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Report
Another note on deadweight loss
Our defense of these postulates is two-fold. First we compare them with existing alternative theories. Second, we provide an illustrative model which : (a) is consistent with the postulates, (b) implies rate-of-return dominance under suitable legal restrictions, and (c) addresses monetary policy questions with standard welfare economics and, in particular, rationalizes in terms of price discrimination a debt management policy that ?tailors debt issues to the needs of the market.?
Report
Variable rate subsidies: the inefficiency of in-kind transfers revisited
The inefficiency of fixed rate consumer price subsidies, relative to cash transfers, is one of the best-known propositions in welfare economics. It has also been used to show that matching grants are a more inefficient intergovernmental aid than are lump sum grants. Furthermore, the cost of fixed rate subsidies cannot be controlled without providing a ?cap? beyond which amount no subsidy is received. This paper reports, both qualitatively and quantitatively, that a broad class of variable rate price subsidies also dominates fixed rate subsidies on both counts. The relative inefficiency of ...
Report
Time consistency of optimal plans: an elementary primer
Time consistent optimal plans are defined within the context of a simple, discrete time optimal control framework. Three possible sources of inconsistency are identified and discussed with reference to the literature.
Working Paper
The simple analytics of observed discrimination in credit markets
Controversial econometric studies of mortgage data show that mortgage loan applications by minorities are denied more frequently than are applications by whites with similar observable default risk factors. But recent evidence indicates that minority borrowers also default more frequently than whites with similar observable risk. This paper presents a simple equilibrium model of discriminatory credit rationing and finds parametric restrictions consistent with both these empirical findings. But in this model, proposed anti-discrimination policies have surprising side effects. Thus, policy ...
Report
Correspondence principles for concave orthogonal games
Silberberg [6] and Pauwels [2] have produced and clarified seminal results in the comparative statics of single-agent classical optimization problems. This paper extends Pauwels? method to derive analogous results for stable Nath equilibria in a subclass of the widely used class of concave orthogonal games defined by Rosen [3]. Application of these results to cost curve shifts in the asymmetric Cournot oligopoly immediately uncovers apparently new comparative statics results.
Report
Parametric properties of tax effort revenue sharing
Some Revenue Sharing programs, including the Federal government?s General Revenue Sharing program, reward higher tax effort with larger aid payments. A natural, game-theoretic generalization of the standard consumer demand based theory of grants-in-aid is used to examine the impacts such tax effort provisions have on the recipient government?s tax effort, spending levels, and welfare. Nonlinear simulation is used to provide rough quantitative estimates of the impacts General Revenue Sharing had in 1972.