Knowledge that Transforms

This paper studies tax reforms in a dynamic model of a global economy calibrated to current U.S. and European tax policies. World capital markets add consumption-smoothing and income-redistribution effects that alter closed-economy predictions. In the absence of taxes on foreign interest, welfare gains of eliminating U.S. income taxes are enlarged by up to 34 percent at the expense of European losses caused by transitional declines in consumption and leisure and a permanent capital outflow. In contrast, if foreign interest is taxed, the same tax reform reduces U.S. welfare 0.7 percent and increases European welfare 1.8 percent.

The literature on educational standards suggests that an increase in graduation requirements heightens inequality, since achievement rises only for the best students. The paper derives a different conclusion based on a model featuring workers with heterogeneous abilities. Higher educational standards, while increasing inequality, can increase the earnings of both the most able and the least able workers. Thus an egalitarian social planner may set higher standards than an income-maximizing social planner. The egalitarian planner may prefer more strict standards because they come closer to creating a pooling equilibrium. The results mitigate the concern that higher standards are necessarily inegalitarian. JEL Codes: I20, J24, J31 1 The Impact of Educational Standards on the Level and Distribution of Earnings In recent years, the role of standards in improving the quality of public education has received considerable attention from economists. Recent examples include Robert M. Costrel...

This paper defines and estimates general equilibrium treatment effects. The conventional approach in the literature on treatment effects ignores interactions among individuals induced by the policy interventions being studied. Focusing on the impact of tuition policy, and using estimates from our dynamic overlapping generations general equilibrium model of capital and human capital formation, we find that general equilibrium impacts of tuition on college enrollment are an order of magnitude smaller than those reported in the literature on microeconomic treatment effects. The assumptions used to justify the LATE parameter in a partial equilibrium setting do not hold in a general equilibrium setting. Policy changes induce two way flows. We extend the LATE concept to a general equilibrium setting. We present a more comprehensive evaluation to program evaluation by considering both the tax and benefit consequences of the program being evaluated and placing the analysis in a market setting.

The debate concerning the effects of payas-you-go (PAYG), defined-benefits, social security systems on the real economy has focused on private savings (Robert J. Barro, 1978; Martin Feldstein, 1997). We expand the inquiry to neglected effects on economic growth and underlying family choices. Our inquiry is based on Ehrlich and Francis T. Lui's (1998) model of the relationships among social security, the family, and endogenous growth.

Lives Saved or Lives Lost? The Effects of Concealed-Handgun Laws on Crime Author(s): Hashem Dezhbakhsh and Paul H. Rubin Source: The American Economic Review, Vol. 88, No. 2, Papers and Proceedings of the Hundred and Tenth Annual Meeting of the American Economic Association (May, 1998), pp. 468-474 Published by: American Economic Association Stable URL: http://www.jstor.org/stable/116969 Accessed: 05/09/2008 17:45