Intergenerational Transfers, Lifetime Welfare and Resource Preservation

This paper analyzes overlapping-generations models where natural capital is owned by selfish agents. Transfers in favor of young agents reduce the rate of depletion and increase output growth. It is shown that intergenerational transfers may be preferred to laissez-faire by an indefinite sequence of generations: if the resource share in production is sufficiently high, the welfare gain induced by preser- vation compensates for the loss due to taxation. This conclusion is reinforced when other assets are available, e.g. man-made capital, claims on monopoly rents, and R&D investment. Transfers raise the welfare of all generations, except that of the first resource owner: if resource endowments are taxed at time zero, all successive generations support resource-saving policies for purely selfish reasons.Distortionary Taxation, Intergenerational Transfers, Overlapping Generations, Renewable Resources, Sustainability, Technological Change

KNOWLEDGE SPILLOVER, LEARNING INCENTIVES AND ECONOMIC GROWTH

Knowledge spillover implies that the social value of knowledge is higher than its private value and leads to insufficient private investment in human capital. This paper examines implications for economic growth and offers a remedy. An incentive mechanism that implements the socially optimal outcome is offered based on learning subsidy and flat income or consumption taxes (each levied at a different phase of the growth process). The scheme is self-financed in that the tax proceeds cover exactly the subsidy payments at each point of time.endogenous growth, human capital, knowledge spillover, learning incentives, linear taxes, International Development, C61, H21, O33, O38, O41,

Determinants of agricultural protection from an international perspective: The role of political institutions

"This paper explores the role of political institutions in determining the ability of agriculture to avoid taxation in developing countries or attract government transfers in industrialized countries. The utilized model is based on a probabilistic voting environment, wherein rural districts are less ideologically committed than urban districts in industrialized countries, and the reverse is true in developing countries. As a consequence, in industrialized (developing) countries rural (urban) districts are pivotal in determining the coalition that obtains a majority, whereas urban (rural) districts are pivotal within the majority itself. In bargaining at the level of the legislature, this generates a conflict between a government that tends to favor rural (urban) districts, and a parliamentary majority that is dominated by urban (rural) concerns. As district size grows and the electoral system converges to a purely proportional system, both of these biases are attenuated. Overall, we see opposing nonlinear relationships between district size and agricultural subsidies on the one hand and district size and taxation on the other. In developing countries, taxation of agriculture first increases and then decreases with district magnitude; in industrialized countries, agricultural subsidization first increases and then decreases with district magnitude. Moreover, the impact of district magnitude on the level of agricultural subsidization is attenuated in presidential versus parliamentary systems, while the level of agricultural taxation is amplified in presidential systems. In the present paper, these findings are first theorized and then empirically confirmed by a cross-country analysis of data from 37 countries over a 20-year period." from authors' abstractpolitical economy of agricultural protectionism, Agricultural policies, Urban-rural differences, political institutions,

Abatement costs for agricultural nitrogen and phosphorus loads: a case study of South-Western Finland

Designing efficient agri-environmental policies for agricultural nutrient load reductions calls for information on the costs of emission reduction measures. This study develops an empirical framework for estimating abatement costs for nutrient loading from agricultural land. Nitrogen abatement costs and the phosphorus load reductions associated with nitrogen abatement are derived for crop farming in southern Finland. The model is used to evaluate the effect of the Common Agricultural Policy reform currently underway on nutrient abatement costs. Results indicate that an efficiency designed policy aimed at a 50 % reducton in agricultural nitrogen load would cost 25 to 28 million euro, or 1995 to 2197 euro per farm

Can U.S. Agriculture Provide Agro-Pharms for Malaria Treatment?

For policy analysis, interest is in investigating the effect of a subsidy policy-switching regime on agro-pharms investment through the theory of investment under uncertainty. It considers the probability of a policy implemented when it is not in effect and the probability of removal when it is in effect. Poisson type policy jumps models a discrete subsidy policy, which provides pharmaceutical plants financial assistance to manufacture Artemisinin-based therapies. A case study analysis determines if Artemisinin efficiency improvements can result in the development of a commercially viable U.S. agribusiness investment opportunity. Accounting for uncertainty, irreversibility, and adoption timing in establishing an Artemisinin agribusiness industry, this analysis reveals a significant impact on the decisions to invest in the industry. In order to provide cost effective antimalarial treatment, a comparison evaluates net present value criterion with the real options thresholds to discuss the optimal timing of adopting high Artemisinin genotyped Artemisia annua varieties. A real options analysis on the optimal timing of adoptions provide an outline for other potential agro-pharm endeavors

