Welfare Effects of VAT Reforms: a general equilibrium analysis
Bye Brita
Indirect taxes such as value added taxes (VAT) generate a substantial part of tax revenue in many countries. In practise VAT systems are often characterised by exemptions, reduced rates and zero ratings. A non-uniform VAT system may generate an efficiency loss and encourage rent-seeking and tax fraud activities. It also has high administrative costs. We compare two different non-uniform VAT systems exemplified by the former and current Norwegian VAT systems, with a general and uniform VAT system. Our analysis shows that an imperfect extension of the VAT system to cover more services is welfare inferior to the baseline non-uniform VAT system only covering goods. However a general and uniform VAT system is welfare superior to both the non-uniform systems.
Submission Date: 2008-08-15 00:00:00

Convergence clubs: geography and technology
Tomkins Judith
This paper investigates the extent of convergence amongst the 51 prefectures of Greece during the time period 1970-2000. The main objectives are to discover whether there is a convergence club amongst the regions, to establish whether there is a spatial pattern to club membership, to assess the impact of agglomeration effects and regional capacities to innovate or adopt technology and finally, to analyse the characteristics of convergence club members. The results suggest that there is a significant spatial dimension to regional growth and that members of the convergence club are not only in close spatial proximity but also share other characteristics in common. The analysis is also shown to have important implications for the direction of regional policy in Greece.
Submission Date: 2006-09-25 00:00:00

Optimal Patent Length in a North-South Framework: A comment
Banerjee Swapneddu
We show that under some conditions the non-innovating south gives patent protection for a longer period than the north. A cooperative patent agreement involves a larger protection by each country compared to the non-cooperative situation.
Submission Date: 2005-02-04 00:00:00

Rebuilding socio-economic impact measurement for public investment evaluation
Yang Jichung

Submission Date: 2004-11-17 00:00:00

Growth, Employment and Wage Formation
Sorolla Valeri
We develop an endogenous growth model with a non-competitive labor market characterized by a monopoly union in order to study the relation between growth and employment. We show that if there is wage inertia, economic growth positively affects employment in the long run. We also use the model to analyze the effects on employment and growth of increasing public capital.
Submission Date: 2004-06-09 00:00:00

Purchasing power parity and economic integration among caribbean countries: Evidence from the 1980s and 1990s
Aggarwal Raj
This study documents that Purchasing Power Parity seems to hold for the 1980s and the 1990s among the currencies of the Caribbean. In addition, this study presents evidence of some economic integration and of currency blocs in the region as it documents co-integration among real exchange rates in the Caribbean for the 1990s (after the economic reforms of the late 1980s and early 1990s). These findings mean that currency risks of foreign investments in the Caribbean region can be hedged using common instruments. These findings also have other important implications for policy makers, managers, investors, and scholars interested in the Caribbean region.
Submission Date: 2002-05-28 00:00:00

An estimation of U.S. Industry-level Capital-Labor Substitution Elasticities: Cobb-Douglas as a Reasonable Starting Point?
Balistreri Edward
A key parameter that determines the distributional impacts of a policy shift in general equilibrium models is the elasticity of substitution between capital and labor. Despite the importance of this parameter in applied modeling, its identification continues to pose a challenge. Given the structure of most growth models, we posit that the true relationship between capital and labor is likely to be close to Cobb-Douglas. Using a rich new data set from the Bureau of Economic Analysis, we estimate substitution elasticities for 28 industries, which cover the entire economy, and provide an indication of the long- and short-run estimates. We fail to reject the Cobb-Douglas specification in 20 of the 28 industries. These findings lend support to the Cobb-Douglas specification as a transparent starting point in simulation analysis.
Submission Date: 2002-05-28 00:00:00

Effects of Trade Liberalization on Domestic Prices: The Evidence From Korea, 1983-1995
Yang Yung
This paper presents estimates of the competitive effect of trade liberalizationi on the domestic pricing behavior of Korean manufacturing, utilizing panel data for 18 manufacturing sectors at the 3 digit SIC level over five 3-year periods during 1983-1995. The theoretical framework is based on an oligopolistic model of price determination in an open econmy. Our results indicate that there was a restraining effect from import competition on domestic prices in Korea. One implication is that trade policy should be viewed as another viable policy option to promote domestic competition.
Submission Date: 2002-04-17 00:00:00

Systematic risk in a mature, export oriented industry in a small open economy: The Canadian forestry industry
Sadorsky Perry
Changing conditions in the domestic and global economic environment, and at the industry level can impact a company\'s systematic (market) risk. Changing systematic risk can, in turn, impact a firm\'s current business performance and its future strategic options. This is particularly true of a mature, export oriented industry located in a small open economy. This paper investigates the determinants of systematic risk in the Canadian forestry industry. Daily data are used to estimate quarterly market betas. Although the average firm market beta is 0.62, the quarterly market betas show some variation across both time and cross-section. The results indicate that forest product commodity prices, the term premium, the exchange rate between the Canadian and the American dollar, and firm market value are each statistically significant determinants of systematic risk in the Canadian forestry industry. This paper shows that the financial markets take these factors into account when determining systematic risk. These results are useful for managers, planners, policy makers, and investors who are interested in the Canadian forestry industry.
Submission Date: 2002-04-03 00:00:00

Seeking Information: The Role of Information Providers in the Policy Decision Process
Swank Otto H.
The consequences of many policies are complicated and difficult to foresee. Those who are capable of providing information to policy makers often have a vested interest in the outcomes. This gives them an incentive to distort information to manipulate policy decisions. In this article we argue that reputation or penalties for lying do not always induce information providers to tell the truth. Rather than relying on interested parties, policy makers can create public agencies to collect information about policy consequences. This has the advantage that policy makers can affect the preferences of the information provider. The drawback is that public agencies must exert efforts to collect information. We argue that policy makers create public agencies whose preferences deviates from their own preferences.
Submission Date: 2002-04-01 00:00:00

Poverty Alleviation Policies: The Problem of Targeting when Income is not Directly Observed
Fernandes Reynaldo
This paper aims to propose an indicator to evaluate the degree of targeting of programs to alleviate poverty, which weights success of reaching (families correctly included) and leakage (families wrongly included) in a social program. A proxy means-tested criterion is also proposed, based on estimation of the propensity score (the probability of a family being poor, conditional on covariates). This criterion consists of choosing a cut-off value for the propensity score in such a way as to maximize the proposed indicator. An application of the indicator to the metropolitan regions of Brazil is carried out. It is shown that even when there is a social consensus that policies should be directed toward the truly needy families, a significant degree of mistargeting can persist.
Submission Date: 2002-04-01 00:00:00