Welfare Analysis

Welfare trade-offs between intellectual property (IP) protections provided by patents and by plant variety protection (PVP) are explored. PVP breeders' exemption weakens IP protection, but may speed the transfer of research gains across firms. A model is developed assuming firms optimise research given existing IP protection. A baseline scenario supporting each system is used to perform welfare analysis, and study how the balance is altered between systems. Survey data suggest patents are more appropriate for longer-term, higher-risk research, whereas PVP is better suited for traditional breeding. A scenario where patents and licensing co-exist dominates PVP in all commercially relevant areas.

We study the problem of inheritance and capital income optimal taxation in an economy with migration. In particular, we analyze the role played by the weights attached to the individual utility functions in the social welfare function. If these weights correspond to the demographic weights, the disconnection brought in by migration is the underlying reason for non zero optimal tax rates.

-2.98 -1.91 0.17 -2.50 -1.31 -0.84 Vietnam -2.49 -2.66 -1.71 -4.66 -1.50 -1.69 Myanmar -0.89 -1.62 0.23 -3.86 -2.18 -0.22 Indonesia -1.78 -2.91 -0.32 -3.84 -2.11 -0.90 Bangladesh -0.52 -1.02 -0.62 -3.09 -1.06 -0.40 India -0.15 -1.10 -0.13 -3.12 -1.61 0.06 Pakistan -0.31 -1.07 -1.15 -3.63 -1.42 -0.21 China -1.84 -2.88 -0.71 -3.25 -1.69 -0.94 KyrgyzRepub -0.33 -0.73 -1.36 -4.30 -0.79 -0.55 RoSoAsia -0.36 -0.59 -0.90 -3.81 -1.59 -0.36 RoAsia -3.43 -2.89 -0.96 -3.44 -1.14 -1.73 RoAmericas -1.95 -3.17 -0.73 -3.89 -1.76 -1.37 NorthAfrica -3.20 -4.09 -1.03 -5.30 -2.55 -1.98 Nigeria -4.81 -6.24 0.14 -5.84 -2.21 -1.33 Senegal -0.93 -1.09 -2.00 -4.01 -1.23 -1.11 RoWAfrica -1.70 -2.18 -1.96 -4.59 -1.80 -1.45 CntrlAfrica -3.37 -5.53 -0.07 -5.56 -2.84 -1.54 SCntrlAfrica -4.28 -4.72 -0.74 -6.65 -3.88 -2.00 Ethiopia -0.67 -1.01 -1.55 -3.99 -1.68 -0.69 Malawi -1.18 -1.39 -1.09 -4.33 -1.79 -0.99 Mozambique -1.11 -1.60 -1.06 -3.54 -0.90 -0.89 Tanzania -0.67 -1.12 -1.08 -3.69 -1.48 -0.59 Uganda -1.31 -2.31 -0.30 -4.67 -2.54 -0.74 Zambia -0.95 -1.31 -0.37 -2.94 -0.91 -0.64 Zimbabwe -1.44 -1.52 -0.84 -3.60 -0.67 -1.03 RoEAfrica -1.52 -2.15 -1.04 -4.59 -2.09 -1.15 SouthAfrica -2.28 -3.12 -1.41 -4.37 -1.32 -1.80 RoSACU -2.93 -2.69 -0.92 -4.43 -0.99 -1.79 OECDAsia -4.88 -4.08 -4.65 -5.46 1.52 -5.00 OECDAmerica -4.68 -3.49 -5.65 -6.34 0.52 -5.01 OECDEurope -4.78 -4.39 -4.95 -6.02 0.53 -5.00 RoW -3.39 -4.02 -0.10 -5.13 -2.85 -1.71 Simulation: oecdall Cambodia -0.60 -0.38 0.03 -0.50 -0.26 -0.17 Vietnam -0.50 -0.53 -0.34 -0.93 -0.30 -0.34 Myanmar -0.18 -0.32 0.05 -0.77 -0.44 -0.04 Indonesia -0.36 -0.58 -0.06 -0.77 -0.42 -0.18 Bangladesh -0.10 -0.20 -0.12 -0.62 -0.21 -0.08 India -0.03 -0.22 -0.03 -0.62 -0.32 0.01 Pakistan -0.06 -0.21 -0.23 -0.73 -0.28 -0.04 China -0.37 -0.58 -0.14 -0.65 -0.34 -0.19 KyrgyzRepub -0.07 -0.15 -0.27 -0.86 -0.16 -0.11 RoSoAsia -0.07 -0.12 -0.18 -0.76 -0.32 -0.07 RoAsia -0.69 -0.58 -0.19 -0.69 -0.23 -0.35 RoAmericas -0.39 -0.63 -0.15 -0.78 -0.35 -0.27 NorthAfrica -0.64 -0.82 -0.21 -1.06 -0.51 -0.40 Nigeria -0.96 -1.25 