Bequests,gifts, and education: links between intergenerational transfers

We study the channels parents use to make transfers to their children. First, we focus on the relationship between investments in education and property transfers. Second, we turn to how property transfers are divided between inter vivos gifts and bequests. We use a Swedish dataset that is superior to previously used data as it contains information on both gifts and inheritances received from parents. We estimate models for the probabilities of having university education, receiving gifts, and receiving inheritances. In addition, we estimate models for gift and inheritance amounts. We find that the more resources parents have, the higher the likelihood of transfers, and that the correlation between receiving inter vivos gifts and inheritances is very high. Finally, women are more likely to have university education and to receive gifts, and daughters receive gifts of larger amounts than sons, although there are no differences in terms of inheritance.     

Distinction or dichotomy: Rethinking the line between thymology and praxeology

The aim of this paper is to critically reexamine Ludwig Mises’ attempt to separate the psychological aspects of understanding (thymology) from the “science of action” (praxeology). There are, we contend, legitimate distinctions between theory, on the one hand, and, on the other, psychology or history. But, there is no need to dichotomize them from one another in the way Mises sometimes did.     

Regulating an externality-generating public utility: A multi-dimensional screening approach

In this paper, I present a monopoly screening model in which a firm holds private information on fixed abatement costs. Because of the nature of the optimal contracts, bunching is never optimal even with ‘n’ distinct types. A characterization of full and limited information solutions is offered and it is shown that the design standards alone determine the value of an information rent. The variable charge is completely free of any marginal information costs. This allows the variable charge to track marginal damages and thereby ensures that marginal social costs are covered. A fixed charge implements the optimal solution.     

Estimating the Heckscher–Ohlin model: Inverting the inverse matrix

This paper estimates the Heckscher–Ohlin model with annual US data from 1949 to 2006 for outputs of manufactures and services with inputs of fixed capital assets and the labor force. Difference equation and error correction regressions provide estimated coefficients for the comparative static system. Tariffs on manufactures primarily raise the capital return in the estimated Stolper–Samuelson results. Factor price equalization does not hold for labor and capital. Inverting the estimated system inverse matrix provides evidence on production. The suggestions are capital biased production of manufactures, strong substitution of capital for labor, and strong labor substitution in manufactures.     

STATE DEPENDENT PRICING AND BUSINESS CYCLE ASYMMETRIES*

We present a tractable, dynamic general equilibrium model of state‐dependent pricing and study the response of output and prices to monetary policy shocks. We find important nonlinearities in these responses. For empirically relevant shocks, this generates substantially different predictions from time‐dependent pricing. We also find a distinct asymmetry with state‐dependent pricing: Prices respond more to positive shocks than they do to negative shocks. This is due to a strategic linkage between firms in the incentive for price adjustment. Our state‐dependent model can account for business cycle asymmetries in output of the magnitude found in empirical studies.     

Climate Change Taxes and Energy Efficiency in Japan

In 2003 Japan proposed a Climate Change Tax to reduce its CO₂ emissions to the level required by the Kyoto Protocol. If implemented, the tax would be levied on fossil fuel use and the revenue distributed to encourage the purchase of energy efficient equipment. Analysis using the MIT Emissions Prediction and Policy Analysis (EPPA) model shows that this policy is unlikely to bring Japan into compliance with its Kyoto target unless the subsidy encourages improvement in energy intensity well beyond Japan’s recent historical experience. Similar demand-management programs in the US, where there has been extensive experience, have not been nearly as effective as they would need to be to achieve energy efficiency goals of the proposal. The Tax proposal also calls for limits on international emission trading. We find that this limit substantially affects costs of compliance. The welfare loss with full emissions trading is 1/6 that when Japan meets its target though domestic actions only, the carbon price is lower, and there is a smaller loss of energy-intensive exports. Japan can achieve substantial savings from emissions trading even under cases where, for example, the full amount of the Russian allowance is not available in international markets.     

Duopoly models with a joint capacity constraint

The paper proposes a two-stage mixed duopoly model of exhaustible resource market where at the first stage the government decides on the degree of privatization of public firm and at the second stage the public and private firms decide simultaneously on the two-period extraction paths. It is demonstrated that if the two firms have symmetric technologies with increasing marginal extraction costs and the same resource stocks, then neither full nationalization of any of the two firms nor full privatization will be socially desirable. It is shown that the presence of a semi-public firm improves intertemporal allocation of the fixed resource stock. Thus, partial privatization is optimal even under exogenously fixed total outputs of each firm. For asymmetric cost case, when the public firm is less efficient than the private firm, we derive the conditions under which full nationalization or full privatization is optimal.     

Macroeconomic shocks and stock market returns: the case of Korea

This study examines the effects of macroeconomic shocks on key macro variables, including stock market returns in Korea, using the structural vector autoregression (SVAR) model. We suggest a three-variable SVAR model incorporating inflation, output growth and stock returns. We adopt a nonzero z-ratio restriction for the long-run identifying assumption to allow for economically meaningful relationships among variables. While our results support the negative (positive) relation of demand (supply) shocks to stock returns, we also find that demand shocks influence stock market variance more significantly than supply shocks do. The sub-period analysis finds that global market fluctuations during the global financial crisis have relatively little effect on Korean stock market performance. We also examine a generalized five-variable model that includes the foreign exchange rate and interest rate, confirming the results from the three-variable case.     

DOES THE MISSION OF PROVIDERS MATTER ON A QUASI‐MARKET? THE CASE OF THE BELGIAN ‘SERVICE VOUCHER’ SCHEME

ABSTRACT 1 : In 2001, the Belgian government introduced a ‘service voucher’ scheme in the field of domestic (housework) services, following a quasi‐market mechanism which fosters competition between providers of different types as regards sector (for‐profit, public, third sector) and mission (seeking profits, home care provision to vulnerable groups and work integration of the unemployed). Empirical evidence suggests that third sector organizations focusing on a social mission recognized by a tutelary regulation are the best performing with regards to the quality of jobs and service organization, leading to a better ‘triangulation’ of the service relationship. On the other hand, for‐profit providers, especially temporary work agencies, seem to favour their capacity of adaptation to the desiderata of their clients and costs’ minimization to the detriment of the quality of jobs which are made as flexible as possible.