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Abstract: We demonstrate that when capital and depletable resources are used in production their initial endowments affect the long-run standard of living, due to the existence of history dependent steady-state equilibria. We characterize... more
Abstract: We demonstrate that when capital and depletable resources are used in production their initial endowments affect the long-run standard of living, due to the existence of history dependent steady-state equilibria. We characterize the steady states as a ray from the origin and demonstrate that the economy converges to a point on the ray depending on initial conditions. Moreover, if an economy has reached a steady state and a resource discovery is made the economy will converge to a new steady state with a higher level of consumption. Providing the economy, however, with more capital may not lead to higher consumption.
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Since carbon emissions mitigation can be regarded as a global public good, there is a large body of economic literature focusing on the need of interstate fiscal transfers due to emissions regulation. This literature has either considered... more
Since carbon emissions mitigation can be regarded as a global public good, there is a large body of economic literature focusing on the need of interstate fiscal transfers due to emissions regulation. This literature has either considered optimal emissions policy, also in terms of fiscal equalization schemes, or has compared various policy instruments. However, if the interstate transfers needed to achieve optimality become too large, they may oppose the states’ self-interests and become politically infeasible. This paper contributes by considering the acceptance of the states’ self-interests as a prerequisite to design federal emissions policies. Within an analytical framework we analyze the potential of a federal government to regulate emissions, which entail spillover effects to all states, while strategic state policies are present. The federal government acts as a Stackelberg-leader, can employ a uniform price on emissions and provide incentive compatible transfers. While feder...
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Housing costs are an important potential driver of rising inequality. There is a broad literature suggesting that land rent taxation can be used to ameliorate this inequality due to its non-distortionary properties. In practice, only a... more
Housing costs are an important potential driver of rising inequality. There is a broad literature suggesting that land rent taxation can be used to ameliorate this inequality due to its non-distortionary properties. In practice, only a portion of total residential land is subject to rent taxation, since most countries abstain from taxing homeowners imputed rents. We built a dynamic macroeconomic model that disentangles land and structures from housing and study the welfare implications and distortionary properties of land rent taxation. We find that the lack of imputed rent taxation causes land rent taxation to be distorionary. Opposite to the thought that land rent taxation can be beneficial for tenants, we find that the lack of imputed rent taxation causes land rent taxation to be detrimental to tenants’ welfare. This results since increases in the land rent tax rate decrease the implicit cost of land for self-use of homeowners, which increase their demand for land. This in turn r...
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This paper provides a theoretical foundation for the use of rules of thumb for federal transfers when multi-layered public good policies coexist. As a mean to ensure consent of differently rich states we constrain the federal government... more
This paper provides a theoretical foundation for the use of rules of thumb for federal transfers when multi-layered public good policies coexist. As a mean to ensure consent of differently rich states we constrain the federal government to attain Pareto superior allocations relative to the decentralized policy scenario. Within a game theoretic general equilibrium framework we show when a uniform federal price instrument in combination with simple transfer criteria (equality, decentralized output level shares, juste retour) deliver Pareto superior allocations. We find that equality (decentralized output level shares) based transfers are effective (in)dependent of the states’ capital endowments. We also find an endogenously emerging federal minimum price which ensures consent of all states. At this minimum price the richest state agrees to carry a disproportionately large share of the federal policy cost and becomes the benevolent hegemon. JEL classification: H77, Q58, H23, D62, H87
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The validity of the Hotelling’s rule, the fundamental theorem of nonrenewable resource economics, is limited by its partial equilibrium nature. One symptom of this limitation may be the disagreement between the empirical evidence, showing... more
The validity of the Hotelling’s rule, the fundamental theorem of nonrenewable resource economics, is limited by its partial equilibrium nature. One symptom of this limitation may be the disagreement between the empirical evidence, showing stable or declining resource prices, and the rule, predicting exponentially increasing prices. In this paper, we study the optimal depletion of a nonrenewable resource in a
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We present a general equilibrium model with oligopsonistic market structure in one of the sectors. Buyers of inputs can set the price of inputs by being involved in rent seeking activities. The framework developed is applied to the... more
We present a general equilibrium model with oligopsonistic market structure in one of the sectors. Buyers of inputs can set the price of inputs by being involved in rent seeking activities. The framework developed is applied to the Bulgarian economy in particular to the agro-food chain.
We develop a framework where economic agents choose between becoming productive entrepreneurs or re-distributive rent seekers. Rent seekers use economic resources to extract rents and thus their existence generates an inefficient economic... more
We develop a framework where economic agents choose between becoming productive entrepreneurs or re-distributive rent seekers. Rent seekers use economic resources to extract rents and thus their existence generates an inefficient economic outcome. We study the welfare impact of rent seeking activities and show that their reduction is welfare improving.
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In the United States, religious attendance rises sharply with education across individuals, but religious attendance declines sharply with education across denominations. This puzzle is explained if education both increases the returns to... more
In the United States, religious attendance rises sharply with education across individuals, but religious attendance declines sharply with education across denominations. This puzzle is explained if education both increases the returns to social connection and reduces the extent of religious belief, and if beliefs are closely linked to denominations. The positive effect of education on social connection is the result of both treatment and selection: schooling creates social skills and may increase people’s utility from engaging in other social activities such as church attendance. The negative effect of education on religious belief occurs because secular education emphasizes secular beliefs that are at odds with many traditional religious views.
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Research Interests: International Trade, Economic Growth, Civil War, Foreign Direct Investment, Economic policy, and 11 moreFiscal policy, Applied Economics, External Debt, Trade Liberalization, World Trade Organization, Computable General Equilibrium, Economic Reform, Open Economy, Fiscal reform, Physical Capital, and Finance and Investment Banking
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This paper provides a survey on studies that analyze the macroeconomic effects of intellectual property rights (IPR). The first part of this paper introduces different patent policy instruments and reviews their effects on R&D and... more
This paper provides a survey on studies that analyze the macroeconomic effects of intellectual property rights (IPR). The first part of this paper introduces different patent policy instruments and reviews their effects on R&D and economic growth. This part also discusses the distortionary effects and distributional consequences of IPR protection as well as empirical evidence on the effects of patent rights. Then, the second part considers the international aspects of IPR protection. In summary, this paper draws the following conclusions from the literature. Firstly, different patent policy instruments have different effects on R&D and growth. Secondly, there is empirical evidence supporting a positive relationship between IPR protection and innovation, but the evidence is stronger for developed countries than for developing countries. Thirdly, the optimal level of IPR protection should tradeoff the social benefits of enhanced innovation against the social costs of multiple distorti...