Optimal redistribution when different workers are indistinguishable

Abstract.  Using the standard non linear income and commodity taxation framework, we examine the optimal policy to be adopted when the same labour disutility can receive two opposite interpretations: taste for leisure and activity limitation. In the absence of complete information about individual characteristics, an income tax does not allow distinguishing lazy from handicapped individuals. One may rely, however, on a combination of commodity and income taxes to redistribute from the former to the latter when they differ in their preferences for commodities. JEL Classification: H21, H41
Redistribution optimale quand les divers travailleurs sont indistincts.  A l'aide du cadre d'analyse conventionnel de fiscalité non linéaire sur les revenus et les biens, ce mémoire examine la politique optimale à adopter quand le même niveau de désutilité du travail peut être interprété de deux manières opposées : goût pour le loisir et souffrance attribuable à une infirmité. En l'absence de renseignements complets à propos des caractéristiques des individus, un impôt sur le revenu ne permet pas de distinguer les individus paresseux de ceux qui sont handicapés. On peut cependant compter sur une combinaison de taxes sur les revenus et les biens pour redistribuer du premier groupe vers le second quand leurs préférences pour les biens diffèrent.     

The structural implications of technological change in the manufacturing sector

This paper uses a three-sector, pseudo-general equilibrium model to investigate the implications of different types of technological progress in the manufacturing sector. We show that the increased relative importance of services that has occurred could be the consequence of such rapid technological advance in manufacturing that the relative price decline of manufactured goods has reduced spending on manufactures versus services. Furthermore, we show that only labor-saving technological change in manufacturing can explain the growth in the relative importance of investment. This adds indirect support to other studies which have shown that technological advance in manufacturing has generally been of a labor-saving variety.The refereeing process of this paper was handled through Murray Brown. The authors are respectively Professor, Faculty of Commerce and Business Administration, University of British Columbia, and Assistant Professor, Faculty of Business, University of New Brunswick. They are grateful to the Canadian International Development Agency and to Nomura Asset Management International Limited for generous financial support. The authors are also grateful for the helpful comments of James Brander and two anonymous referees of this journal. However, responsibility for any errors that may remain is borne solely by the authors.     

Two-step two-stage least squares estimation in models with rational expectations

The paper develops a two-step estimator for use in rational-expectations models with autocorrelated residuals and predetermined, but not strictly exogenous, instruments. The estimator extends the applicability of McCallum's (1976) error-in-variablesapproach to estimating such models, and is asymptotically efficient in a class of intrumental-variables estimators. As an application we use instrumental-variables techniques to estimate Taylor's (1979) rational-expectations macroeconomic model of the United States.     

SOCIAL GAIN,WELFARE, POLITICAL ECONOMY AND A' THAT

The economic criterion of public investment choice is aggregate consumers' surpluses and producers' rents generated by the investment. Its analytical model is a social revenue function and a social cost function. It is a welfare criterion only so far as efficiency is a welfare component and then subject to severe limitations. It is argued here that the economist's conclusions rest in part on a set of value preferences; therefore, the test of their rightness is in part their acceptability to the public choice-maker.     

Crises and the International System

This paper reviews the recent experience of financial crises since 2007, including the continuing crisis in the euro zone. I seek to answer three main questions: In what respects (if any) is the recent experience of crises novel? How special is the euro crisis? And what changes in the international financial architecture can reduce the chances of future crises?