Voting requirements, concessions, international side payments and the European Monetary Union

This paper addresses the question of criteria for selection of EMU members. We identify two factors in the decision process: (1) The costs and benefits which the individual countries attribute to alternative EMU arrangements (`hard-core', medium-sized, all EU members), and (2) the binding institutional restrictions, i.e., the distribution of votes in the European Council and the minimum vote requirements. Within this framework the EU countries are assigned to different groups according to their degree of convergence. Based on stability concessions and side payments these groups decide on the final EMU composition. We show that minimum vote requirements can lead to a suboptimal size of the EMU and can threaten the feasibility of a multi-speed monetary union.     

On the efficiency of environmental instruments in a spatial economy

This paper develops an efficiency criterion to evaluate environmental policy instruments in a spatial economy. We call an environmental policy regime at the regional level efficient if it guarantees not only an efficient distribution of emission permits within a region, but also an efficient locational pattern of mobile firms across the regions of a federation. Using marketable pollution rights or emission taxes, efficiency in this broad sense can only be achieved if revenues of regional environmental agencies are not transferred to regional firms. Direct controls neither support an efficient allocation of emission rights within a region nor locational efficiency of firms.     

An invariance property of the Slutsky symmetry test statistic

The test statistic for Slutsky symmetry of a demand system is usually computed after one equation of the system is deleted. A simple direct proof is given of the proposition that the value of the statistic is not affected when a different equation is deleted.     

Household tenure choice and migration

A model of the joint tenure choice and migration decision is estimated. Unlike previous work that has considered each decision separately or examined the premigration tenure status choice jointly with the migration decision, this analysis addresses change in tenure status as well. The empirical findings indicate that variables often thought to affect either or both tenure status of the residence location change decision have offsetting or augmenting effects on their joint probabilities which are masked if the decisions are examined independently.     

A Medium-Term Framework for Analyzing the Real Exchange Rate, with Applications to the Philippines and Tanzania

A competitive official real exchange rate is important to externalbalance and sustainable medium-term growth in developing countries.This article presents a methodology for estimating the appropriatereal rate and provides a basis for evaluating the extent towhich the prevailing rate is misaligned. In particular, themedium-term equilibrium real exchange rate is evaluated by estimatingthe effects of structural factors on the trend observed fora country's real rate compared with the rates of its major tradingpartners, taking into account the effects of macroeconomic policy.Structural factors include terms of trade, external capitalflows, and trade policy, plus other factors relevant to thecircumstances of individual countries. The implied change inthe medium-term equilibrium real rate is compared with thatof a historical reference period. The application of this methodologyto two developing countries, the Philippines and Tanzania, illustrateshow it can complement and improve upon other analytic approaches,such as those using purchasing power parity and analysis ofparallel rates. This approach is complemented by an analysisof the relation between a country's real exchange rate and thoseof its major competitors.     

Intertemporal tenure choices

An intertemporal model of household tenure choice is estimated using data from the Michigan Panel Survey on Income Dynamics. Unlike empirical studies that focus on household tenure differences at any point in time, this analysis considers choice patterns over a 4-year period. The estimation results often indicate substantial leads, lags, and household condition duration effects on the structure of tenure status choices and the timing of their change. An implication of these findings is that inferences based on analyses of tenure choice at one particular point in time often are misleading.     

Neighborhood amenities: An economic analysis

A spatial model of household and firm demand and supply of market goods is developed. Housing and neighborhood amenity markets are explicitly considered in deriving market equilibrium. The equilibrium relationships are empirically investigated, yielding important insights into the functioning of the urban economy. Attention is focused on externalities involved in neighborhood markets and the simultaneous determination of housing and amenity market equilibrium. The effect of neighborhood amenities on household equilibrium is of a major magnitude and effects of “externality” variables on both housing and amenity equilibrium are substantiated. The degree of neighborhood homogeneity and the extent of government programs aimed at neighborhood development are found to have significant impacts on housing and amenity markets.