0.03 -1.17 -0.44 -0.27 Senegal -0.19 -0.22 -0.40 -0.80 -0.25 -0.22 RoWAfrica -0.34 -0.44 -0.39 -0.92 -0.36 -0.29 CntrlAfrica -0.67 -1.11 -0.01 -1.11 -0.57 -0.31 SCntrlAfrica -0.86 -0.94 -0.15 -1.33 -0.78 -0.40 Ethiopia -0.13 -0.20 -0.31 -0.80 -0.34 -0.14 Malawi -0.24 -0.28 -0.22 -0.87 -0.36 -0.20 Mozambique -0.22 -0.32 -0.21 -0.71 -0.18 -0.18 Tanzania -0.13 -0.22 -0.22 -0.74 -0.30 -0.12 Uganda -0.26 -0.46 -0.06 -0.93 -0.51 -0.15 Zambia -0.19 -0.26 -0.07 -0.59 -0.18 -0.13 Zimbabwe -0.29 -0.30 -0.17 -0.72 -0.13 -0.21 RoEAfrica -0.30 -0.43 -0.21 -0.92 -0.42 -0.23 SouthAfrica -0.46 -0.62 -0.28 -0.87 -0.26 -0.36 RoSACU -0.59 -0.54 -0.18 -0.89 -0.20 -0.36 Simulation: oecdall Vietnam -2.49 0.06 -0.84 -1.72 -0.49 -2.87 Myanmar -0.89 0.11 -0.31 -0.68 -0.52 -1.32 Indonesia -1.78 -0.22 -0.52 -1.03 -0.20 -1.95 Bangladesh -0.52 0.07 -0.31 -0.27 -0.13 -0.63 India -0.15 0.11 -0.32 0.06 -0.03 -0.19 Pakistan -0.31 0.11 -0.34 -0.07 -0.04 -0.36 China -1.84 -0.27 -0.38 -1.17 -3.96 -5.02 KyrgyzRepub -0.33 0.38 -0.65 -0.04 -0.98 -1.11 RoSoAsia -0.36 0.31 -0.52 -0.13 -0.01 -0.38 RoAsia -3.43 -0.81 -0.84 -1.77 -0.43 -3.80 RoAmericas -1.95 -0.84 -0.83 -0.26 -0.11 -2.04 NorthAfrica -3.20 -0.57 -2.22 -0.41 -0.13 -3.30 Nigeria -4.81 -1.70 -2.07 -1.02 -0.31 -5.01 Senegal -0.93 0.52 -1.41 -0.02 -0.01 -0.95 RoWAfrica -1.70 0.16 -1.39 -0.45 -0.17 -1.83 CntrlAfrica -3.37 -0.92 -1.94 -0.51 -0.22 -3.52 SCntrlAfrica -4.28 -0.96 -1.95 -1.39 -0.58 -4.62 Ethiopia -0.67 0.13 -0.72 -0.06 -0.10 -0.77 Malawi -1.18 0.14 -0.95 -0.36 -0.03 -1.21 Mozambique -1.11 -0.08 -0.96 -0.05 -0.10 -1.20 Tanzania -0.67 0.08 -0.59 -0.14 -0.11 -0.76 Uganda -1.31 -0.18 -0.80 -0.33 -0.09 -1.38 Zambia -0.95 -0.13 -0.63 -0.15 -0.10 -1.04 Zimbabwe -1.44 -0.17 -0.96 -0.27 -0.07 -1.49 RoEAfrica -1.52 -0.09 -1.08 -0.34 -0.20 -1.68 SouthAfrica -2.28 -0.24 -1.63 -0.37 -0.09 -2.37 RoSACU -2.93 -0.42 -2.28 -0.18 -0.04 -2.97 Vietnam -4.66 -2.47 -0.86 -1.33 -0.37 -4.94 Myanmar -3.86 -2.38 -0.67 -0.77 -0.41 -4.20 Indonesia -3.84 -2.27 -0.50 -1.06 -0.28 -4.08 Bangladesh -3.09 -2.51 -0.59 0.02 0.07 -3.04 India -3.12 -2.44 -0.52 -0.14 -0.22 -3.30 Pakistan -3.63 -2.88 -0.63 -0.12 -0.06 -3.68 China -3.25 -2.24 -0.26 -0.73 -3.28 -5.77 KyrgyzRepub -4.30 -2.85 -1.00 -0.43 -0.97 -5.05 RoSoAsia -3.81 -2.67 -0.89 -0.26 -0.13 -3.91 RoAsia -3.44 -2.18 -0.39 -0.84 -0.40 -3.79 RoAmericas -3.89 -2.68 -0.79 -0.39 -0.15 -3.99 NorthAfrica -5.30 -2.74 -1.92 -0.60 -0.19 -5.43 Nigeria -5.84 -3.13 -1.51 -1.09 -0.25 -6.00 Senegal -4.01 -2.41 -1.49 -0.14 -0.03 -4.03 RoWAfrica -4.59 -2.56 -1.56 -0.47 -0.12 -4.66 CntrlAfrica -5.56 -2.88 -1.67 -0.93 -0.43 -5.84 SCntrlAfrica -6.65 -3.43 -1.60 -1.59 -1.11 -7.33 Ethiopia -3.99 -2.84 -0.86 -0.29 -0.25 -4.18 Malawi -4.33 -2.65 -1.04 -0.63 -0.14 -4.41 Mozambique -3.54 -2.36 -1.16 0.01 -0.11 -3.62 Tanzania -3.69 -2.56 -0.74 -0.37 -0.26 -3.89 Uganda -4.67 -2.73 -1.08 -0.81 -0.23 -4.81 Zambia -2.94 -2.27 -0.39 -0.25 -0.19 -3.11 Zimbabwe -3.60 -2.32 -0.86 -0.39 -0.04 -3.61 RoEAfrica -4.59 -2.68 -1.13 -0.77 -0.36 -4.82 SouthAfrica -4.37 -2.32 -1.55 -0.47 -0.13 -4.47 RoSACU -4.43 -2.25 -2.02 -0.11 -0.02 -4.44 Cambodia -2.98 -2.23 -2.25 -0.80 -1.24 -1.81 Vietnam -2.49

