Showing 1 - 10 of 561
The paper discusses the case against a laissez faire approach to resource allocation and develops a model of supply bottlenecks. It argues that: (1) once budget constraints are hardened and credit markets begin to function appropriately, externalities associated with production bottlenecks and...
Persistent link: https://www.econbiz.de/10005769112
The purpose of this paper is to study why decentralized economies often fail to achieve national objective in the presence of externalities. The paper employs a two-period, open economy framework in which the central government allocates its tax revenues among a larger number of individual...
Persistent link: https://www.econbiz.de/10005777476
The paper characterizes the feasibility of economic transformation as requiring the simultaneous attainment of macroeconomic stability, political support, and adequate private investment. Macroeconomic stability is defined as fiscal balance; political feasibility is related to the income gains and...
Persistent link: https://www.econbiz.de/10005605396
This paper explains why a laissez-faire approach may fail to account for externalities in transforming economies, focusing on externalities associated with supply bottlenecks and adjustment costs. Bottlenecks tend to arise whenever input requirements are stochastic and the opportunity cost of...
Persistent link: https://www.econbiz.de/10005718425
The paper emphasizes the role of institutions and incentives in the presence of externalities. An economy with multiple public decision makers is likely to experience "overspending," "undertaxing," "overborrowing," and "overinflation" unless effective institutions exist for overcoming...
Persistent link: https://www.econbiz.de/10005050292
Persistent link: https://www.econbiz.de/10008512641
This paper analyzes the consequences of future policy uncertainty on the allocation of effort in an economy undergoing reforms. We demonstrate that uncertainty regarding future tax policies may reduce present effort, and will also reduce the responsiveness of output to productivity shocks and...
Persistent link: https://www.econbiz.de/10005177099
Persistent link: https://www.econbiz.de/10005205485
The paper analyzes the feasibility of sustaining both macroeconomic stability and political support during economic transformation. Macroeconomic stability requires that state sector losses plus public infrastructure investment be financed by tax revenue plus any external assistance. Political...
Persistent link: https://www.econbiz.de/10009208061
Persistent link: https://www.econbiz.de/10005365246