TARIFFS AND IMPORTS MISINVOICING UNDER OLIGOPOLY

Mismatch of trade statistics between developed and developing countries indicate a substantial misinvoicing of trade figures, primarily by developing country traders. This is due to the inflexible exchange rate regimes, severe import restrictions and export subsidies prevailing in Less Developed Countries (LDCs). In this paper, we focus on import underinvoicing due to high tariff barriers in a market where domestic producers compete with importers. Specifically, we examine how tariff levels, market structure and government intervention (in the form of intensity of monitoring and severity of penalties) affect the levels of underinvoicing. We also look at the optimal levels of import tariff and instruments of government intervention in these circumstances.     

On the Asymmetric U‐Shaped Relationship between Inflation,Inflation Uncertainty,and Relative Price Skewness in the UK

We investigate the asymmetric relationships between aggregate inflation and the second and third moments of the cross‐sectional distribution of relative prices using a modified Calvo pricing model with regime‐dependent price rigidities. Calibration experiments reveal that the inflation‐standard deviation and inflation‐skewness relationships exhibit U‐shaped asymmetries around the historical mean inflation rate. UK sectoral data support our results. We conclude that monetary policy should target an inflation rate proximate to the (common) minima of these nonlinear relationships and that core inflation measures should not be used for policy purposes as they exclude much of the information contained in the higher moments.     

Cleaner Technologies and the Stability of International Environmental Agreements

This paper shows that if countries are farsighted when deciding whether to defect from a coalition, then the implementation of cleaner technologies, as embodied by a reduction in the emission per output ratio, may either improve or jeopardize the chances of reaching an international environmental agreement. A small change in the emission per output ratio can result in a discrete jump in the stable size of a coalition and global welfare evaluated under the stable coalition size. In the case of three countries, the grand coalition may be destabilized by the implementation of cleaner technologies, ultimately resulting in higher global emissions and lower global welfare. In the case of more than three countries, implementing cleaner technologies may result in a discrete jump, either upward or downward, of the largest stable coalition size and welfare. We examine both, the case of a flow and that of a stock pollutant. In the latter case, we show that the higher the stock of pollution at the instant when the cleaner technology is implemented, the more likely that a grand coalition of three countries is destabilized. Measures that enhance the natural rate of decay of stock pollutants are shown to have similar effects on the size of stable coalitions to reductions in the emission per output ratio.     

Statistical Discrimination with Peer Effects: Can Integration Eliminate Negative Stereotypes?

We introduce peer effects in the costs of human capital acquisition into a model of statistical discrimination in labour markets. This creates a link between the level of segregation in social networks and racial disparities in job assignment and wages. We show that this relationship is characterized by discontinuities: there is a threshold level of segregation below which negative stereotypes become unsustainable, and steady-state skill levels can change dramatically. This change can work in either direction: skill levels may either rise or fall in both groups. Which of these outcomes arises depends on the population share of the disadvantaged group and on the distribution of the costs of human capital investments. We also examine the effects of affirmative action policies in the presence of peer effects and provide conditions under which such policies eliminate negative stereotypes.     

MID‐DAY MEAL PROGRAM AND INCIDENCE OF CHILD LABOUR IN A DEVELOPING ECONOMY

The present paper purports to examine the consequence of a mid‐day meal program and/or cash stipend scheme on the incidence of child labour in a developing economy using a three‐sector general equilibrium model. It has been found that the policy may be counterproductive as it lowers both the initial incomes of the working families and the return on education. Direct cash payments to the working families instead of a mid‐day meal program are likely to be effective in eradicating the problem of child labour.