This paper uses a dynamic overlapping-generations (OLG) general equilibrium model to analyze welfare effects in Slovenia, the macroeconomic effects of the Slovenian pension reform, and the effects of the pension fund deficit on the sustainability of Slovenian public finances. Although young and new generations will lose from the pension reform, even complete implementation of reforms might not sufficiently compensate for unfavorable demographic developments. The level of expected deficit for the pay-as-you-go state pension fund seems to be most worrying. Financing the pension system with value-added tax revenues, as an extreme case, could result in more sustainable public finances, because gross domestic product and welfare levels ought to increase; however, this might be infeasible to implement politically, given that generations of voters would have their welfare decreased. In addition, the present pension system is opaque and tremendously complicated and primarily, should be made more comprehensible to the public. The economic sustainability of social security systems in Slovenia is currently under severe pressure, due to aging caused by decreasing fertility rates, increased life expectancies, increased numbers of recipients of social benefits, and a decreased active population (European Commission 2001; Organization for Economic Cooperation and Development [OECD] 2000). For these reasons, policy makers anticipate increases in traditional social security benefits and the introduction of new types of old-age insurance. Among the key topics of social security in Slovenia is developing a sustainable, efficient, and fair system of funding social security in an Miroslav Verbi¡ c and Boris Majcen are affiliated with the Institute for Economic Research, Ljubljana, Slovenia. Renger van Nieuwkoop is affiliated with ECOPLAN,

The International Agricultural Trade and Policy Center (IATPC) was established in 1990 in the Food & Resource Economics Department (FRED) of the Institute of Food and Agricultural Sciences (IFAS) at the University of Florida. Its mission is to provide information, education, and research directed to immediate and long-term enhancement and sustainability of international trade and natural resource use. Its scope includes not only trade and related policy issues, but also agricultural, rural, resource, environmental, food, state, national and international policies, regulations, and issues that influence trade and development. The Center's objectives are to: -Support initiatives that enable a better understanding of U.S. and international trade policy issues impacting the competitiveness of Florida agriculture and all specialty crops and livestock nationwide; -Serve as a nationwide resource base for research on international agricultural trade policy issues on all specialty crops and livestock; -Disseminate agricultural trade related research results and publications; -Interact with researchers, business and industry groups, state and federal agencies, and policymakers to examine and discuss agricultural trade policy questions. Programs in the IATPC have been organized around five key program areas.

Knowledge of the effect of unearned income on economic behavior of individuals in general, and on labor supply in particular, is of great importance to policy makers. Estimation of income effects, however, is a difficult problem because income is not randomly assigned and exogenous changes in income are difficult to identify. Here we exploit the randomized assignment of large amounts of money over long periods of time through lotteries. We carried out a survey of people who played the lottery in the mid-eighties and estimate the effect of lottery winnings on their subsequent earnings, labor supply, consumption, and savings. We find that winning a modest prize ($15,000 per year for twenty years) does not affect labor supply or earnings substantially. Winning such a prize does not considerably reduce savings. Winning a much larger prize ($80,000 rather than $15,000 per year) reduces labor supply as measured by hours, as well as participation and social security earnings; elasticities for hours and earnings are around -0.20 and for participation around -0.14. Winning a large versus modest amount also leads to increased expenditures on cars and larger home values, although mortgages values appear to increase by approximately the same amount. Winning $80,000 increases overall savings, although savings in retirement accounts are not significantly affected. The results do not vary much by gender, age, or prior employment status. There is some evidence that for those with zero earnings prior to winning the lottery there is a positive effect of winning a small prize on subsequent labor market participation.

This very fine book by three prominent economists-Browning at Oxford, Chiappori at Columbia, and Weiss at Tel Aviv-will provide an invaluable tool not only to population economists but also to labour economists (especially those with an interest in explaining the gender gap) and all economists with an interest in inequality and household consumption (which is to say, almost all economists). The book offers a summary of knowledge (empirical and theoretical), presented in a unified framework, and has "sufficient material for one or two [graduate level] semesters of lectures on family economics." It is at the frontier of research, and the reader will find novel insights and thought-provoking models-for instance, on the mechanisms of assortative matching and their impact on inequality. Of special note, the welfare consequences of the analyses are sometimes counter-intuitive (e.g., the authors show that divorce can be welfare-improving). It is the hope of the authors (and of these reviewers) that the book will appeal also to non-economists with interests in the family. To that end, the authors have presented the "somewhat technical" discussions in each chapter in non-technical terms, so that "the main ideas … [can be understood] by scholars from other fields who wish to understand the economic approach without necessarily agreeing with it" (p. 5). One aspect of that approach is the (heroic) attempt to account for, and possibly predict, changes in family behaviour-with respect to marriage, divorce, fertility, labour supply, schooling and consumption-without having to rely on changes in preferences, either individual or societal. That is the standard assumption in economics and the basic tenet of the unified framework of this book: individuals make rational decisions based on stable preferences, and decisions change only when the environment changes. Moreover, changes in the environment are most often conveyed by changes in relative prices. We are reminded of the famous quip by James Duesenberry, "Economics is all about how people make choices. Sociology is all about why they don't have any choices to make" (NBER 1960: 233). That said, non-economists might be disappointed by what they see as the naiveté of economists in assuming stable preferences, and by their (sometimes unacknowledged) reliance on changing norms. A case in point is basing the gender wage gap on the fact that women bear most of the burden of having children (p. 439). It may be true that biology helps to explain the gender wage gap, but what explains the observed change over time in that gap? If not grounded in empirical work, such comments can appear as a patch on a leaky theory. While different disciplinary approaches bring different understandings and insights into what are inevitably complex matters, this book demonstrates that the focus on production and distribution, how prices affect the choices we make as producers and consumers, and how that directs the allocation of resources yields much insight into the functioning of modern families. An important aspect of the approach in this volume is what is observable or potentially observable, i.e., evidence that could help us assess the relative merits of alternative frameworks in yielding insights. In this regard, the authors bring subtlety and nuance as well as intellectual rigour to the discussion. Chapter 1, entitled "Facts," presents some evidence-a carefully prepared selection of tables and figures "intended to motivate the analysis … by showing how presumably noneconomic activities, such as marriage and fertility, interact with economic considerations such as work, wages, and schooling" (p. 11). That sets the stage for addressing two aspects of family economics that are central to this volume-"what happens inside existing unions and who married whom" (p. 3). Within unions are questions of joint production (the time that each partner spends in market and home production, including child rearing) and joint consumption or resource sharing (how much goes to each member of the household). Such questions, as they relate to decision making within