On the Public Economics of Casino Gambling

This paper studies casino-style gambling from the public economics point of view in a jurisdiction populated by oligopolistically competitive legal casinos. We consider three different regimes: laissez-faire, entry regulation and tax regulation. The model highlights three important external effects from casino-style gambling: non-casino income creation, social disorder costs, and casino exporting to other jurisdictions. In the generalized case with an endogenously-determined ratio of local to total gamblers, we allow the configuration of casinos to be centralized or jurisdiction-wide dispersed. A complete comparison between equilibrium and command optimum outcomes is provided, and the welfare consequences under the three regimes and two casino configurations are examined.Casino gambling, externalities, oligopoly pricing, entry, tax regulation

Feed-in tariff contract schemes and regulatory uncertainty

This paper presents a novel analysis of two feed-in tariffs (FIT) under market and regulatory uncertainty, namely a sliding premium with cap and floor and a minimum price guarantee. Regulatory uncertainty is modeled with a Poisson process, whereby a jump event may reduce the tariff before the signature of the contract. Using a semi-analytical real options framework, we derive the project value, the optimal investment threshold, and the value of the investment opportunity for these schemes. Taking into consideration the optimal investment threshold, we also compare the two aforementioned FITs with the fixed-price FIT and the fixed-premium FIT, which are policy schemes that have been extensively studied in the literature. Our results show that increasing the likelihood of a jump event lowers the investment threshold for all the schemes; moreover, the investment threshold also decreases when the tariff reduction increases. We also compare the four schemes in terms of the corresponding optimal investment thresholds. For example, we find that the investment threshold of the sliding premium is lower than the minimum price guarantee. This result suggests that the first regime is a better policy than the latter because it accelerates the investment while avoiding excessive earnings for producers or excessive payments for consumers.- This work was supported by a PhD scholarship provided by Fundação para a Ciência e a Tecnologia (FCT) through the MIT Portugal program under project SFRH/BD/52086/2013, and was supported by national funds through FCT with references UIDB/50021/2020, UIDB/03182/2020, CEMAT -UIDB/04621/2020, and UIDP/04621/2020. In addition, this material is based upon work supported by the Air Force Office of Scientific Research under award number FA9550-19-1-0020. Claudia Nunes acknowledges support from FCT through project reference FARO_PTDC/EGEECO/30535/2017, through national funds, and the Research Council of Norway through project nr. 26809

Schumpeter Meeting Keynes: A Policy-Friendly Model of Endogenous Growth and Business Cycles

This paper studies an agent-based model that bridges Keynesian theories of demandgeneration and Schumpeterian theories of technology-fueled economic growth. We employ the model to investigate the properties of macroeconomic dynamics and the impact of public polices on supply, demand and the \fundamentals" of the economy. We find that the complementarities between factors in uencing aggregate demand and drivers of technological change affect both "short-run" fluctuations and long-term growth patterns. From a normative point of view, simulations show a corresponding complementarity between Keynesian and Schumpeterian policies in sustaining long-run growth paths characterized by mild fluctuations and acceptable unemployment levels. The matching or mismatching between innovative exploration of new technologies and the conditions of demand generation appear to suggest the presence of two distinct "regimes" of growth (or absence thereof) characterized by different short-run fluctuations and unemployment levels.Endogenous Growth, Business Cycles, Growth Policies, Business Cycle Policies, Evolutionary Economics, Agent-Based Computational Economics, Post-Walrasian Economics, Empirical Validation, Monte-Carlo Simulations

To Segregate or to Integrate: Education Politics and Democracy

The governments of nearly all countries are major providers of primary and secondary education to its citizens. In some countries, however, public schools coexist with private schools, while in others the government is the sole provider of education. In this study,we askwhy different societiesmake different choices regarding the mix of private and public schooling. We develop a theory which integrates private education and fertility decisionswith voting on public schooling expenditures. In a given political environment, high income inequality leads to more private education, as rich people opt out of the public system. Comparing across political systems, we find that concentration of political power can lead to multiple equilibria in the determination of public education spending.