REVENUE-NEUTRAL INCENTIVES FOR EFFICIENCY AND ENVIRONMENTAL QUALITY

Recently, interest has grown in using monetary incentives as an efficient way to promote energy efficiency and environmental quality. This paper describes issues raised in designing revenue-neutral incentive policies to achieve these goals. Such policies involve charging fees in proportion to undesirable characteristics and giving rebates in proportion to desirable characteristics. The fees pay for the rebates and for any administrative costs of the program.
This paper analyzes the conceptual issues raised in designing such incentive policies to correct for externalities and to promote the efficiency of buildings and automobiles. The paper examines the nature and importance of externalities, presents the rationale for revenue-neutral incentive policies, and describes six revenue-neutral incentive programs for achieving these goals. In addition, it analyzes the criteria that one should use in determining the size of fees and rebates, in light of the large uncertainties. Finally, the paper addresses key implementation issues.     

The Incredible HOLC? Mortgage Relief during the Great Depression

This paper examines the relief provided by the Home Owners’ Loan Corporation (HOLC), a New Deal program that purchased and refinanced over 1 million distressed residential mortgages. I document that the HOLC paid relatively high prices for its mortgages, most likely in an effort to encourage lender participation and stimulate the housing market. The consequence was that lenders were able to remove poorly performing assets from their balance sheets at attractive prices. While this meant the HOLC’s ability to seek principal reductions was somewhat limited, borrowers still received significant relief through the terms of the HOLC’s more modern and forgiving mortgage contracts.     

Conscientiousness,Financial Literacy,and Asset Accumulation of Young Adults

This study utilizes the 1997 National Longitudinal Survey of Youth to examine the relationship between financial literacy, conscientiousness, and asset accumulation among young adults. Findings indicate that both conscientiousness and financial literacy are consistent predictors of asset accumulation among young Americans. A one‐standard‐deviation increase in conscientiousness is correlated with a 40% increase in net worth, a 53% increase in illiquid asset holdings, and a 33% increase in liquid asset holdings. A one‐standard‐deviation increase in financial literacy is correlated with a 60% increase in illiquid asset holdings and a 30% increase in liquid asset holdings. Financial literacy moderates the effect of conscientiousness on net worth. These findings suggest that conscientiousness and financial literacy are important factors and that policies and programming with a dual emphasis on increasing conscientiousness and financial literacy are likely to have a positive impact on consumer savings and asset‐building.     

Gender Differences in Debt Repayment Problems after Divorce

Studies have shown that a growing number of divorced women were experiencing debt repayment problems during the 1980s. This study uses data from the Panel Study of Income Dynamics to (1) examine how debt repayment problems differ by marital status and gender and (2) investigate the role that supplemental income payments play in helping to mitigate repayment problems. The results show that divorced men and women are more likely to default on their debt obligations than married households. Further analysis reveals that increases in welfare payments significantly decrease the likelihood of default for divorced women but do not affect the probability of default for divorced men and married households. There is no evidence that payments related to child support and alimony affect default rates. The findings suggest that welfare benefits may help to mitigate the economic consequences of divorce for women.     

Gatekeeping as Accumulation and Domination: Decentralization and Class Relations in Rural South India

Gatekeeping is taken here to mean the act of channelling formal and informal resources between the state and society for private economic and political gain. Based upon fieldwork in Karnataka, India, this paper argues that whilst traditional forms of control over the labouring class have been eroded, gatekeeping increasingly allows the dominant class to exert a more subtle form of political control, which in turn facilitates processes of accumulation. Rather than equalizing political power and control over public resources, heightened levels of fiscal decentralization to village councils (gram panchayats) have increased levels of gatekeeping, which both provides a significant share of the politically active dominant class's income and forges new patterns of labouring class dependence upon the dominant class. This heightens socio‐economic differentiation and reproduces the latter's political dominance despite the loosening of labour‐related ties. In addition, it is argued that although a minority of gatekeepers are from the labouring class, their inclusion facilitates dominant class accumulation rather than their own upward mobility. The paper stratifies gatekeeping in order to locate it amongst the totality of social relations between and within classes, which collectively produce processes of accumulation, differentiation and domination within society. The paper concludes that although the forms taken by extra‐economic aspects of capital's control over rural labour have been altered during the erosion of traditional forms of dominance, they remain highly significant and are increasingly so in the fieldwork area in a context of decentralized governance.     

Uncertainty,Inflation, and Welfare

This paper studies the welfare costs and the redistributive effects of inflation in the presence of idiosyncratic liquidity risk, in a microfounded search‐theoretical monetary model. We calibrate the model to match the empirical aggregate money demand and the distribution of money holdings across households and study the effects of inflation under the implied degree of market incompleteness. We show that in the presence of imperfect insurance the estimated long‐run welfare costs of inflation are on average 40% to 55% smaller compared to a complete markets, representative agent economy, and that inflation induces important redistributive effects across households.     

Are IPO Allocations for Sale? Evidence from Mutual Funds

Combining data on brokerage commissions that mutual fund families paid for trade execution between 1996 and 1999 with data on mutual fund holdings of initial public offerings (IPOs), I document a robust, positive correlation between commissions paid to lead underwriters and reported holdings of the IPOs they underwrite. Moreover, I find that the correlation is limited to IPOs with nonnegative first‐day returns and strongest for IPOs that occur shortly before mutual funds report their holdings, when the noise introduced by flipping is smallest. Overall, the evidence suggests that business relationships with lead underwriters increase investor access to underpriced IPOs.