231 research outputs found

    Three great american disinflations

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    In this paper, we examine three famous episodes of deliberate deflation (or disinflation) in U.S. history, including episodes following the Civil War, World War I, and the Volcker disinflation of the early 1980s. These episodes were associated with widely divergent effects on the real economy, which we attribute both to differences in the policy actions undertaken, and to the transparency and credibility of the monetary authorities. We attempt to account for the salient features of each episode within the context of a stylized DSGE model. Our model simulations indicate how a more predictable policy of gradual deflation could have helped avoid the sharp post-WWI depression. But our analysis also suggests that the strong argument for gradualism under a transparent monetary regime becomes less persuasive if the monetary authority lacks credibility; in this case, an aggressive policy stance (as under Volcker) can play a useful signalling role by making a policy shift more apparent to private agents. JEL Classification: E31, E32, E5

    Three Great American Disinflations

    Get PDF
    In this paper, we examine three famous episodes of deliberate deflation (or disinflation) in U.S. history, including episodes following the Civil War, World War I, and the Volcker disinflation of the early 1980s. These episodes were associated with widely divergent effects on the real economy, which we attribute both to differences in the policy actions undertaken, and to the transparency and credibility of the monetary authorities. We attempt to account for the salient features of each episode within the context of a stylized DSGE model. Our model simulations indicate how a more predictable policy of gradual deflation could have helped avoid the sharp post-WWI depression. But our analysis also suggests that the strong argument for gradualism under a transparent monetary regime becomes less persuasive if the monetary authority lacks credibility; in this case, an aggressive policy stance (as under Volcker) can play a useful signalling role by making a policy shift more apparent to private agents.DSGE Model, Credibility, Deflation

    Pricing information goods with piracy and heterogeneous consumers

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    We present an information good pricing model with persistently heterogeneous consumers and a rising marginal propensity for them to pirate. Three offsetting pricing mechanisms occur: skimming, compressing price changes, and delaying product launch. We identify a novel trade off in piracy's effect on welfare. We find that piracy quickens sales times and raises welfare in fixed capacity markets, and does the opposite in growing markets. In our model, consumers benefit from piracy except at very high rates in rapidly expanding markets, legal sellers always dislike it, and pirate providers like high but not very high rates. Purchase delay, transient heterogeneity, inelastic demand, and network externalities reduce piracy's effect, but demand uncertainty doesn't

    Pricing information goods with piracy and heterogeneous consumers

    Get PDF
    We present an information good pricing model with persistently heterogeneous consumers and a rising marginal propensity for them to pirate. Three offsetting pricing mechanisms occur: skimming, compressing price changes, and delaying product launch. We identify a novel trade off in piracy's effect on welfare. We find that piracy quickens sales times and raises welfare in fixed capacity markets, and does the opposite in growing markets. In our model, consumers benefit from piracy except at very high rates in rapidly expanding markets, legal sellers always dislike it, and pirate providers like high but not very high rates. Purchase delay, transient heterogeneity, inelastic demand, and network externalities reduce piracy's effect, but demand uncertainty doesn't

    Consumer Valuation of Fuel Costs and the Effectiveness of Tax Policy - Evidence from the European Car Market

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    To what extent do car buyers undervalue future fuel costs, and what does this imply for the effectiveness and welfare impact of alternative tax policies' To address both questions, we show it is crucial to account for consumer heterogeneity in mileage and other dimensions. We use detailed product-level data for a long panel of European countries, and exploit variation in fuel costs by engine type. Although we find there is modest undervaluation of fuel costs, fuel taxes are still more effective in reducing fuel usage than product taxes based on fuel economy. Importantly, fuel taxes also perform better in terms of total welfare even when usage demand is held completely fixed. The reason is that fuel taxes better target the right consumers, those with a high mileage, to purchase more fuel efficient cars

    Drifting Together or Falling Apart? The Empirics of Regional Economic Growth in Post-Unification Germany

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    The objective of this paper is to address the question of convergence across German districts in the first decade after German unification by drawing out and emphasising some stylised facts of regional per capita income dynamics. We achieve this by employing non-parametric techniques which focus on the evolution of the entire cross-sectional income distribution. In particular, we follow a distributional approach to convergence based on kernel density estimation and implement a number of tests to establish the statistical significance of our findings. This paper finds that the relative income distribution appears to be stratifying into a trimodal/bimodal distribution.regional economic growth, Germany, convergence clubs, density estimation, modality tests

    Opioid abuse and austerity: Evidence on health service use and mortality in England

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    Opioid abuse has become a public health concern among many developed countries, with policymakers searching for strategies to mitigate adverse effects on population health and the wider economy. The United Kingdom has seen dramatic increases in opioid-related mortality following the financial crises in 2008. We examine the impact of spending cuts resulting from government prescribed austerity measures on opioid-related hospitalisations and mortality, thereby expanding on existing evidence suggesting a countercyclical relationship with macroeconomic performance. We take advantage of the variation in spending cuts passed down from central government to local authorities since 2010, with reductions in budgets of up to fifty percent in some areas resulting in the rescaling of vital public services. Longitudinal panel data methods are used to analyse a comprehensive, linked dataset that combines information from spending records, official death registry data and large administrative health care data for 152 local authorities (i.e., unitary authorities and county councils) in England between April 2010 and March 2017. A total of 280,827 people experienced a hospital admission in the English National Health Service because of an opioid overdose and 14,700 people died from opioids across the study period. Local authorities that experienced largest spending cuts also saw largest increases in opioid abuse. Interactions between changes in unemployment and spending items for welfare programmes show evidence about the importance for governments to protect populations from social-risk effects at times of deteriorating macroeconomic performance. Our study carries important lessons for countries aiming to address high rates of opioid abuse, including the United States, Canada and Sweden

    Innovative Financing at a Global Level

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    The European Commission services published a staff working document assessing the main sources of innovative financing under discussion. The analysis shows that for some of the instruments a "double dividend" of both raising revenues and improving market efficiency and stability could be reaped, in particular by putting a price on risk-taking in the financial sector and on carbon emissions.European Union, taxation, financial transaction tax, bank levy, bonus tax, carbon tax, financial institutions
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