Taxation in an economy with private provision of public goods

This paper analyses the effects of taxation and subsidies in an economy with private provision of a public good. It is shown that in a situation where all individuals contribute, taxation affects the equilibrium allocation if and only if at least one individual's voluntary contribution to the public good has an impact on the aggregate tax payments of the others. We then consider linear nonneutral tax-subsidy schemes and analyse efficiency and uniqueness of the resulting Nash equilibria. We show that an efficient Nash equilibrium, where all individuals contribute, will in general not be unique, and establish a non-uniformity property which a tax-subsidy scheme must fulfil in order to induce a unique interior equilibrium that is efficient. Throughout the paper it is assumed that individuals fully understand and take into account the government's budget constraint. Received: 3 November 1997 / Accepted: 23 March 1999     

Austria and the Single European Market

The economic consequences—global and on a sectoral level—of the full participation of Austria in the process of economic integration in Europe are assessed with the help of the INFORUM system of interlinked input–output models and the Austrian model in this family, i.e. AUSTRIA IV. The results of two scenarios up to the year 2000 are compared. One scenario is based on the assumption of the full participation of Austria in the process of European integration. The alternative scenario is based on the hypothesis that Austria has to remain in an outsider position. The analysis shows quite relevant positive consequences of full participation by Austria in the process of European integration. Because of compensating forces, the effects on a sectoral level are much more pronounced than those on the global level. The structural implications on output, employment, etc. are quite remarkable.     

A note on increased probability of loss and the demand for insurance

It is shown that the effect of increased probability of loss on the demand for insurance depends on whether both insured and insurer are aware of the change. When both insurer and insured share the same beliefs about the probability of loss (symmetric information), an increase in the loss probability may lead risk-averse agents to demandless insurance.     

Enterprise responses to price and output shocks in transitioning economies: The case of the Czechoslovak machine-building sector

The behavior of a sample of 161 state-owned, Czechoslovak machine-building enterprises for the period 1985–89 is examined by means of simulation techniques based on the estimated dynamic factor demand equations. The simulations of input utilization for 1990–92 indicate that the state-owned firms have been less responsive to market signals and to output changes during the transition period of 1990–92 than they were in 1985–89. This may reflect either a change in decision-making regime at the firm level or the magnitude of changes in prices and output levels that occurred in 1990–92. We also find that the output shocks were much more important for the changes in input utilization during the transition than were input price shocks. The research results reported here are part of a World Bank project on enterprise behavior in transition. The results and conclusions are solely the responsibility of the authors and in no way represent the views of the World Bank or of their respective employers.     

On Mutual Fund Investment Styles

Most mutual funds adopt investment styles that cluster arounda broad market benchmark. Few funds take extreme positions awayfrom the index, but those who do are more likely to favor growthstocks and past winners. The bias toward glamour and the tendencyof poorly performing value funds to shift styles may reflectagency and behavioral considerations. After adjusting for style,there is evidence that growth managers on average outperformvalue managers. Though a fund's factor loadings and its portfoliocharacteristics generally yield similar conclusions about itsstyle, an approach using portfolio characteristics predictsfund returns better.     

The impact of West European trade strategies on exports to Eastern Europe

This paper examines the extent to which West European countries have utilized diplomacy and reductions in trade barriers to improve their export performance in East European markets during the 1960's. Equal-price export shares of 7 West European countries are estimated by means of an econometric model, and their behavior over time and among importing regions is related to the commercial and foreign policies of the exporters. Our results demonstrate that East European import decisions have been significantly influenced both by changes in western commercial policies and by diplomatic initiatives such as DeGaulle's effort at détente with the Soviet Union. Our results also indicate that elasticities of substitution in East-West trade are significantly lower than those in trade among western countries.