The EU banana market has been of enormous interest for researchers for a long time, especially after the import policy unification brought by the Common Market Organization for Bananas (CMOB) in 1993. Empirical evidence suggests that the CMOB and its subsequent modifications have been highly distorting. However, the quantifications made of those distortions by different authors vary a lot, not only in magnitude but also in direction. The reason is that for each evaluation, a different system of demand equations has been estimated. However, besides the different models used, there is one common denominator to all models. They do not incorporate the general restrictions (homogeneity, symmetry and adding up) necessary to make the demand estimations consistent with economic theory. In this paper we estimate the almost ideal demand system (AIDS) to calculate more reliable elasticities to facilitate future welfare analysis of the EU banana market. The inverse almost ideal demand system (I...

In the Winter 1999-2000 issue (Vol. 19, No.4) of this publication, Michael Trebilcock and Ralph Winter reviewed the state of the efficiency defence in the assessment of proposed mergers in Canada prior to the decision of the Competition Tribunal in The Commissioner of ...

We suggest a methodology to calibrate a collective model with household specific bargaining rules and marriage specific preferences that incorporate leisure exter nalities. The empirical identification relies on the assumption that some aspects of indi vidual preferences remain the same after marriage, so that estimation on single individuals can be used. The procedure maps the complete Pareto frontier of each household in the dataset and we define alternative measures of a power index. The latter is then regressed on relevant bargaining factors, including a set of variables retracing the potential relative contributions of the spouses to household disposable income. In its capacity to handle complex budget sets and labor force participation decisions of both spouses, this frame work allows the comparison of unitary and collective predictions of labor supply reactions and welfare changes entailed by fiscal reforms in a realistic setting (see Michal Myck et al., 2006; Denis Beninger et al., 2006).

In addition to transferring about 16 percent of GDP from exporters to importers, Uzbekistan's quasi-fiscal multiple exchange rate regime generates identifiable welfare losses of 2-8 percent of GDP on import markets and up to 15 percent on export markets. These excess burdens have increased substantially with the growing difference among exchange rates. The welfare analysis allows some conclusions regarding the optimal reform strategy: (i) welfare losses will decline overproportionally as exchange rates unify, (ii) exchange rate unification should be supplemented by changing the explicit fiscal system; (iii) at a minimum, Uzbekistan would benefit from moving to an explicit fiscal regime. [JEL F31, H29] *

This paper studies the relationship between competition and incentives in an economy with financial contracts. We concentrate on non-exclusive credit relationships, those where an entrepreneur can simultaneously accept more than one contractual offer. Several homogeneous lenders compete on the contracts they offer to finance the entrepreneur's investment project. We model a common agency game with moral hazard, and characterize its equilibria. As expected, notwithstanding the competition among the principals (lenders), non-competitive outcomes can be supported. In particular, positive profit equilibria are pervasive. We then provide a complete welfare analysis and show that all equilibrium allocations turn out to be constrained Pareto efficient.

HAL is a multi-disciplinary open access archive for the deposit and dissemination of sci-entific research documents, whether they are pub-lished or not. The documents may come from teaching and research institutions in France or abroad, or from public or private research centers. L’archive ouverte pluridisciplinaire HAL, est destinée au dépôt et a ̀ la diffusion de documents scientifiques de niveau recherche, publiés ou non, émanant des établissements d’enseignement et de recherche français ou étrangers, des laboratoires publics ou privés. Lower-order logsums André de Palma∗ Centre d’Economie de la Sorbonne, ENS Cachan

The logsum formula, which provides the expected maximum utility for the multinomial logit model, is often used as a measure of welfare. We provide here a closed form formula of the welfare measure of an individual who has not access to his first-best choice, but has access to his rth-best choice, r = 2, ...n, where n is the number of alternatives. The derivation is based on a standard identity in order statistics.

