Chris Jones
- Published in print:
- 2005
- Published Online:
- July 2005
- ISBN:
- 9780199281978
- eISBN:
- 9780191602535
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199281971.003.0001
- Subject:
- Economics and Finance, Public and Welfare
This chapter examines welfare measures when they are made without cardinal utility functions to understand the properties of the aggregate dollar changes in utility computed in a conventional ...
More
This chapter examines welfare measures when they are made without cardinal utility functions to understand the properties of the aggregate dollar changes in utility computed in a conventional Harberger (1971) analysis. The Hatta (1977) decomposition is used to show how, for individual consumers, dollars are a reliable proxy for utility, whenever policy changes are incrementally small. This decomposition finds that income effects are a scaling coefficient on the efficiency effects from marginal policy changes that play no role in single consumer economies. A number of different approaches are examined to account for distributional effects when there are heterogenous consumers.Less
This chapter examines welfare measures when they are made without cardinal utility functions to understand the properties of the aggregate dollar changes in utility computed in a conventional Harberger (1971) analysis. The Hatta (1977) decomposition is used to show how, for individual consumers, dollars are a reliable proxy for utility, whenever policy changes are incrementally small. This decomposition finds that income effects are a scaling coefficient on the efficiency effects from marginal policy changes that play no role in single consumer economies. A number of different approaches are examined to account for distributional effects when there are heterogenous consumers.
Chris Jones
- Published in print:
- 2005
- Published Online:
- July 2005
- ISBN:
- 9780199281978
- eISBN:
- 9780191602535
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199281971.003.0002
- Subject:
- Economics and Finance, Public and Welfare
The formal analysis in this chapter lays the foundation for the welfare analysis in the remainder of the book. A conventional welfare equation for marginal policy changes is obtained in a competitive ...
More
The formal analysis in this chapter lays the foundation for the welfare analysis in the remainder of the book. A conventional welfare equation for marginal policy changes is obtained in a competitive general equilibrium model of a tax-distorted closed economy. Initially, the distributional effects are removed by adopting the ‘dollar-is-a-dollar’ assumption used by Harberger. The analysis is extended in the following chapters to include distributional effects, time, internationally traded goods, externalities, non-competitive behaviour, price-quantity controls, public goods, and other market distortions. The Hatta decomposition is generalized to show that the shadow prices of goods are equal to their compensated shadow prices multiplied by the shadow value of government revenue. Any income effects are isolated in the shadow value of government revenue.Less
The formal analysis in this chapter lays the foundation for the welfare analysis in the remainder of the book. A conventional welfare equation for marginal policy changes is obtained in a competitive general equilibrium model of a tax-distorted closed economy. Initially, the distributional effects are removed by adopting the ‘dollar-is-a-dollar’ assumption used by Harberger. The analysis is extended in the following chapters to include distributional effects, time, internationally traded goods, externalities, non-competitive behaviour, price-quantity controls, public goods, and other market distortions. The Hatta decomposition is generalized to show that the shadow prices of goods are equal to their compensated shadow prices multiplied by the shadow value of government revenue. Any income effects are isolated in the shadow value of government revenue.
Chris Jones
- Published in print:
- 2005
- Published Online:
- July 2005
- ISBN:
- 9780199281978
- eISBN:
- 9780191602535
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199281971.003.0011
- Subject:
- Economics and Finance, Public and Welfare
This chapter provides a set of questions drawn from material presented in previous chapters. Most are designed to emphasize important points, and to illustrate practical examples of applied welfare ...
More
This chapter provides a set of questions drawn from material presented in previous chapters. Most are designed to emphasize important points, and to illustrate practical examples of applied welfare analysis. A number of questions are quite long and are intended as assignments, while others are more suitable for tutorial exercises.Less
This chapter provides a set of questions drawn from material presented in previous chapters. Most are designed to emphasize important points, and to illustrate practical examples of applied welfare analysis. A number of questions are quite long and are intended as assignments, while others are more suitable for tutorial exercises.
