A note on Ramsey and Corlett-Hague rules

Ramsey-type results dictate that an optimal pattern of taxes must tax more heavily those goods which have a more inelastic(compensated)demand. Corlett and Hague (1953) investigated the optimal revenue-neutral movements from an initial uniform tax. They obtained that the goods (relatively) more complementary to the untaxed good (leisure)should see their taxes increased-which in a revenue-neutral seeting implies that the other goods see their taxes disminished. In a three-good economy (with only two goods being subject to taxation) the Ramsey-type rule and the Corlett-Hague result can be easily related

On the Private Provision of Public Goods: A Diagrammatic Exposition

This paper surveys a selection of the literature on the private provision of public goods using the Kolm triangle. (The Kolm triangle is the analogue of an Edgeworth box in an economy with a public good.) We provide simple geometrical proofs of various established results using this graphical device. Our reference framework is the model of private contributions to public goods developed by Bergstrom, Blume and Varian (1986). With the Kolm triangle, we can easily study the existence and uniqueness of Nash equilibria, the effects of redistribution of the initial wealth, the level of provision in Stackelberg equilibria, the effects of subsidizing private contributions, and the implementation of Lindahl equilibria.Public Goods, Nash Equilibrium, Stackelberg Equilibrium, Lindahl Equilibrium, Kolm triangle, Redistribution, Subsidies, Regressive Redistribution of Income

Switching regressions and activity analysis.

We study the use of switching regression models to characterize the coefficients in linear production technologies with a finite number of activities. Maximum likelihood-based methods are proposed and different switching specifications are discussed. The viability of these newly proposed technniques is established. The methods developed combine the advantages of the two major approaches to frontier estimation: the functional flexibility of the linear programing-nonparametric and nonstatistical-approach and the statistical nature of the econometric-both parametric and statistical-approach. This combination comes at the expense of some analytical complexity.Switching regression models; Activity analysis; Linear production models;

Optimal Provision of Public Goods with Altruistic Individuals

We study the optimal provision of public goods in the context of a special class of altruistically linked utility functions. We show that the usual Samuelson condition holds as if the utility functions were independent.Samuelson condition, Pareto efficiency

A note on Ramsey and Corlett-Hague rules.

Ramsey-type results dictate that an optimal pattern of taxes must tax more heavily those goods which have a more inelastic(compensated)demand. Corlett and Hague (1953) investigated the optimal revenue-neutral movements from an initial uniform tax. They obtained that the goods (relatively) more complementary to the untaxed good (leisure)should see their taxes increased-which in a revenue-neutral seeting implies that the other goods see their taxes disminished. In a three-good economy (with only two goods being subject to taxation) the Ramsey-type rule and the Corlett-Hague result can be easily related.Optimal taxation; Ramsey; Corlett-Hague; Demand elasticity;

On Plutocratic and Democratic CPIs

Prais (1958) showed that the standard CPI computed by most statistical agencies can be interpreted as a plutocratic weighted average of household price indexes because the weight of each household in the official CPI is determined by its total expenditures. In this paper, we decompose the difference between the standard CPI and a democratically weighted index as the product of a measure of income inequality and the sample covariance between the elementary individual price indexes and a parameter which is a function of the income elasticity of each good.

Bayesian econometrics:conjugate analysis and rejection sampling using mathematica

Mathematica is a powerful "system for doing mathematics by computer" which runs on personal computers (Macs and MS-DOS machines), workstations and mainframes. Here we show how Bayesian methods can be implemented in Mathematica. One of the drawbacks of Bayesian techniques is that they are computation-intensive, and every computation is a little different. Since Mathematica is so flexible, it can easily be adapted to solving a number of different Bayesian estimation problems. We illustrate the use of Mathematica functions (i) in a traditional conjugate analysis of the linear regression model and (ii) in a completely nonstandard model -where rejection sampling is used to sample from the posterior

Refinements to the probabilistic approach to fiscal sustainability analysis

This paper relaxes some key assumptions in the probabilistic approach to fiscal sustainability. First, the authors identify structural breaks over the sample period used to estimate the covariance matrix of the shocks to the debt ratios. Second, the assumption of normality of the shocks is dropped by modeling their respective empirical distribution directly, which makes it possible to quantify asymetries and thick tails. Third, the use of fiscal reaction functions is avoided by focusing attention on debt-stabilizing balances.Debt Markets,Economic Theory&Research,,Emerging Markets,External Debt

Measuring National Income and Growth in Resource-Rich, Income-Poor Countries

GDP, the leading economic measurement, is outdated and misleading. . . . It’s like grading a corporation based on today’s cash flow and forgetting to depreciate assets and other costs. – Joseph Stiglitz, “Good Numbers Gone Bad,” Fortune, October 2, 2006.National income, growth, natural resources, resource-rich, income-poor, GPD, wealth, assets, exports, imports

Rejection sampling in demand systems

We illustrate the method of rejection sampling in a Bayesian application of a new approach toı estimating Demand Systems. This approach, suggested by Varian (1990), is based on a generalization of Afriat's (1967) efficiency index. Rejection sampling is applied to the prior-to-posterior mapping enabling us to obtain posterior results in a nonstandard model