Integrability of incomplete demand systems is discussed. The concepts of weak integrability, quasi‐expenditure function, quasi‐indirect utility function, and quasi‐utility function are defined. Their relationships to the expenditure function, indirect utility function, and utility function are developed. The dual structure of the quasi‐functions permits exact welfare analysis and reveals the conditional preference structure for the commodities of interest. New results relating the uniqueness and exactness of consumer's surplus to the structure of the expenditure and indirect utility functions are obtained.

I develop a model of (individually rational) collective reality denial in groups and organizations, or among participants in a market. More generally, I ask when individual tendencies toward wishful thinking and overoptimism reinforce or dampen each other. To make clear that such groupthink is entirely distinct from standard linkage mechanisms, there are no complementarities or substitutabilities in payoffs in the basic model, nor any private signals that could give rise to social learning or herding. What emerges is thus a new and surprisingly simple mechanism generating interdependencies in information processing, beliefs and actions. Intuitively, whenever an agent benefits (on average) from other' delusions, this tends to make him more of a realist; and whenever their disconnect from reality makes him worse off this pushes him toward denial, which is then contagious. This Mutually Assured Delusion (MAD) principle can, in particular, give rise to multiple equilibria with different "social cognitions" of the same reality. The same general principle implies that, in organizations where some agents have a greater impact on others' welfare than the reverse (e.g., managers and workers respectively), strategies of realism or denial will "trickle down" the hierarchy, so that subordinates will in effect take their beliefs from the leader(s). In addition to collective illusions of control, the model also accounts for the mirror case of collective fatalism and resignation, such as public apathy and "looking away" from humanitarian disasters. In market interactions, equilibrium prices typically introduce a substitutability between agents' decisions that works against collective belief. Nonetheless, I show how, in markets with time-to build features, or more generally where participants find themselves with outstanding positions potentially subject to (endogenous) capital losses, contagious wishful thinking can again take hold, leading to overinvestment and an ultimate crash. Finally, the model's welfare analysis makes clear what factors distinguish valuable group morale from harmful groupthink and generates new results concerning organizations' ex ante and ex post attitudes toward dissenting speech. "It appears that there are enormous differences of opinion as to the probability of a failure with loss of vehicle and of human life. The estimates range from roughly 1 in 100 to 1 in 100,000. The higher figures come from the working engineers, and the very low figures from management. What are the causes and consequences of this lack of agreement? Since 1 part in 100,000 would imply that one could put a Shuttle up each day for 300 years expecting to lose only one, we could properly ask 'What is the cause of management's fantastic faith in the machinery?' " (Richard Feynman, in Rogers Commission Report, 1986) "We have a wealth of information we didn't have before," Joe Anderson, then a senior Countrywide executive, said in a 2005 interview. "We understand the data and can price that risk." (BusinessWeek, "Not So Smart," August. 2007

This paper explores the business cycle implications of financial distress and bankruptcy law. We find that due to the presence of financial imperfections the effect of liquidations on the price of capital goods can generate endogenous fluctuations. We show that a law reform that 'softens' bankruptcy law may increase the amplitude of the cycle in the long run. In contrast, a policy of bailing out businesses during the bust, or actively managing the interest rate across the cycle, could stabilize the economy in the long run. A comprehensive welfare analysis of the policy is provided as well.

Reductions of social security contributions (RSSC) and a basic income (BI) (or the related Negative Income Tax) are considered in a dynamic general equilibrium framework with imperfect competition on the labour market (the 'wage-setting/price-setting' model). The cases with homogeneous and heterogeneous workers are considered. It turns out that both policies have a long-run effect on the unemployment rate if they are appropriately designed. With two types of skills, this proposition holds if relative wages are rigid and if the supply of skills is not perfectly elastic. A welfare analysis shows that introducing appropriately framed RSSC or BI can be a Pareto improvement.

We develop a framework for economy-wide modelling of value-added tax systems. Our framework models a number of complexities of VAT systems as they are implemented by tax agencies. In particular, we model multiple rates, multiple exemptions, multiple degrees of refundability across commodity users, and multi-product enterprises. A detailed VAT framework, such as that which we present in this paper, is important for correct modelling of VAT within a general equilibrium model. Such a framework is also of value in correctly calculating the distribution of indirect tax payments in CGE model databases, a prerequisite of accurate welfare impact calculations. We use the model to analyse the effects of simplifying Vietnam's complex VAT system. We simplify the system by moving from three tax rates to one budget-neutral rate, while also removing many discretionary exemptions. We find that the policy lifts real private consumption spending, our welfare measure, by an average of 0.9 per cent over our simulation period, 2008-2018.

A widely shared intuition holds that individual control over money matters for the decision process within the household and the subsequent distribution of resources and welfare. As a consequence, there are good reasons to depart from the unitary model of the household and to explore the possibilities offered by models of the family accounting for several decision makers in the household and for the potential impact of tax reforms on the balance of power. This paper summarizes both the methodological and empirical findings presented in the next three papers of this special issue of the Review of the Economics of the Household. This series of contributions primarily entails a concrete comparison of the policy implications of the choice between the unitary and a particular multi person repre sentation: the collective representation. On the one hand, it suggests a methodology to implement the collective model of labor supply in a realistic context where participation is modeled together with working hours, and where the full tax benefit system is accounted for. On the other hand, the empirical part relies on comprehensive simulations of tax reforms in Belgium, France, Germany, Italy, Spain, and the United Kingdom, and allows to quantify the distortions that may affect policy recommendations based on the unitary model.

