Although managers’ green investments have no impact on future cash flows in our experimental markets, investors respond favorably when managers make and disclose an investment and highlight the societal benefits rather than the cost to the company. Managers anticipate investors’ reaction and therefore often disclose their investment and the associated societal benefits. Managers and other shareholders benefit from investors’ reaction, but the investment cost always exceeds this benefit, demonstrating that managers make green investments because they value the societal benefits. Collectively, our findings show that both investors and managers tradeoff wealth for societal benefits and help explain managers’ corporate social responsibilty disclosures.

This paper derives some analytic results concerning the possible effects of a tax-based incomes policy (TIP), and compares them to the effects of a wage subsidy or a decreased payroll tax. The policies are compared using a model of firm equilibrium which is somewhat simpler than that of Yehuda Kotowitz and Richard Portes, and R. W. Latham and David Peel. Because the model is one of firm equilibrium, it ignores both interactions among firms and workers, and the bargaining process. As a result, it cannot answer all possible questions about the effectiveness of a TIP. Nevertheless, the model can address an important question that lies at the very heart of the issue of the possible effectiveness of a TIP: in what way would a TIP influence a firm to change its wage and price decisions, assuming nothing else in the economy were to be changed. If, as shown below, certain versions of TIP

Recent results in capital theory concerning the reswitching of techniques of production have shaken the foundations of a neoclassical parable according to which the total quantity of output per man is supposed to be a function of the total quantity of capital per man-the Surrogate Production Function-which can be used to predict all behavior in the sense of the wage and profit rates that would prevail in different long-run equilibria or steady states.' The source of the difficulty, it would appear, lies in the fact that the neoclassical parable attempts, as it were, to kill two birds with one stone, namely 1) to provide a general representation (or surrogate) of realistic technologies involving production with heterogeneous commodities, and 2) to link the determination of the (listribution of income directly to the technology itself and to the relative size of factor endowments. It turns out that, in general, not only are realistic

ment of an unexpectedly large growth in the money supply will lead to an immediate increase in interest rates. This is often taken as confirmation of the monetarist view that the way to bring down interest rates, even in the short run, is to reduce the rate of money growth. In this paper we provide an alternative explanation of the announcement effect that is consistent with the Keynesian view that, in the short run, the way to bring down interest rates is to expand the money supply. We do not address the issue of inflationary expectations in a formal way, though, in the long run, we would expect the well-known Fisher effect to hold. Looking closely at the announcement effect, it is clear that whatever may be the true short-run relationship between money growth and interest rates, it cannot be inferred from a simple correlation of announcements of changes in the money stock with the resulting changes in interest rates. This is because of several properties of the announcement phenomenon that we capture in the model