Measuring the welfare effects of tax changes using the LES: An application to a carbon tax

This paper explores the use of a parametric approach to the measurement of compensating and equivalent variations resulting from price changes. The approach is based on the application of the Linear Expenditure System (LES) to each of a range of household income groups, rather than being based on a representative consumer. The method is then used to examine the distributional effects of a carbon tax, designed to reduce carbon dioxide emissions. The price changes resulting from a carbon tax depend on the carbon intensities of each good, which depend in turn on the nature of inter-industry transactions (the input-output matrix). The use of transfer payments to compensate for adverse distributional effects of a carbon tax is investigated, using social welfare functions based on equivalent incomes.     

Moral managers and business sanctuaries

Richard Konrad claims that businessmen are guilty of adhering to a vicious form of ethical relativism. In practice, the relativism takes the form of doing an act which ordinarily would be called wrong and then claiming that the act is right or justified because it falls under a special set of codes (business ethics) which preempt ordinary ones. These codes or business ethics establish moral sanctuaries for businessmen. Konrad examines three versions of the sanctuary position, argues that they fail, and concludes that the position is untenable. In this article it is claimed that Konrad is in error, that upon closer examination the three versions do provide justification for businessmen claiming relief from moral criticism.David Roberts IV is Adjunct Assistant Professor at the University of Alabama at Birmingham. He presently holds a post as Assistant to the Dean of Humanities, Special Studies.     

International Growth Spillovers,Geography and Infrastructure

There is significant academic evidence that growth in one country has a positive impact on growth in neighbouring countries. This paper contributes to this literature by analysing the heterogeneous strength of growth spillovers across world regions and by investigating the contribution of transport and communication infrastructure to explain this heterogeneity and promote neighbourhood effects. By defining neighbourhood on the basis of membership of regional trade agreements, we focus on spillovers that work through regional integration and trade. The analysis finds significant evidence for heterogeneity in growth spillovers, which are strong between OECD countries and essentially absent in sub‐Saharan Africa (SSA). We further find strong interaction between infrastructure and being a landlocked country. This suggests that growth spillovers from regional ‘success stories’ in SSA and other lagging world regions will depend on first strengthening the channels through which such spillovers can spread – most importantly connective infrastructure such as transport and telecommunication links.     

Psychosocial Influences on Children's Food Consumption

This exploratory study generated a grounded theory of factors influencing children's diets, particularly those that contribute to suboptimal eating and ultimately child obesity. The study involved 124 children (aged 6–12 years) and 39 of their parents from three separate junior schools (including a lower, middle, and higher socioeconomic school). Research methods included (i) interviews with children and parents and (ii) observations, drawings, and lunchbox audits with children. The findings suggest that children and parents prioritize psychosocial needs over physiological needs during food selection and consumption. This tendency toward psychosocial eating appears to be strongly reinforced by food advertising.     

Success in failure? Reflections on the changing Spanish audit environment

The 1990s in Spain have witnessed a significant shift in attitudes towards the role of auditing, with promises of more transparent reporting being replaced by talk of audit expectations gaps. This paper explores the changing atmosphere, both through an analysis of one of the most notorious scandals of recent times - involving the Banco Español de Credito (‘Banesto’) - and a more general review of the way the Spanish profession has responded to such downturns in public expectations of auditing. While at first sight, the profession appears to have become more defensive and the audit environment more competitive, the multinational accounting firms do appear to have strengthened their position in the Spanish audit market. Intriguingly, despite public expressions of concern with the quality and capabilities of auditing and the imposition of large fines on audit firms for inadequate audit work, proposed ‘solutions’ for improving audit quality include the establishment of a self-regulated audit regime and reductions in auditor liability. The Spanish experience allows for some timely reflections on the significance of an audit expectations gap and highlights the importance of viewing the audit function from an international perspective.     

Independent but Not Indifferent: Partisan Bias in Monetary Policy at the Fed

Independent central banks are thought to be effective inflation hawks because they are run by technocrats with conservative monetary policy preferences. However, central bankers can only protect their independence by compromising with the elected officials who grant them their independence. Policy, therefore, is likely to be a weighted average of the preferences of the central bank and the government. Consequently, central bankers may be eager to help right‐wing governments stay in power and oppose the election of left‐wing governments. We show evidence from the United States that interest rates (a) decline as elections approach when Republicans control the White House, but rise when Democrats do; and (b) are sensitive to the inflation rate (output gap) when Democrats (Republicans) are in the White House. Thus, the Federal Reserve is a conditional inflation hawk. Since the Fed became operationally independent in 1951, the Republicans have exhibited a decided electoral advantage in presidential politics.