Optimal Taxation and Monopsonistic Labor Market: Does Monopsony Justify the Minimum Wage?

Does monopsony on the labor market in itself justify the implementation of a minimum wage when it would not be used in a competitive economy? This issue is studied in a model of optimal taxation. We find that there is no room for the minimum wage when there are a continuum of skills with no isolated mass point at the bottom of the wage distribution. Accordingly, in the empirically relevant situation, where there is a continuum of wages at the bottom of the distribution, the minimum wage is not helpful.     

The Impacts of the California Beverage Container Recycling and Litter Reduction Act on Consumers

In late 1987 the California Beverage Container Recycling and Litter Reduction Act went into effect. Like mandatory beverage deposit legislation in other states, this Act is designed to promote returns through the payment of a redemption value. However, unlike traditional legislation, the Act attempts to promote recycling with lower redemption values and more state intervention. This paper presents a methodology for analyzing the impacts of beverage container recycling legislation on consumers. Applying this methodology to California, it is found that the Act will significantly reduce beverage container solid waste and litter, but the net benefits of the Act depend critically on consumers' valuations of intangible benefits.     

Consumer Education: Does It Change Students' Competencies and Attitudes?

A number of states require or are considering the required teaching of consumer education in secondary schools. However, almost all previous research has found no difference in consumer economic competency between students who had taken a consumer education/economics course and students who had not taken the course. This research was conducted in a state that requires consumer education of all students to see if there was a change in competency level and attitudes toward business. Potential differences in types of courses used to meet the state requirements were also investigated. The basic finding is that students who took a course specifically designed to present consumer education topics did improve their consumer economics competency and developed a more positive attitude toward business.     

Shoppers' Reactions to Supermarket Price Scanning and Shopper Price Marking

Supermarkets are starting to adopt price scanning checkouts. Other supermarkets, both scanner equipped and non-scanner equipped, are removing individual item prices. Although much has been written, especially in the retail trade press, about the advantages to retailers of scanner check-outs little attention has been paid to shopper reactions. This study sought to determine the attitudes and behavior of shoppers at scanner equiped supermarkets. Some user reactions to self-price marking of purchases was also determined.     

BUDGETARY POLICIES, FOREIGN INDEBTEDNESS, THE STOCK MARKET, AND ECONOMIC GROWTH

This paper analyses a small open economy with overlapping generations,endogenous growth, and a risk premium on foreign debt. A balanced-budgetincrease in public consumption or a rise in government debtraises the ratio of foreign debt to domestic income and theinterest rate, but depresses economic growth. Supply-side policiesaimed at internalising production externalities boost foreignindebtedness, the interest rate, and economic growth. A higherglobal interest rate leads, if initial foreign indebtednessis not too large, to a lower foreign debt and, if a countryis dragged down by large levels of foreign debt, lower economicgrowth.     

U.S. DIRECT INVESTMENT TO MEXICO: POLITICS, ECONOMICS, AND NAFTA

The goal of this paper is to determine whether the recent opening of the Mexican economy caused a significant change in the investment behavior of U.S. multinational firms. The first finding is that a real investment function that explained the data well through 1989 shifted dramatically thereafter. Tests indicate that the probable causes of this shift were (i) the relaxation of Mexican restrictions on direct investment after 1989 and (ii) anticipatory investment behavior after the positive conclusion of the NAFTA negotiations.     

Is the Phillips Curve A Curve? Some Evidence and Implications for Australia

The Phillips curve has generally been estimated in a linear framework. This paper investigates the possibility that the Phillips curve is indeed a curve, and shows that a convex short-run Phillips curve may be a more accurate representation of reality than the traditionally used linear specification. The paper also discusses the policy implications of convexity in the Phillips curve. These include the need for policy to be forward looking and to act pre-emptively. Convexity provides a strong rationale for stabilization policy, and it reinforces the need for policy makers to proceed cautiously. It also implies that deep recessions may have only a marginally greater disinflationary impact than shallower ones, unless they induce large credibility bonuses.