Chris Jones
- Published in print:
- 2005
- Published Online:
- July 2005
- ISBN:
- 9780199281978
- eISBN:
- 9780191602535
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199281971.001.0001
- Subject:
- Economics and Finance, Public and Welfare
Important results in the applied welfare literature are used to extend a conventional Harberger cost-benefit analysis. A conventional welfare equation is obtained for marginal policy changes in a ...
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Important results in the applied welfare literature are used to extend a conventional Harberger cost-benefit analysis. A conventional welfare equation is obtained for marginal policy changes in a general equilibrium economy with tax distortions. It is extended to accommodate internationally traded goods, time, income taxes, and non-tax distortions, including externalities, non-competitive behaviour, public goods, and price-quantity controls. The welfare analysis is developed in stages, and where possible is explained using diagrams, to make it more amenable to the different institutional arrangements encountered in applied work. Computable welfare expressions are solved using demand-supply elasticities. In a conventional cost-benefit analysis, lump sum transfers are used to separate the welfare effects of individual policy variables. This is important because it allows policy evaluation to be divided across specialist agencies. These transfers are carefully examined to identify the important role played by the marginal social cost of public funds (MCF) in policy evaluation when governments balance their budgets with distorting taxes. This book separates income effects for marginal policy changes in the shadow value of government revenue. As a scaling coefficient that converts efficiency effects into dollar changes in private surplus, it makes income effects irrelevant in single (aggregated) consumer economies, and conveniently isolates distributional effects in heterogeneous consumer economies. This decomposition is used to test for Pareto improvements, and to examine the separate, but related roles of the shadow value of government revenue and the MCF in applied work.Less
Important results in the applied welfare literature are used to extend a conventional Harberger cost-benefit analysis. A conventional welfare equation is obtained for marginal policy changes in a general equilibrium economy with tax distortions. It is extended to accommodate internationally traded goods, time, income taxes, and non-tax distortions, including externalities, non-competitive behaviour, public goods, and price-quantity controls. The welfare analysis is developed in stages, and where possible is explained using diagrams, to make it more amenable to the different institutional arrangements encountered in applied work. Computable welfare expressions are solved using demand-supply elasticities. In a conventional cost-benefit analysis, lump sum transfers are used to separate the welfare effects of individual policy variables. This is important because it allows policy evaluation to be divided across specialist agencies. These transfers are carefully examined to identify the important role played by the marginal social cost of public funds (MCF) in policy evaluation when governments balance their budgets with distorting taxes. This book separates income effects for marginal policy changes in the shadow value of government revenue. As a scaling coefficient that converts efficiency effects into dollar changes in private surplus, it makes income effects irrelevant in single (aggregated) consumer economies, and conveniently isolates distributional effects in heterogeneous consumer economies. This decomposition is used to test for Pareto improvements, and to examine the separate, but related roles of the shadow value of government revenue and the MCF in applied work.
Bev Dahlby
- Published in print:
- 2008
- Published Online:
- August 2013
- ISBN:
- 9780262042505
- eISBN:
- 9780262271141
- Item type:
- chapter
- Publisher:
- The MIT Press
- DOI:
- 10.7551/mitpress/9780262042505.003.0003
- Subject:
- Economics and Finance, Econometrics
This chapter develops a framework for calculating the marginal cost of public funds (MCF) for commodity taxes. It extends the model developed in Chapter 2 by measuring the MCF when there are other ...
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This chapter develops a framework for calculating the marginal cost of public funds (MCF) for commodity taxes. It extends the model developed in Chapter 2 by measuring the MCF when there are other distortions in the economy. These distortions include taxes on other commodities, positive and negative externalities in the production and consumption of commodities, imperfect competition, smuggling and tax evasion, and addiction. Thus, a major theme of the chapter is how market distortions can be incorporated in the measurement of the MCF. The final section summarizes studies of the marginal distortionary costs of commodity taxes. These studies are divided into those that focus on the MCFs for taxes on specific commodities, those that calculate the MCFs for general sales taxes, and those that calculate the MCFs for taxes on imports and exports.Less
This chapter develops a framework for calculating the marginal cost of public funds (MCF) for commodity taxes. It extends the model developed in Chapter 2 by measuring the MCF when there are other distortions in the economy. These distortions include taxes on other commodities, positive and negative externalities in the production and consumption of commodities, imperfect competition, smuggling and tax evasion, and addiction. Thus, a major theme of the chapter is how market distortions can be incorporated in the measurement of the MCF. The final section summarizes studies of the marginal distortionary costs of commodity taxes. These studies are divided into those that focus on the MCFs for taxes on specific commodities, those that calculate the MCFs for general sales taxes, and those that calculate the MCFs for taxes on imports and exports.
Euston Quah
- Published in print:
- 2013
- Published Online:
- May 2013
- ISBN:
- 9780199934386
- eISBN:
- 9780199333028
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199934386.003.0002
- Subject:
- Economics and Finance, Development, Growth, and Environmental
Valuation of health and mortality risks, environmental services, and other nonmarket goods are essential to cost-benefit analysis. But in developing countries, persistent market distortions may ...