The advent of e-government and the use of the Internet to connect governments to citizens and businesses have resulted into direct contact among government agencies and their customers. The development towards more direct interaction can be used to predict the bypassing of intermediaries. In this paper three case studies are analyzed which counter this argument. A reintermediation strategy is followed in which intermediaries are used as new distribution channels to interact with customers. The case studies show that intermediaries can be employed to reduce cost and at the same time make government more demand-driven. Following only a disintermediation strategy, often motivated by transaction cost, is a too narrow approach and needs to be complimented by reintermediation strategy to advance towards a demand-driven government.

We prove a general identity which states that any element of a tuple (ordered set) can be obtained as an alternating binomial weighted sum of rst elements of some sub-tuples. The identity is then applied within the random utility models framework where any alternative's ordered choice probability (the probability that it has a given rank) is expressed with respect to standard best choice probabilities. The logit and the logsum formulas are extended to their ordered choice counterparts. In a symmetric case, we compare for the probit and the logit, the surplus loss due to the withdrawal of a product with the damage due to the loss of a rank.

We study the descriptive and the normative consequences of price and/or other attributes changes in additive random utility models. We …rst derive expressions for the transition choice probabilities associated to these changes. A closed-form formula is obtained for the logit. We then use these expressions to compute the cumulative distribution functions of the compensating variation conditional on ex-ante and/or ex-post choices. The unconditional distribution is also provided. The conditional moments of the compensating variation are obtained as a one-dimensional integral of the transition choice probabilities. This framework allows us to derive a stochastic version of Shephard's lemma, which relates the expected conditional compensating variation and the transition choice probabilities. We compute the compensating variation for a simple binary linear in income choice model and show that the information on the transitions leads to better estimates of the compensating variation than those obtained when only ex-ante or ex-post information on individual choices is observed. For the additive in income logit, we compute the conditional distribution of compensating variation, which generalizes the logsum formula. Finally, we derive a new welfare formula for the disaggregated version of the representative consumer CES model.

I lavori riflettono esclusivamente le opinioni degli autori e non impegnano la responsabilità del Dipartimento. SERIES e MATEF vogliono promuovere la circolazione di studi ancora preliminari e incompleti, per suscitare commenti critici e suggerimenti. Si richiede di tener conto della natura provvisoria dei lavori per eventuali citazioni o per ogni altro uso.

We study the strategic choice of compatibility between two initially incompatible network goods in a two-stage game played by an incumbent and an entrant firm. Compatibility may be achieved by means of a converter. We derive a number of results under different assumptions about the nature of the converter (one-way vs two-way) and the existence of property rights. In the case of a two-way converter, which can only be supplied by the incumbent, incompatibility will result in equilibrium. When both firms can build a one-way converter and there are no property rights on the necessary technical specifications, the unique equilibrium involves full compatibility. Finally, when each firm has property rights on its technical specifications, full incompatibility and preemption are again observed at the equilibrium. With incompatibility, entry deterrence occurs for sufficiently strong network effects. The welfare analysis shows that the equilibrium compatibility regime is socially inefficient for most levels of the network effects.

Economic analysis of spectrum policy focuses on government revenues derived via competitive bidding for licenses. Auctions generating high bids are identified as “successful” and those with lower receipts as “fiascoes.” Yet spectrum policies that create rents impose social costs. Most obviously, rules favoring monopoly predictably increase license values but reduce welfare. This article attempts to shift analytical focus to efficiency in output markets. In performance metrics derived by comparing 28 mobile telephone markets, countries allocating greater bandwidth to licensed operators and achieving more competitive market structures are estimated to realize efficiencies that generally dominate those associated with license sales. Policies intended to increase auction receipts (e.g., reserve prices and subsidies for weak bidders) should be evaluated in this light.

I. INTRODUCTION ¶1 Economists and policy makers have embraced "spectrum auctions." 1 Assigning wireless licenses to high bidders places assets with the most productive firms, reduces rent-seeking costs incurred by comparative hearings or lotteries, 2 and captures license rents for the public treasury. This last benefit potentially increases efficiency, in that funds generated without the use of taxes do not cause tax-distorting social losses. Each tax dollar raised, for instance, is expected to cost society about $0.33 in deadweight loss. 3 Auction dollars, as pure transfers, cost less. ¶2 Yet this "public finance bonus" is a delicate matter. Government allocates spectrum, and regulation constrains its use. Wireless licenses generate bids

Significant progress has been made recently by African countries towards signing the Economic Partnership Agreements (EPAs) with the European Union (EU), following twelve years of intense negotiations. Shifting from unilateral trade preferences to a WTOcompatible reciprocal-albeit asymmetric-agreement such as the EPAs has traditionally raised numerous concerns, notably on the potential impact on Africa's regional integration and development prospects. These questions are all the more relevant at the current juncture, characterized by the growing momentum towards the establishment of the Continental Free Trade Area (CFTA) by the indicative date of 2017. In light of this, the present paper provides an empirical assessment of the EPAs based on the MIRAGE computable general equilibrium (CGE) model, to sheds new lights on these issues, focusing on the cases of West African and Eastern and Southern Africa (ESA) regions.

