Public Health Federalism?

This paper develops a general equilibrium model of competitive jurisdictional choice that provides insights into what is being coined 'public health federalism'. Using a standard neoclassical model of production combined with a utility maximization hypothesis, jurisdictions choose both tax rates and a level of local public health quality. Incorporating the joint determination of both tax decisions and the choice of public health standards can give rise to some interesting interrelationships between local tax revenues and public health considerations. Additionally, the model is extended to address the fiscal realities of sub-state jurisdictions in the United States. Beleaguered in a second-best setting, devolved efficiency becomes a target difficult to hit. We show that when jurisdictions rely on taxing mobile factors and mobile factor productivity is enhanced by relaxing public health mitigation, jurisdictions will choose lower levels of public health quality. JEL classification numbers: H73, I18, R13. Keywords: Federalism, Decentralized authority, COVID - 19, Public health mandates.

Public Health Federalism?

This paper develops a general equilibrium model of competitive jurisdictional choice that provides insights into what is being coined 'public health federalism'. Using a standard neoclassical model of production combined with a utility maximization hypothesis, jurisdictions choose both tax rates and a level of local public health quality. Incorporating the joint determination of both tax decisions and the choice of public health standards can give rise to some interesting interrelationships between local tax revenues and public health considerations. Additionally, the model is extended to address the fiscal realities of sub-state jurisdictions in the United States. Beleaguered in a second-best setting, devolved efficiency becomes a target difficult to hit. We show that when jurisdictions rely on taxing mobile factors and mobile factor productivity is enhanced by relaxing public health mitigation, jurisdictions will choose lower levels of public health quality. JEL classification numbers: H73, I18, R13. Keywords: Federalism, Decentralized authority, COVID - 19, Public health mandates.

Residential Consumer Understanding of Electricity Bills

The neoclassical model of economics assumes that greater the information available, the easier it is for a consumer to make decisions. In the context of electricity usage, overwhelming amounts of information presented on energy bills and a lack of real-time information deter consumers from understanding their own energy usage and developing personalized strategies to reduce it. This study assesses the literacy levels regarding electricity bills amongst consumers in India. Regression results indicate that homes with stronger beliefs in energy conservation minimize their usage. The size of the dwelling,demographics, and the ownership of the dwelling influence literacy levels regarding electricity bills. The study had a counterintuitive finding, as the respondents were found reluctant to receive a normative comparison of their electricity bills—strange for a collectivistic cultured society like India. The study recommends making electricity bills more visually appealing and increasing their frequency to increase awareness of energy usage.

Incentivizing Irreversible Investment

Existing dynamic investment models that show that a manager can be incentivized to implement the optimal investment policy rely on the assumption that the firm is operating in an ever-expanding product market. This paper presents an analytically tractable, discrete-time, neoclassical model with irreversible investment and the possibility of unfavorable demand events. We show that even when the principal is uninformed about changes in demand for the firm's output, there exists a performance measurement system that leads to goal congruent investment incentives for the manager. If the principal can observe the unfavorable demand events, then goal congruence can be achieved using very simple accrual accounting rules, such as straight-line depreciation.

Choice with Endogenous Categorization

We propose and axiomatize the categorical thinking model (CTM) in which the framing of the decision problem affects how agents categorize alternatives, that in turn affects their evaluation of it. Prominent models of salience, status quo bias, loss-aversion, inequality aversion, and present bias all fit under the umbrella of CTM. This suggests categorization is an underlying mechanism of key departures from the neoclassical model of choice. We specialize CTM to provide a behavioural foundation for the salient thinking model of Bordalo et al. (2013, Journal of Political Economy, 121, 803–843) that highlights its strong predictions and distinctions from other models.

NEOCLASSICAL NATURE AND BACKGROUND OF BETA CONVERGENCE BETEWEEN COUNTRIES/REGIONS

The methodological basis of beta-convergence concept (which is based on the neoclassical model of growth) is studied. According to the theory of convergence, there is a set of countries (regions, provinces) that are members of the so-called "convergence clubs" i.e. in these countries (or regions) there is the process of convergence of their social and economic development towards more developed countries (regions). Numerous empirical studies of scientists around the world on this topic are currently a powerful basis for the development of appropriate regional economic policy by governments. The period since the 1980s is characterized by increased interest of researchers in the convergence processes of regions and countries, as such processes have important positive consequences for the welfare of the population, economic growth and are the basis for effective regional policy. Today, a large number of scientists from around the world annually publish dozens of research results based on the use of convergence, which is based on a non-classical model of growth. However, these studies should take into account the nature of non-classical growth models, their shortcomings and make appropriate modifications to the classical model. Given the above in this context it is common to analyze the features of the neoclassical model, the main of which is the non-competitive nature of the ideas underlying the technology. An analysis of the features of the neoclassical model of growth, the main of which is the non-competitive nature of the ideas underlying the technology. It was found that the level of growth of the economy, which is below the steady state, is high and gradually decreases over time. The author proves the existence of certain conditions for the usage of beta-convergence in empirical studies. First, in the models, the growth rate of per capita income and its corresponding initial value are usually inversely dependent, and therefore the testing of the hypothesis of convergence of countries/regions should be based on the assessment of such dependence. Second, the Cobb-Douglas production function must have the property of a permanent effect of scale, which requires its empirical study.

Optimal Positive Capital Taxes at Interior Steady States

We generalize recent results of Bassetto and Benhabib (2006) and Straub and Werning (2019) in a neoclassical model with endogenous labor-leisure choice where all agents are allowed to save and accumulate capital. We provide a sufficient condition under which optimal redistributive capital taxes remain at their allowed upper bound forever, even if the resulting equilibrium trajectory converges to a unique steady state with positive and finite consumption, capital, and labor. We then provide an interpretation of our sufficient condition. Using recent evidence on wealth distribution in the United States, we argue that our sufficient condition is empirically plausible. (JEL D31, E21, H21, H23, H25, J22)

China’s Accession to the WTO and the Collapse That Never Was

This article examines the application of neoclassical economics to the discussion of China’s transition to the market in the 1990s and its accession to the World Trade Organization (WTO) in 2001. It shows how this theory shaped, and misled, forecasts of the impact of that accession and of China’s subsequent economic performance. It discusses the debate between mini-bang and big-bang transition policies in the 1990s and shows the two sides shared far more in common than separated them. Both sides misestimated, in fact grossly underestimated, the dynamism of China’s economy. It shows how widely anticipated predictions of crisis and collapse with China’s WTO accession were the natural result of the assumptions of the neoclassical model. It suggests that a rival model of market transition based on Bukharin and Kuznets has much to offer. JEL Classification: P22, P26, P21, B24