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Valuation of health and mortality risks, environmental services, and other nonmarket goods are essential to cost-benefit analysis. But in developing countries, persistent market distortions may undermine the techniques typically used for valuation, which aim to devise monetary values for nonmarket goods using individual preferences. This chapter explores how different valuation techniques hold up where features such as disguised unemployment or exploitive finance obscure market valuation. After surveying a range of proposed methods, the chapter argues that the paired comparison approach, which is a relatively recent innovation in the design of surveys to elicit individual preferences, has important advantages in developing countries over both traditional contingent valuation approaches and revealed preference studies.Less
Valuation of health and mortality risks, environmental services, and other nonmarket goods are essential to cost-benefit analysis. But in developing countries, persistent market distortions may undermine the techniques typically used for valuation, which aim to devise monetary values for nonmarket goods using individual preferences. This chapter explores how different valuation techniques hold up where features such as disguised unemployment or exploitive finance obscure market valuation. After surveying a range of proposed methods, the chapter argues that the paired comparison approach, which is a relatively recent innovation in the design of surveys to elicit individual preferences, has important advantages in developing countries over both traditional contingent valuation approaches and revealed preference studies.
Joseph E. Stiglitz and Bruce C. Greenwald
- Published in print:
- 2014
- Published Online:
- November 2015
- ISBN:
- 9780231152143
- eISBN:
- 9780231525541
- Item type:
- chapter
- Publisher:
- Columbia University Press
- DOI:
- 10.7312/columbia/9780231152143.003.0009
- Subject:
- Economics and Finance, Development, Growth, and Environmental
This chapter focuses on certain simplified cases where the market distortions associated with learning can be identified. It first describes the behavior of the monopolist. It then contrasts the ...
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This chapter focuses on certain simplified cases where the market distortions associated with learning can be identified. It first describes the behavior of the monopolist. It then contrasts the monopoly outcome with the competitive outcome, focusing in particular on the case of symmetry. Next, it discusses the optimal government intervention, focusing on the special case of a two-sector model, in one of which there is learning which spills over to the other. In this case, it is shown that not only is a subsidy on manufacturing desirable, there is even some presumption that it should be larger with monopoly than with competition.Less
This chapter focuses on certain simplified cases where the market distortions associated with learning can be identified. It first describes the behavior of the monopolist. It then contrasts the monopoly outcome with the competitive outcome, focusing in particular on the case of symmetry. Next, it discusses the optimal government intervention, focusing on the special case of a two-sector model, in one of which there is learning which spills over to the other. In this case, it is shown that not only is a subsidy on manufacturing desirable, there is even some presumption that it should be larger with monopoly than with competition.
Johannes Fedderke
- Published in print:
- 2014
- Published Online:
- March 2015
- ISBN:
- 9780199689248
- eISBN:
- 9780191789731
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199689248.003.0003
- Subject:
- Economics and Finance, Development, Growth, and Environmental
This chapter examines South Africa’s economic growth following democratic transition. It focuses on three principal constraints on growth. These constraints fall into three broad categories: market ...
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This chapter examines South Africa’s economic growth following democratic transition. It focuses on three principal constraints on growth. These constraints fall into three broad categories: market distortions, inadequate human capital provision and political economy questions. The chapter concludes that there has been little change in South Africa’s economic structure despite the democratic transformation. The economy continues to be dominated by an interaction of big business, big labour and big government, which impedes competition and the innovation it fosters.Less
This chapter examines South Africa’s economic growth following democratic transition. It focuses on three principal constraints on growth. These constraints fall into three broad categories: market distortions, inadequate human capital provision and political economy questions. The chapter concludes that there has been little change in South Africa’s economic structure despite the democratic transformation. The economy continues to be dominated by an interaction of big business, big labour and big government, which impedes competition and the innovation it fosters.
Malcolm Torry
- Published in print:
- 2013
- Published Online:
- January 2014
- ISBN:
- 9781447311249
- eISBN:
- 9781447311287
- Item type:
- chapter
- Publisher:
- Policy Press
- DOI:
- 10.1332/policypress/9781447311249.003.0016
- Subject:
- Sociology, Politics, Social Movements and Social Change
Some aspects of household budgets cannot be dealt with by a combination of the labour market and a Citizen's Income. Disabilities can prevent people from earning a living, and they impose additional ...
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Some aspects of household budgets cannot be dealt with by a combination of the labour market and a Citizen's Income. Disabilities can prevent people from earning a living, and they impose additional costs. An additional unconditional benefit might be appropriate, or alternatively means-tested benefits, which are less of a problem where they will not impose additional disincentives. Individualised care budgets will remain useful. Housing costs vary. In the absence of the substantial amounts of additional housing needed to reduce rent levels, either a means-tested housing benefit will still be needed, or a flat rate benefit adjusted for local housing costs. The latter would be simpler to administer, and it would not create the market distortions that accompany a means-tested benefit. Fuel costs pose similar problems, as households have little control over them. Here, as with housing costs, a Citizen's Income would provide additional opportunities to increase net income. Passported benefits, such as free school meals, are those currently conditional on being in receipt of means-tested benefits. With a Citizen's Income, fewer people will be on means-tested benefits. Some passported benefits might need to become universal, which would be no problem in the context of a progressive tax system.Less
Some aspects of household budgets cannot be dealt with by a combination of the labour market and a Citizen's Income. Disabilities can prevent people from earning a living, and they impose additional costs. An additional unconditional benefit might be appropriate, or alternatively means-tested benefits, which are less of a problem where they will not impose additional disincentives. Individualised care budgets will remain useful. Housing costs vary. In the absence of the substantial amounts of additional housing needed to reduce rent levels, either a means-tested housing benefit will still be needed, or a flat rate benefit adjusted for local housing costs. The latter would be simpler to administer, and it would not create the market distortions that accompany a means-tested benefit. Fuel costs pose similar problems, as households have little control over them. Here, as with housing costs, a Citizen's Income would provide additional opportunities to increase net income. Passported benefits, such as free school meals, are those currently conditional on being in receipt of means-tested benefits. With a Citizen's Income, fewer people will be on means-tested benefits. Some passported benefits might need to become universal, which would be no problem in the context of a progressive tax system.
