On the interaction between public and private capital in economic growth

This paper introduces two forms of interaction between private and public capital in an endogenous growth model in which productive government expenditure takes the form of a stock-variable and public capital is used in part as an input in the production of final output and in part to increase its own supply. While the first form of interaction involves the stocks of the two capital-goods and takes place within the final output sector through the specification of the aggregate production function (Cobb?CDouglas vs. CES), the second one concerns the rates of investment in the two kinds of capital. The share of productive public expenditure devoted to output production can be either exogenous or endogenous. Our results suggest that when this share is exogenous, along the balanced growth path the optimal growth rate of the economy is a positive function of the degree of complementarity between the two forms of investment. When the share of productive public expenditure devoted to output production is endogenous, the public capital share in GDP becomes, along with the model??s preference parameters, an important determinant of the economy??s long run growth. We also find that the optimal growth rate is an increasing function of the elasticity of substitution between public and private capital inputs in goods production, and is independent of the complementarity/substitutability between the two forms of investment.     

Ecosystem Service Value and Agricultural Conversion in the Amazon: Implications for Policy Intervention

We explore the welfare implications of agricultural expansion in the Brazilian Amazon by comparing spatially explicit estimates of soybean rents and the value of ecosystem services. Although these estimates are generated from different datasets, models, and estimation techniques, the values are comparable, such that the value of ecosystem services is greater than soybean rents for about 61% of the total area and 24% of the area where soybean rents are positive if protected areas are well enforced. Based on the balance between the benefits and costs of conversion, failure to value ecosystem services reduces total social welfare by 7.13 billion dollars annually relative to an optimum. Policy instruments that internalize the value of ecosystem services via protected lands, land conversion taxes, conservation subsidies, or excise taxes can avoid much of this loss. Regardless of intervention regime, policy makers should be cognizant of the diminishing net benefits of converting natural ecosystems to agriculture. Realizing the final 3.8% requires the conversion of an additional 15% natural ecosystems to soybean production.     

The Effects of a Federal Flat Tax on Agriculture

This study examines the impact of a federal flat tax on agriculture by determining the tax liability under the current and flat tax systems using actual farm records. The study considers the linkages between agriculture and the rest of the economy by examining the impact of a flat tax on interest rates and capital investment and how those changes would affect agriculture. Results indicate that roughly 63% of agricultural producers would benefit from a flat tax in terms of lowering taxes paid. Under the flat tax, larger farms and more profitable farms would be relatively better off.     

The rest of me

iPhone Siri demonstratively introduced natural language processing. Still a gadget, the idea revived one of the old promises of computers as personal assistants. Does it have the potential of fulfilling the already burgeoning imagination related to this promise? The authors believe that, while still dependent on the evolution of artificial intelligence, the virtual assistant may find support in the already maturing technologies of augmented reality and, more important, in the changing global network with the semantic web, Internet of things and geo-location. Bluntly speaking, its feasibility and acceptability may not even have to wait for the promised IBM computer with human brain capabilities, but rather build on a more friendly interaction with the Google search engine.The article provides a narrative scenario of the deep economic and social transformations and even turbulence that the so called imaginary friend may produce. Not discarding, but creatively integrating some of the archetypes of futuristic literature, the story positions these entities as the foreground of a deep integration of networks, with the added turmoil caused by economic interests that go beyond individuals’ sense-making capacity.This article is one of the follow-ups of the international foresight workshop “Crazy futures” coordinated by Ziauddin Sardar and George Cairns in a small resort on the Danube Delta in July 2011, a workshop organised as part of the project Quality and Leadership for Romanian Higher Education.     

The Euro Illusion in Consumers’ Price Estimation: An Italian–Irish Comparison in the Third Year of the Euro

The euro illusion is a transient phenomenon that consists of currency-related asymmetries in the intuitive judgment of product prices made by consumers. The results of a cross-country study in the third year after the introduction of the euro show a strong price estimation asymmetry in a country with an extreme exchange rate (Italy) and a weaker effect in a country in which the nominal values of the new and the old currency are much closer (Ireland). These results rule out proposed explanations of the euro illusion in price estimation that assume the sole influence of plausible anchors (reference prices stored in memory within the plausible price range), supporting instead accounts also endorsing the role of implausible anchors (reference prices outside the plausible price range). Beyond contributing to our theoretical understanding of the euro illusion, this research starts to unveil the interplay between structural factors (i.e., the currency exchange rate) and psychological mechanisms that produce long-lasting difficulties for consumers after a monetary changeover.