TAXES,INVESTMENT INCENTIVES AND THE COST OF AGRICULTURAL INPUTS

This paper examines the effects of taxes and investment incentives on relative capital/labour costs on farms of different sizes. Income tax relief reduces the cost of purchased non-capital inputs to farmers, while investment incentives reduce the cost of capital items. A framework is developed for calculating the relative magnitudes of these effects and it is shown that capital costs have been reduced relative to labour costs throughout the post-war period in the U.K. and on large farms (paying a higher tax rate) more than on small farms.     

The standard of living debate,rational expectations,and neutrality: Some evidence from the industrial revolution

There exists a debate among economic historians concerning the ‘standard of living’ of the British working class during the industrial revolution. In this debate, trends in real wages figure prominently and virtually all long- and short-term real wage movements are attributed to price level variation. This attribution conflicts with recent ‘neutrality’ propositions associated with rational expectations. We test a version of the rational expectations-neutrality hypothesis by examining whether prices caused real wages in the period 1790–1850. This period is of particular interest due to the competitive nature of the British economy at that time. We find the hypothesis is consistent with the data. This is in contrast to all existing interpretations of the period.     

Foreign owners and American cement: Old cartel hands,or new kids on the block?

In 1961, all portland cement producing capacity in the United States was owned by companies domiciled here. Thirty years later, about 70% was controlled by foreign owners, mostly European. It has been suggested by various authorities — academic economists, the business press, even cement executives — that foreign governments' tolerance for formal or tacit collusion would bring the American cement industry a kind of ‘price discipline’ that it has been largely unable to practice since 1948. This contention is tested as an hypothesis, using regional data from the U.S. Bureau of Mines and the Portland Cement Association. The test shows either no or a negative relation between foreign control and the level of regional cement prices. At the same time, we observe the traditional positive relation between concentration (HHI) and prices. The results imply that horizontal mergers between cement producers are a better subject for the attention of public policy than where they are owned.