Anonymous, neutral, and resolute social choice revisited

We revisit the incompatibility of anonymity and neutrality in singleton-valued social choice. We first analyze the irresoluteness structure these two axioms together with Pareto efficiency impose on social choice rules and deliver a method to refine irresolute rules without violating anonymity, neutrality, and efficiency. Next, we propose a weakening of neutrality called consequential neutrality that requires resolute social choice rules to assign each alternative to the same number of profiles. We explore social choice problems in which consequential neutrality resolves impossibilities that stem from the fundamental tension between anonymity, neutrality, and resoluteness.Series: Department of Strategy and Innovation Working Paper Serie

Switching Between Expectation Processes in the Foreign Exchange Market: A Probabilistic Approach Using Survey Data

This paper relaxes a fundamental hypothesis commonly accepted in the expectation formation literature: expectations are, unchangingly, either rational or generated by one of the three simple extrapolative, regressive or adaptive processes. Using expectations survey data provided by Consensus Forecasts on six European exchange rates against the US Dollar, we find that the rational expectations hypothesis is rejected at the aggregate level. By implementing a switching regression methodology with stochastic choice of regime, we show that the expectation generating process is given at any time by some combination of the three simple processes. An interpretation of this framework in terms of economically rational expectations is suggested.expectation formation; switching-regime; exchange rates; survey data; cost and advantage analysis

Portfolio Flows, Foreign Direct Investment, Crises

The goal of the paper is to analyze how financial and economic crises affect the relation between capital flows and their determinants. We develop a model of foreign portfolio investment (FPI) and foreign direct investment (FDI), and apply it to Turkey using an endogenous break analysis and accounting for country risk. We identify two breakpoints that correspond to two crises dates. Our results show changes in the sign and/or coefficient of a number of determinants in both types of investment and thus suggest that analyses based on the assumption of parameter constancy may lead to misleading results.capital flows, crises, structural changes

Economically rational expectations theory: evidence from the WTI oil price survey data

In the light of the economically rational expectation theory, this article shows how an expert chooses an optimal oil price forecast function given that information is costly. In this framework we propose an expectational process which nests all processes considered in the literature. By aggregating individual processes, it is shown that the overall expectational process may result from individual mixing effects and/or group heterogeneity effects. Using Consensus Forecast survey data, for three and twelve month horizons, we find that the rational expectation hypothesis is rejected and that none of the traditional extrapolative, regressive and adaptive processes and macroeconomic fundamentals is relevant. We show however, that a combination of the three traditional processes explains satisfactorily oil price expectations, which appear to exert a stabilizing strength in the oil market.expectation formation; oil price

Modelling oil price expectations: evidence from survey data

Using Consensus Forecast survey data on WTI oil price expectations for three and twelve month horizons over the period November 1989 – December 2008, we find that the rational expectation hypothesis is rejected and that none of the traditional extrapolative, regressive and adaptive processes fits the data. We suggest a mixed expectation model defined as a linear combination of these traditional processes, which we interpret as the aggregation of individual mixing behavior and of heterogenous groups of agents using simple processes. This approach is consistent with the economically rational expectations theory. We show that the target price included in the regressive component of this model depends on macroeconomic fundamentals whose effects are subject to structural changes. The estimation results led to validate the mixed expectational model for the two horizons.Expectations formation, oil price

Taxation, aggregates and the household

We evaluate reforms to the U.S. tax system in a dynamic setup with heterogeneous married and single households, and with an operative extensive margin in labor supply. We restrict our model with observations on gender and skill premia, labor force participation of married females across skill groups, and the structure of marital sorting. We study four revenue-neutral tax reforms: a proportional consumption tax, a proportional income tax, a progressive consumption tax, and a reform in which married individuals file taxes separately. Our findings indicate that tax reforms are accompanied by large and differential effects on labor supply: while hours per-worker display small increases, total hours and female labor force participation increase substantially. Married females account for more than 50% of the changes in hours associated to reforms, and their importance increases sharply for values of the intertemporal labor supply elasticity on the low side of empirical estimates. Tax reforms in a standard version of the model result in output gains that are up to 15% lower than in our benchmark economy

Taxing Women: A Macroeconomic Analysis

Based on well-known evidence on labor supply elasticities, several authors have concluded that women should be taxed at lower rates than men. We evaluate the quantitative implications of taxing women at a lower rate than men. Relative to the current system of taxation, setting a proportional tax rate on married females equal to 4% (8%) increases output and married female labor force participation by about 3.9% (3.4%) and 6.9% (4.0%), respectively. Gender-based taxes improve welfare and are preferred by a majority of households. Nevertheless, welfare gains are higher when the U.S. tax system is replaced by a proportional, gender-neutral income tax.taxation, two-earner households, labor force participation

Taxation, Aggregates and the Household

We evaluate reforms to the U.S. tax system in a dynamic setup with heterogeneous married and single households, and with an operative extensive margin in labor supply. We restrict our model with observations on gender and skill premia, labor force participation of married females across skill groups, and the structure of marital sorting. We study four revenue-neutral tax reforms: a proportional consumption tax, a proportional income tax, a progressive consumption tax, and a reform in which married individuals file taxes separately. Our findings indicate that tax reforms are accompanied by large and differential effects on labor supply: while hours per-worker display small increases, total hours and female labor force participation increase substantially. Married females account for more than 50% of the changes in hours associated to reforms, and their importance increases sharply for values of the intertemporal labor supply elasticity on the low side of empirical estimates. Tax reforms in a standard version of the model result in output gains that are up to 15% lower than in our benchmark economy.taxation, two-earner households, labor force participation