EFFECTS OF PAST AUSTRALIAN WHEAT PRICE POLICIES ON KEY INDUSTRY VARIABLES

Evidence is provided on the extent to which wheat price policies operating over the period 1953-54 to 1983-84 achieved objectives related to the levels and stability of key industry variables. The general findings are that the levels of achievement have been modest and that trade-offs have been involved. This evidence is supplementary to the evidence already available from efficiency-based studies.     

Estimating and testing the compensated double-log demand model

In spite of the proliferation of flexible functional forms for consumer demand systems, the double-log demand model continues to be popular, especially in applied work calling for single-equation models. It is usually estimated in uncompensated form. It can also be estimated in compensated form, by deflating the income variable alone using Stone's price index. The compensated form has the same right-hand side as a single-equation version of the popular linear approximation to the Almost Ideal demand model, facilitating the construction of a test for choosing between the two alternatives. This paper demonstrates these results, develops the specification test, and illustrates its application using US meat consumption data. Simulations suggest that the test is well-behaved with good power in typical applications.     

Unlocking housing equity in Japan

Much prior literature on asset patterns among the elderly has mostly overlooked housing wealth as a determinant of retiree wealth, particularly in the Japanese context. Yet releasing equity in housing may be a natural mechanism to boost consumption, reduce public pension liability, and mitigate the demand for long-term care facilities in Japan. Our study evaluates what might be needed to implement reverse mortgages (RMs) in this country. Policies could include exempting RMs from capital gains tax and transactions tax, along with mechanisms to make annuity income flows nontaxable, along with interest rate accruals for RMs. In addition, housing market reforms to enhance information flows would be needed, particularly regarding new and existing housing trades, which could permit the securitization of housing loans and lines of credit. Other improvements in capital markets could also help, including the establishment of reinsurance mechanisms to help lenders offer these reverse mortgages while having some protection against crossover risk. In the Japanese case, demand for RMs will be dampened by declining residential housing values as well as low interest rates and long life expectancies. Nevertheless, we conclude that RMs can be a good way to finance elderly consumption in Japan, particularly against the backdrop of governmental financial stringencies. J. Japanese Int. Economies 18 (4) (2004) 466–505.     

Welfare loss estimates from homeowner tax preferences: Inflation,mortgage interest deductibility,and capital gains treatment

A model of taxation is presented and used to estimate the welfare loss from distortive treatment between capital gains on housing and on non-housing in the US and the UK. Taxation of nominal capital gains produced by inflation is taken into account. Estimated welfare losses are on the order of 1% of GNP—much higher than that obtained by previous authors.     

Taxing Super

Australia's taxation arrangements for retirement saving are among the most complicated in the world. It is almost unique in applying taxat all three possible points in the retirement saving cycle: contributions, earnings and benefits. Starting from the proposition that the 'best' pension tax is to tax benefits under the personal income tax, this paper proposes a 'withholding tax' arrangement which would have impacts on individual contributors equivalent to a benefit tax, while altering the time profile of tax collections to address cash-flow concerns on the part of the revenue authorities. Simulations are presented to show that individual contributors benefit from the proposed reform, and that equity across contributors in different wage bands is broadly maintained.     

THE ELASTICITY OF AGGREGATE AUSTRALIAN AGRICULTURAL SUPPLY: ESTIMATES AND POLICY IMPLICATIONS

Annual time series data for the period 1950-51 through 1975-76 are used to estimate the price elasticity of aggregate Australian agricultural supply using two methods. The short-run elasticity is estimated to be highly inelastic but it has been increasing through time. The preferred estimate of the long-run elasticity is in the relatively inelastic range and it has also been increasing through time. Some implications of these results for intersectoral resource flows and compensatory assistance, the cost-price squeeze, the effects of the mineral boom and monetary policy are discussed.     

COMBINATIONS OF BUFFER-STOCKS AND BUFFER-FUNDS FOR WOOL PRICE STABILISATION IN AUSTRALIA*

In this paper a preliminary analysis is presented of a combined buffer-fund and buffer-stock as an alternative to a pure buffer-fund or a pure buffer stock for stabilising wool prices. The alternatives analysed are designed so that each provides the same prices to producers as did the Reserve Price Scheme over the period of analysis. Least-cost combinations of policy instruments are derived. The results show that there is considerable potential for cost savings to be made by combining buffer-fund and buffer-stock instruments.     

AGRICULTURAL SELLING CARTELS: RELATIVE CO-OPERATOR AND NON-COOPERATOR GAINS*

An analytical framework is developed for assessing the relative gains accruing to co-operators and non co-operators in a cartel arrangement involving production quotas. Key parameters determining the relative gains are identified. The values of these parameters in the context of Australian agriculture could result in greater gains for non co-operators than for co-operators. Suggestions are offered on some types of information that should be sought in feasibility studies before cartels are established.