Is There a Macroeconomic World of One Simple Model?: Reply*

Two questions arise from the note by Hughes: is there a choice for policy in the short term between more production and less inflation and can special factors, such as institutional arrangements for the fixing of wages, have an influence on outcomes for inflation? We will take these questions in turn.     

Optimal Income Taxation with Risky Earnings: A Synthesis

We study optimal nonlinear income taxation when earnings can differ because of both ability and luck, so the income tax has both a redistributive role and an insurance role. A substantial literature on optimal redistribution in the absence of risk has evolved since Mirrlees's original contribution. The literature on the income tax as a social insurance device is more limited. It has largely assumed that households are ex ante identical so unequal earnings are due to risk alone. We provide a general treatment of the optimal income tax under risk when households differ in ability. We characterize optimal marginal tax rates and interpret them in terms of redistribution, insurance, and incentive effects. The case of ex ante identical households and the no‐risk case with heterogeneous abilities come out as special cases.     

A Gap‐Filling Theory of Corporate Debt Maturity Choice

We argue that time variation in the maturity of corporate debt arises because firms behave as macro liquidity providers, absorbing the supply shocks associated with changes in the maturity structure of government debt. We document that when the government funds itself with more short‐term debt, firms fill the resulting gap by issuing more long‐term debt, and vice versa. This type of liquidity provision is undertaken more aggressively: (1) when the ratio of government debt to total debt is higher and (2) by firms with stronger balance sheets. Our theory sheds new light on market timing phenomena in corporate finance more generally.     

A Survey of Manufacturing Industry Policy: From the Tariff Board to the Productivity Commission

Since World War II Australian industry policy has shifted from providing extensive assistance such as tariff protection to the manufacturing sector to creating an environment for the efficient operation of markets. This paper surveys the evolution of the goals and instruments of industry policy in Australia and elsewhere.     

FEEDING CHILDREN AT SCHOOL*

After briefly reviewing factors affecting questionnaire design with reference to Primary School children, the paper explores three methods of determining food preferences of Middle School children. The overall patterns of food preferences that emerged were similar although there were significant differences obtained for 25% of the 100 individual food items investigated. The reading ability of the pupils influenced the type of questionnaire that could be used, especially for junior schools, although other factors such as amount of paper used and analysis time were also considered. The ‘recognition’ of the name of menu items was investigated and most popular or unpopular items were well known. There was no overall influence on the preferences shown by the sex or the age of the child, although children who stayed at school tended to have higher preference ratios for dishes than those who never stayed to school lunch.     

Changing household formation patterns: implications for consumption and nutrition

The effects of anticipated changes in the composition of U.S. households on food consumption patterns and on levels of nutrition are projected to the year 1995. Despite rather substantial demographic shifts, the estimated impact on aggregate food budget shares is small for 13 aggregated food groups. Stratification of cross-sectional data by income and household composition is important to identify potential household groups at risk with respect to selected nutrition categories. Results from this analysis are useful in developing policies which can be geared to target those groups deficient in nutritional intake.