Personalization is an integral part of e-commerce strategy today. A unique feature of personalization is that it requires users to provide a certain amount of personal information to the service provider, thus giving rise to an interesting dilemma in that consumers cannot enjoy more personalized services without sacrificing more privacy. In this paper, we propose a mechanism that allows an online personalization vendor to provide proper incentives for consumers to share information, while protecting their privacy at the same time. The proposed solution not only enables consumers and the firm to engage in an otherwise unviable market, but it also allows the firm to implement an incentive-compatible menu that serves all consumers regardless of their privacy sensitivity. Further, we demonstrate that a minimum privacy-preservation policy is an effective device for protecting consumers' online privacy, and that it outperforms restricting vendors' ability in collecting customer information. Our proposed mechanism is of theoretical and practical importance: By transforming the compensation schedule (privacy preservation) into a set-compliment device to the production variable, our approach offers an alternative to the reliance on external transfer, thus eradicating a major constraint confronted by traditional mechanism design. Practically, our research proposes a realistic, easilyimplementable solution to the fervent calls for endowing consumers with greater control over their online privacy. Further, it offers important policy guidelines to the regulator on not only what devices can be applied in governing the information practice of online vendors, but also exactly how social-efficiency can be enhanced.

On 16 January 2003, the WTO Appellate Body issued its report on United States – Continued Dumping And Subsidy Offset Act Of 2000 (WTO Doc. WT/DS217 and 234/AB/R). In this report, the Appellate Body condemned the so-called US Byrd Amendment by finding that it was inconsistent with the US obligations under the WTO Agreements on Antidumping (AD) and Subsidies and Countervailing Measures (SCM).

This project owes much to my dissertation committee members Michael Woodford, Steven Davis and Lars Hansen. Comments from Dale Mortensen, Daron Acemoglu, Eric Smith, and Asher Wolinsky also helped me clarify some ideas before I wrote this paper. All errors, of course, are my o wn.

This project owes much to my dissertation committee members Michael Woodford, Steven Davis and Lars Hansen. Comments from Dale Mortensen, Daron Acemoglu, Eric Smith, and Asher Wolinsky also helped me clarify some ideas before I wrote this paper. All errors, of course, are my o wn.

The Andrew Young School of Policy Studies was established at Georgia State University with the objective of promoting excellence in the design, implementation, and evaluation of public policy. In addition to two academic departments (economics and public administration), the Andrew Young School houses seven leading research centers and policy programs, including the International Studies Program. The mission of the International Studies Program is to provide academic and professional training, applied research, and technical assistance in support of sound public policy and sustainable economic growth in developing and transitional economies. The International Studies Program at the Andrew Young School of Policy Studies is recognized worldwide for its efforts in support of economic and public policy reforms through technical assistance and training around the world. This reputation has been built serving a diverse client base, including the World Bank, the U.S. Agency for International Development (USAID), the United Nations Development Programme (UNDP), finance ministries, government organizations, legislative bodies and private sector institutions. The success of the International Studies Program reflects the breadth and depth of the in-house technical expertise that the International Studies Program can draw upon. The Andrew Young School's faculty are leading experts in economics and public policy and have authored books, published in major academic and technical journals, and have extensive experience in designing and implementing technical assistance and training programs. Andrew Young School faculty have been active in policy reform in over 40countries around the world. Our technical assistance strategy is not to merely provide technical prescriptions for policy reform, but to engage in a collaborative effort with the host government and donor agency to identify and analyze the issues at hand, arrive at policy solutions and implement reforms. The International Studies Program specializes in four broad policy areas:  Fiscal policy, including tax reforms, public expenditure reviews, tax administration reform  Fiscal decentralization, including fiscal decentralization reforms, design of intergovernmental transfer systems, urban government finance  Budgeting and fiscal management, including local government budgeting, performancebased budgeting, capital budgeting, multi-year budgeting  Economic analysis and revenue forecasting, including micro-simulation, time series forecasting, For more information about our technical assistance activities and training programs, please

In 2009-10 governments around the world implemented unprecedented fiscal stimulus in order to counter the impact of the Global Financial Crisis of 2008-09. This paper analyses the impact of fiscal stimulus using a dynamic open economy, overlapping generations model that allows for feedback effects of fiscal stimulus on private sector expenditure via changes in the tax rate and the interest rate. There are two types of goods -traded (T) and non-traded (N) goods, which differ in their capital intensities. The main qualitative result is that the dynamic output gains from fiscal stimulus depend on the productivity of the initial stimulus spending, on the speed of repayment of debt, on the sensitivities of the interest rate to government debt and of labour supply to the tax rate. Also, the overlapping generations framework allows an intergenerational welfare analysis. Among the biggest winners from stimulus are those about to retire. The biggest losers are those near the start of their working lives when the stimulus is implemented.

Motivated by the revival of Keynesian-inspired fiscal activism in response to the global financial crisis of 2008-09, this paper analyses stylised simulations of fiscal stimulus using an overlapping generations model that allows for feedback effects of stimulus spending on intertemporal consumption decisions of households, via the tax rate, wages and the interest rate. Simulations vary according to the size and type of stimulus, and the speed and way in which the stimulus is unwound. The main qualitative result is that the output gains from fiscal stimulus are short-lived once the stimulus ceases -the fiscal multiplier turns negative and remains negative long after the stimulus ends, mainly because it must be reversed in some way. Also, the overlapping generations framework allows an intergenerational welfare analysis. Among the biggest winners from stimulus are those about to retire. The biggest losers are those near the start of their working lives when the stimulus is implemented.

