Knowledge that Transforms

In this paper we report a generalization of the results of Foley and Guesnerie on the second welfare theorem to economies with arbitrary nonconvex production sets. The nature of marginal cost prices in such economies is clarified through the use of the Clarke tangent cones.

Journal Article Policy Targeting with Endogenous Distortions: Theory of Optimum Subsidy Revisited Get access Dani Rodrik Dani Rodrik Harvard University Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 102, Issue 4, November 1987, Pages 903–911, https://doi.org/10.2307/1884288 Published: 01 November 1987

An individual with known preferences over lotteries can be led to accept random wealth distributions different from his initial endowment by a sequential process in which some uncertainty is resolved and he is offered a new lottery in place of the remaining uncertainty. This paper examines the restrictions that can be placed on an individual's preferences by axioms that stipulate that such a process not be able to generate a new wealth distribution that is prima facie inferior to the original. The relationship of these axioms to the independence axiom of von Neumann and Morgenstern and to the quasi convexity of preferences in the wealth distribution are explored.

Stabilization programs in open economies typically consist of two stages. In the first stage the rate of currency devaluation is reduced, but the fiscal adjustment does not eliminate the fiscal deficit that causes growth of debt and loss of reserves, making a future policy change necessary. Only later, at a second stage, is this followed by either an abandonment of exchange rate management or by a sufficiently large cut in the fiscal deficit. We study how different second-stage policy changes affect economic dynamics during the first stage. These changes include tax increases, budget cuts on traded and nontraded goods, and increases in the growth rate of money.

Amit Bhaduri, Donald J. Harris; The Complex Dynamics of the Simple Ricardian System*, The Quarterly Journal of Economics, Volume 102, Issue 4, 1 November 1

Journal Article The Spatial Incidence of Local Retail Taxation Get access Ralph M. Braid Ralph M. Braid Columbia University Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 102, Issue 4, November 1987, Pages 881–891, https://doi.org/10.2307/1884286 Published: 01 November 1987

This paper presents evidence that the corporate stock owned by high-income investors appreciates substantially faster than the stock owned by investors with lower incomes. The evidence indicates that the differences are large and that they have persisted for a long period of time. Some potential explanations of this phenomenon are discussed, and it seems that the best explanation is that the rich have a higher tendency to invest in risky stock.

This paper sets up a general equilibrium model of a world of heterogeneous jobs and heterogeneous tastes, and uses the model to (i) analyze the effects of employer discrimination and (ii) predict the likely consequences of requiring "equal pay for jobs of comparable worth." It shows that employment of both women and men is likely to fall as a result of comparable worth. It also shows that when individuals' tastes are heterogeneous, neither comparable worth nor the simple model of compensating differentials on which it is based provides useful insights into wage determination. In particular, when tastes are heterogeneous, there is no reason to expect equal pay for jobs of "comparable worth" even in the absence of employer discrimination.

This paper considers a simple general equilibrium model that contains two types of workers with differing levels of ability and a social-welfare-maximizing government. The paper shows that social welfare can sometimes be increased by supplementing an optimal linear income tax with a minimum wage, but that social welfare can never be increased by supplementing an optimal nonlinear income tax with a minimum wage.

Journal Article Preference Proximity and Anonymous Social Choice Get access Nick Baigent Nick Baigent Tulane University Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 102, Issue 1, February 1987, Pages 161–169, https://doi.org/10.2307/1884686 Published: 01 February 1987