one type of decision or the other. Even fewer attempts have been made to study interdependencies between competing towns in their selection of zoning and fiscal policies. If these interdependencies are prevalent, autonomous local governments may pursue zoning, taxing, and spending policies that are locally rational but socially inefficient. In this study, an optimization model of the local economy is used to illustrate the nature of these interdependencies and to specify an appropriate empirical test. Data from 164 Connecticut townships are used to estimate the empirical model.     

Correcting Trade Distortions in a Small Open Economy

This paper considers the second-best strategy of correcting a wide variety of trade distortions in a small open economy with perfect competition in all markets. Using the tools of duality, we obtain some general properties of the structure and the levels of the optimal taxlsubsidy rates. The paper also analyzes the welfare effects of unilateral piecemeal trade policy reforms when some of the quota distortions—imposed by the foreign countries—are unalterable. It is shown that the merits of unilateral trade policy reforms that are emphasized in the literature crucially depend on the absence of unalterable foreign imposed quotas.     

Food for education versus school quality: a comparison of policy options to reduce child labour

Abstract.  In a model in which credit markets play a crucial role, we examine two policy options for reducing child labour, 'food for education' and 'investment in education quality,' With an imperfectly elastic supply of credit, an increase in food subsidy is more effective in reducing child labour than an 'income‐equivalent' increase in expenditures in education quality. The effectiveness of the latter policy improves, and the optimal share of resources devoted to this policy increases, at the expense of food subsidies, as the supply of credit becomes more elastic. JEL classification: H52, O10     

R&D Subsidies Under Asymmetric Duopoly: A Note

This paper analyses the question of optimum R&D subsidies in the context of a two-stage asymmetric Cournot duopoly model with endogenous R&D. For the special case of symmetric duopoly, whether the firms should be subsidized or taxed in their R&D activities crucially depends on the concavity/convexity property of the demand function. It is also shown that a firm with some initial cost advantage should be subsidized in its R&D activities and a firm without should be taxed. In this way, we obtain policy implications that cast doubts on the universal applicability of competition policies.
JEL Classification Numbers: L13, L52, H25.     

收购与兼并：一项关于整合的游戏

收购与兼并一向都被企业领导者视为一项危险的交易。组织如何保证在收购与兼并后能够为企业真正带来价值？     

A political economy perspective on persistent inequality,inflation, and redistribution

In this paper we examine the dynamics of the link between inequality and inflation from a political economy perspective. We consider a simple dynamic general equilibrium model in which agents vote over the desired inflation rate in each period, and inequality is persistent. Inflation in our model is a mechanism of redistribution, and we find that the link between inequality and inflation within any period or over time depends on institutional and preference related parameters. Furthermore, we find that differences in the initial distributions of wealth can yield a diverse set of patterns for the evolution of the inflation and inequality link. Relative to existing literature, our model leads to more precise predictions about the inflation–inequality correlation. To that end, results in the extant empirical literature on the inflation and inequality link need to be interpreted with caution.     

Commercial Policy Reform in Pakistan: Opening up the Economy under Revenue Constraints

We examine the potential for further reform of sales tax and tariffs on final goods and on intermediate inputs in Pakistan. Analysis is conducted at two levels. First, optimal taxes are computed under the assumption that tax revenue is exogenous and pays for a public good, and these are compared with their current levels. Second, we consider two piecemeal reform exercises to examine whether there is further scope for replacing the two tariffs by sales tax in a revenue-neutral way. Both approaches suggest that there is considerable scope for further reducing tariffs on final goods, but not on intermediate inputs. JEL Code: F1, O2, O5     

Strategic Environmental Policies in the Presence of Foreign Direct Investment

We analyze strategic environmental standards in the presence of foreign direct investment. A number of foreign firms located in a host country compete with a domestic firm in another country to export a homogeneous good to a third country. When the number of foreign firms is exogenous, the host country applies a stricter environmental regulation than the other producing country. However, under free entry and exit of foreign firms, the host country may apply a less severe standard under both non-cooperative and cooperative equilibrium. We also find that the nature market structure does not affect the equilibrium values of total pollution if export subsidies are also used.JEL Classification: F2, H2     

A panel data analysis of productive efficiency in freestanding health clinics

By using a panel data on a number of freestanding health clinics in New York State over 1984–1987, we have estimated the production function for ambulatory care after controlling for unmeasured clinic-specific managerial efficiency. We found significant differences in management efficiency, which peaks around 50500 visits per year. The optimal staffing ratio between doctors, extenders and nurses was found to be around 1∶1/3∶1, in order for a clinic to be on the efficiency frontier.