Motivated by the revival of Keynesian-inspired fiscal activism in response to the global financial crisis of 2008-09, this paper analyses stylised simulations of fiscal stimulus using an overlapping generations model that allows for feedback effects of stimulus spending on intertemporal consumption decisions of households, via the tax rate, wages and the interest rate. Simulations vary according to the size and type of stimulus, and the speed and way in which the stimulus is unwound. The main qualitative result is that the output gains from fiscal stimulus are short-lived once the stimulus ceases -the fiscal multiplier turns negative and remains negative long after the stimulus ends, mainly because it must be reversed in some way. Also, the overlapping generations framework allows an intergenerational welfare analysis. Among the biggest winners from stimulus are those about to retire. The biggest losers are those near the start of their working lives when the stimulus is implemented.

In 2009-10 governments around the world implemented unprecedented fiscal stimulus in order to counter the impact of the Global Financial Crisis of 2008-09. This paper analyses the impact of fiscal stimulus using a dynamic open economy, overlapping generations model that allows for feedback effects of fiscal stimulus on private sector expenditure via changes in the tax rate and the interest rate. There are two types of goods -traded (T) and non-traded (N) goods, which differ in their capital intensities. The main qualitative result is that the dynamic output gains from fiscal stimulus depend on the productivity of the initial stimulus spending, on the speed of repayment of debt, on the sensitivities of the interest rate to government debt and of labour supply to the tax rate. Also, the overlapping generations framework allows an intergenerational welfare analysis. Among the biggest winners from stimulus are those about to retire. The biggest losers are those near the start of their working lives when the stimulus is implemented.

1 ISEL - Instituto Superior de Engenharia de Lisboa, and FEUNL - Faculdade de Economia da Universidade Nova de Lisboa Departamento de Engenharia Electrotécnica e Automação Rua Conselheiro Emídio Navarro, 1 - 1950-062 Lisboa - Portugal [email protected]

Economics Meetings, for useful comments. We are also indebted to Xiaochen Fan and Eduardo Perez for able research assistance. Bernheim gratefully acknowledges financial support from the NSF (SES-0452300 and SES-0752854). Rangel gratefully acknowledges financial support from the NSF (SES-0134618) and the Moore Foundation. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

This paper incorporates anticipated and unexpected shocks to bank capital into a DSGE model with a banking sector. We apply this model to study Basel III countercyclical capital requirements and their implications for banking stability and household welfare. We introduce three different countercyclical capital rules. The first countercyclical capital rule responds to credit to output ratio. The second countercyclical rule reacts to deviations of credit to its steady state, and the third rule reacts to credit growth. The second rule proves to be the most effective tool in dampening credit supply, housing demand, household debt and output fluctuations as well as in enhancing the banking stability by ensuring that banks have higher bank capital and capital to asset ratio. After conducting a welfare analysis we find that the second rule outranks the other ones followed by the first rule, the baseline and the third rule respectively in terms of welfare accumulation.

This paper incorporates anticipated and unexpected shocks to bank capital into a DSGE model with a banking sector. We apply this model to study Basel III countercyclical capital requirements and their implications for banking stability and household welfare. We introduce three different countercyclical capital rules. The first countercyclical capital rule responds to credit to output ratio. The second countercyclical rule reacts to deviations of credit to its steady state, and the third rule reacts to credit growth. The second rule proves to be the most effective tool in dampening credit supply, housing demand, household debt and output fluctuations as well as in enhancing the banking stability by ensuring that banks have higher bank capital and capital to asset ratio. After conducting a welfare analysis we find that the second rule outranks the other ones followed by the first rule, the baseline and the third rule respectively in terms of welfare accumulation.

This paper incorporates anticipated and unanticipated shocks to bank capital into a DSGE model with a banking sector. We apply this model to study Basel III countercyclical capital requirements and their implications for banking stability and household welfare. We introduce three different countercyclical capital rules. The first countercyclical capital rule responds to credit to output ratio. The second countercyclical rule reacts to deviations of credit to its steady state, and the third rule reacts to credit growth. The second rule proves to be the most effective tool in dampening credit supply, housing demand and household debt as well as in enhancing the banking stability by ensuring that banks have higher bank capital and capital to asset ratio. After conducting a welfare analysis we find that the second rule outranks the other ones followed by the first rule, the baseline and the third rule respectively in terms of welfare accumulation.

Stated preference surveys often provide ambiguous descriptions of ecological commodities, yielding welfare estimates that have unclear interpretations and cannot be linked to measurable outcomes. This paper proposes guidelines to promote ecological content validity in survey scenarios and defensible use of ecological information for welfare analysis. These guidelines are illustrated through an application to migratory fish restoration. Content validity is evaluated vis-à-vis norms for communication of ecological changes in the ecological literature. Findings suggest that less structured treatment of ecological commodities may lead to an omission of information that is relevant to respondents and essential for valid welfare estimation. (JEL Q51, Q57)

This paper reexamines the speed of convergence in a one-sector growth model under fairly general conditions with respect to both production and preferences. We investigate the response of the rate of convergence to the intratemporal elasticity of substitution in production, and to the intertemporal and intratemporal elasticities of substitution in consumption. The speed of convergence is highly sensitive to the ÿrst two elasticities, but not to the third, which is re ected primarily in the agent's labor-leisure choice. Small deviations in the elasticities from standard benchmark parameters can lead to signiÿcant variations in the rate of convergence, encompassing the range of typical empirical estimates.