This paper establishes a methodology for valuing the impact of large-scale ecological changes in a market. Given the large capital stocks inherent in most ecological systems, the dynamic nature of most ecological change, and the dynamic response of markets, it is critical to build dynamic models to capture the resulting effects. This paper demonstrates how to construct such a model using the impacts of climate change on U.S. timber markets as an example. Across a wide range of scenarios and models, warming is predicted to expand timber supplies and thus benefit U.S. timber markets.
The Cold War’s ending has brought mounting pressures to recognize national science and technology research systems. Yet, by comparison with what has been learned already concerning institutional arrangements and business strategies affecting corporate RD investments, surprisingly little is known about the economic origins and effects of the corresponding institutional infrastructures shaping the world of “academic” science, and the organization and conduct of publicly supported RD more generally. The desirability of closing this particular lacuna in the economics and economic-history literatures has been just as evident to economists concerned with extending the analysis of modern institutions as to those who have begun to approach the whole area of science and technology studies from the perspectives and methods of industrial-organization economics. [1] Even before the “new economics of science” had begun to direct attention to such a program, Douglass North (1990 p. 75) saw a significant challenge and a promising opportunity in explicit exploration of “the connecting links between institutional structures... and incentives to acquire pure knowledge.” The research reported here has accepted that challenge (see also the other papers in this session: Timothy Lenoir [1998], Christophe Lecuyer [1998], and Marjory S. Blumenthal [1998]). It is focused upon key episodes in the institutional evolution of “public science,” and its complex and changing relationship to the other organizational spheres of contemporaneous scientific activity: those in which research was conducted under “proprietary rules” for industrial profit-goals, and “defense-related” science and engineering knowledge was sought under conditions of restricted access to information concerning methods, findings, and their actual and potential applications.
Missing from recent discussions of tax reform is any systematic analysis of the effects of various tax proposals on skill formation. This gap in the literature in empirical public finance is due to the absence of any empirically based general equilibrium models with both human capital formation and physical capital formation that are consistent with observations on modern labor markets. This paper is a progress report on our ongoing research on formulating and estimating dynamic general equilibrium models with endogenous heterogeneous human capital accumulation. Our model explains many features of rising wage inequality in the U.S. economy (James Heckman, Lance Lochner and Christopher Taber, 1998). In this paper, we use our model to study the impacts on skill formation of proposals to switch from progressive taxes to flat income and consumption taxes. For the sake of brevity, we focus on steady states in this paper, although we study both transitions and steady states in our research.
In this brief paper I explore several issues related to [U.S.] demographic change and the political economy of public education.... I describe the existing empirical evidence that suggests that older and childless voters are less likely to support public-school spending than younger voters with children. I then note several unresolved issues about the degree to which rational self-interest should lead older voters to vote for low levels of public-school spending. (EXCERPT)
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.