In this paper we address the robustness of overshooting hypothesis in agricultural prices. We find that agricultural prices may undershoot their long-run level if the economy experiences an anticipated monetary shock rather than an unanticipated monetary shock. We also find that agricultural prices definitely display undershooting if the price of manufactures adjusts instantaneously rather than sluggishly. Copyright 1996, Oxford University Press.
This article develops a dynamic optimising macro model that sheds light on two tourism stylised facts, namely, (i) the congestion externalities caused by tourism expansion and (ii) the wealth effect generated by the revenues from overseas tourism taxation. Based on the two salient characteristics, our positive analysis indicates that if tourism tax revenues are used to provide rebates to local residents, because of the wealth effect, Dutch disease cannot be cured by the consumption tax on tourists. In contrast, if tourism tax revenues are used to provide productive government services for the manufacturing sector, Dutch disease can be treated effectively by taxation tailored for tourism. In a normative analysis, we show that to simultaneously correct the distortion caused by the congestion externality of tourism and generate the revenues from overseas tourism taxation, a government should not only levy a general tax on tourism consumption, but it should also discriminate between domestic and overseas tourism consumption, so that a positive tax surcharge is imposed on foreign tourists. In addition, the key factors that govern the optimal rates of a general tax and tax surcharge are also examined in this article.
Using an endogenous growth model, this paper examines the growth and welfare effects of the allocation of foreign aid in the recipient economy. As public inputs are a productive factor, a rise in the allocation of aid to the public inputs increases growth and hence the welfare of the economy. However, raising the ratio of aid to pollution abatement may not help an economy, because it crowds out public inputs. Since public inputs are also partly financed by income taxation, the welfare‐maximizing income tax rate is larger than the growth‐maximizing rate, because a portion of the aid constitutes a lump‐sum transfer and can increase household consumption and hence welfare.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.