FISCAL POLICY, MACROECONOMIC STABILITY AND FINITE HORIZONS

In this paper we analyse the stabilisation properties of distortionary taxes in a new‐Keynesian model with overlapping generations of finitely lived consumers. In this framework, government debt is part of net wealth and this adds a number of interesting channels through which fiscal policy could affect output and inflation. Output volatility, in the presence of technology shocks, is not substantially affected by the operation of automatic stabilisers, but we find interesting composition effects. While the presence of finitely lived households strengthens the stabilisation performance of distortionary taxes through the reduction of the volatility of consumption, it does so at the cost of more volatile investment and real money balances.     

India’s contribution to the British balance of payments, 1757-1812

The East India Company’s “regulated” trade monopoly more effectively served Britain’s national interest during the French wars than might be inferred from contemporary complaints and recent scholarship. The Board of Control’s assessment of India’s importance to the British balance of payments in the 1780s was well informed and was borne out by subsequent developments. British net inflows from India remained substantial through 1765-1812 and were arguably least dispensable. British trade with Asia most frequently outgrew the worldwide totals and retained some of the acquired gains to the end of the period. The real constraints faced by private traders should be weighed against the external economies and scale advantages rendered by the East India Company to a wider range of British interests.     

Tariff Peaks for Agricultural and Food Products: their Incidence and Alternatives for their Removal

The aim of the paper is the analysis of the current market access situation in global agricultural markets for the post‐Uruguay Round period. It identifies those commodity groups in the food and agricultural sector for which tariff peaks exist, and examines how various tariff‐cutting formulae would affect their levels. The related issues of tariff complexity and of the administration of Tariff Rate Quotas are also reviewed here. Results show that the implementation of the Uruguay Round agreement has not significantly reduced agricultural protection, since high tariff peaks and nontransparent tariff structures still persist. A repetition of the Uruguay Round cuts would not solve the problem of high protection levels either, and only the introduction of more aggressive harmonising formulae could lead to a true liberalisation of world agricultural and food markets.     

Do European Primarily Internet Banks Show Scale and Experience Efficiencies?

Empirical evidence shows that Internet banks worldwide have underperformed newly chartered traditional banks mainly because of their higher overhead costs. European banks have not been an exception in this regard. This paper analyses, for the first time in Europe, whether this is a temporary phenomenon and whether Internet banks may generate scale economies in excess of those available to traditional banks. Also do they (and their customers) accumulate experience with this new business model, allowing them to perform as well or even better than their peers, the traditional banks? To this end, we have generally followed the same analytical framework and methodology used by DeYoung (2001, 2002, 2005) for Internet banks in the USA although the limitations in the availability of data, as well as the existence of different regulatory frameworks and market conditions, particularly in the retail segment, in the 15 European Union countries have required some modifications to the methodology. The empirical analysis confirms that, as is the case for US banks, European Internet banks show technologically based scale economies, while no conclusive evidence exists of technology based learning economies. As Internet banks get larger, the profitability gap with traditional banks shrinks. To the extent that Internet banks are profitable, European authorities may encourage a larger number of consumers to use this delivery channel, by tackling consumers security concerns. This would allow Internet banks to capture more of the potential scale efficiencies implied in our estimations.     

Investment Horizon Effects

Abstract:   Boudry and Gray (2003) have documented that the optimal buy‐and‐hold demand for Australian stocks is not necessarily increasing in the investment horizon when returns are predictable. Such finding is in contrast with Barberis (2000) who shows that positive monotonic horizon effects predominate for US stocks. Using a closed‐form approximation to the asset allocation problem, this paper relates the return dynamics to the investor's portfolio choice for different investment horizons. In the special case of a single risky asset, it is shown that return predictability under stationarity may induce both positive and negative horizon effects in the optimal allocation to the risky asset. The paper extends previous empirical results by solving for the optimal portfolio when two risky assets with predictable returns are available for investment.     

Designing Policy for Reducing the Off‐farm Effects of Soil Erosion Using Choice Experiments

Soil erosion produces both on‐site private costs and off‐site social costs, such as desertification, rural depopulation, siltation of waterways and reductions in biodiversity. To design efficient policies, land use planners and decision makers need information on the relative weights of changes in these consequences, since policy alternatives, such as different management restrictions, will have varying impacts on these consequences of erosion. The research presented here uses the choice experiment method to evaluate these relative weights, using a case study in the Alto Genil and Guadajoz watersheds in southern Spain. We find that reductions in desertification, protection of water quality, protection of biodiversity, the area covered by the scheme, and the number of rural jobs safeguarded are all significant determinants of preferences over alternative policy designs.     

Testing Choice Experiment for Benefit Transfer with Preference Heterogeneity

Benefit transfer is a cost-effective method for estimating the value of environmental goods that relies on information obtained in previous studies. The multiattribute approach of choice experiments should provide advantages in terms of benefit transfer, allowing differences in environmental improvements between sites as well as differences in socioeconomic and attitude characteristics between respondent populations. This article investigates the capability of choice experiment method to be used in environmental benefit transfer when a random parameters approach is used to allow for preference heterogeneity: we find that the inclusion of respondents' taste heterogeneity reduces the magnitude of the transfer error.