Economics - Research Publications
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ItemDiscounting and the Time Preference Rate:an introduction( 2007-04)This paper provides an introduction to the evaluation of alternativetime streams of consumption and the closely related concept oftime preference. The potential sensitivity of comparisons, especiallyto the choice of time preference rate and elasticity of marginal valuation,is demonstrated. The nature of time preference, based on anaxiomatic approach, is then discussed. The analysis of optimisationover time leads to the concept of the social time preference rate, and adifficulty with using this rate is highlighted. Finally, complications introducedby non-income differences between individuals are examined.Emphasis is placed on the central role of value judgements.
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ItemA PhD thesis without tears( 2007-02)The aim of this article is to offer some advice to help make the PhD journey more pleasant, less stressful and more rewarding.
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ItemChanges in the taxation of superannuation: macroeconomic and welfare effects( 2007-02)This paper provides an applied general equilibrium analysis of several alternative taxationregimes applying to superannuation. It is motivated by the decision, announced by theAustralian Government in its 2006 Budget, to exempt from tax all superannuation benefitsreceived by recipients over 60 years of age. The analysis focuses on the implications of thisand other superannuation tax regimes for intergenerational equity, national living standards,labour supply, saving and social welfare. The method of analysis is simulation of an openeconomy overlapping generations CGE model, calibrated to Australia.
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ItemEducation vouchers: means testing versusuniformity( 2006-12)This paper compares a uniform education voucher system with ameans-tested scheme in which the voucher is subject to a taper orwithdrawal rate as parental gross income increases. Parents are assumedto maximise a utility function which includes their consumption,leisure and the human capital of children. The human capitalproduction function has inputs consisting of parental human capitaland expenditure on education. The government faces a budget constraintsuch that the voucher and a social dividend are financed froma proportional income tax. Alternative combinations of voucher andtax and transfer schemes are evaluated using a social welfare functiondefined in terms of the utility of parents. It is found that for allcombinations of policy variables, a uniform voucher turns out to beoptimal. However, if a binding constraint is placed on the maximumtax rate, means-testing, with a low taper, is found to be optimal.
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ItemFrancis Ysidro Edgeworth 1845-1926( 2006-09)Francis Ysidro Edgeworth (1845-1926) was born in Edgeworthstown in CountyLongford, Ireland. The background into which he was born was dominatedby the ‘larger than life’ figure of his grandfather Richard Lovell Edgeworth(1744-1817), whose life was documented in a two-volume memoir (1820)by his oldest daughter, the famous novelist Maria Edgeworth (1767-1849).1Richard Lovell’s many scientific and mechanical experiments were helped byhis strong association with the Lunar Society of Birmingham, whose membersincluded Watt, Bolton, Wedgwood, Priestley, Darwin, and Galton. In addition,Maria’s scientific acquaintances also included Davy, Humboldt, Herschel,Babbage, Hooker and Faraday. The marriage of F. Y. Edgeworth’scousin Harriet Jessie Edgeworth (daughter of Richard Lovell’s seventh andyoungest son Michael Pakenham, 1812-81) to Arthur Gray Butler providedlinks with another large and eminent academic family. These connections extendeven further since A. G. Butler’s sister, Louisa Butler, married FrancisGalton, a cousin of Charles Darwin.Richard Lovell’s sixth son, and seventeenth surviving child, was FrancisBeaufort Edgeworth (1809-46), who met his wife, Rosa Florentina Eroles, thedaughter of a Spanish refugee from Catalonia and then aged sixteen, while onthe way to Germany to study philosophy; they married within three weeks.This is a forthcoming entry for the New Palgrave Dictionary of Economics. I amgrateful to Denis O’Brien and Steven Durlauf for comments on an earlier draft.1On the family background, see also Butler and Butler (1927). For a full-length treatmentof Edgeworth’s work, see Creedy (1986).in 1831. F. Y. Edgeworth was their fifth son. With his family backgroundand his knowledge of French, German, Spanish and Italian, Edgeworth hadwide international sympathies.Edgeworth was educated by tutors in Edgeworthstown until the age of 17,when in 1862 he entered Trinity College Dublin to study languages. In 1867Edgeworth entered Exeter College,
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ItemPopulation ageing and intertemporal consumption: representative agent versus social planner( 2006-09)This paper examines the optimal path of consumption over time in the contextof population ageing. Older age groups are considered to have relatively greater‘needs’, resulting for example from additional health costs. These differences give riseto the concept of the ‘equivalent number of persons’, as distinct from the populationsize. Emphasis is given to the difference between a framework involving arepresentative agent and one in which plans are made by a social planner. The preciseconditions under which consumption growth paths are the same under therepresentative agent and the social planner are established. This equivalence is foundto hold only in the case where the social planner’s value judgements are such thatindividuals are considered to be the appropriate unit of analysis. An alternativeassumption, in which equivalent persons are regarded as the appropriate units, isfound to give rise to a different optimal consumption path. Numerical examplesdemonstrate the relative orders of magnitude for a range of parameter values. Thedifferences are found to be potentially important. The choice of appropriateconsumption units – individuals or equivalent persons – is far from arbitrary since itinvolves possibly conflicting value judgements. This choice has implications forpolicies designed to influence the optimal saving rate, such as superannuation policyand the fiscal balance.
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ItemEvaluating policy: welfare weights and value judgements( 2006-09)This paper is concerned with the use of social welfare functions inevaluating changes. In particular, it considers suggestions that welfareweights to be used in comparing the gains and losses of different individuals(or other appropriate units of analysis), and a social time preferencerate for use in cost benefit evaluation, can be estimated eitherfrom consumers’ behaviour or from the judgements implicit in tax policy.It is suggested that results are highly sensitive to the context andmodel specification assumed. More importantly, the argument that anestimated elasticity of marginal utility or time preference rate shouldbe used in policy evaluations fails to recognise that fundamental valuejudgements are involved. Various estimates may be of interest, butthey cannot be used by economists to impose value judgements. Themain contribution economists can make is to examine the implicationsof adopting a range of alternative value judgements.
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ItemAn in-work payment with an hours threshold: labour supply and social welfare( 2005-03)This paper uses an optimal tax framework to examine the effecton a measure of social welfare of an in-work payment, involving a discontinuityat an hours threshold. Social welfare is defined in termsof individuals’ utilities, which depend on leisure and net income. Thein-work payment augments a modified minimum income guaranteehaving two tax rates. Numerical simulations, which ensure that afixed amount of net revenue per person is collected by the government,show that social welfare falls systematically as the extent ofthe discontinuity increases, and as the hours threshold, at which thejump in net income occurs, increases. Eliminating the discontinuityresulting from the in-work payment therefore improves social welfare.
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ItemFrom manuscript to publication: a brief guide for economists( 2005-03)The aim of this paper is to give a short description of the nature ofbooks and journals, their respective editors, and the difficult process andproprieties involved in publishing papers. It describes some of the mainfeatures of the publication process, so that readers may be in a better positionto make judgements about published work and writers may be, tosome extent at least, prepared to face the difficulties that inevitably lie intheir path. Emphasis is given to the need to deal with rejections and theoften substantial revisions requested by editors. While some of the featuresof publishing are common to all disciplines, this paper is specificallyintended for economists.
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ItemChoosing the tax rate in a linear income tax structure: an introduction( 2007-09)This paper provides an introduction to modelling the choice of linearincome tax rate in both majority voting and social welfare maximisingcontexts. Although the basic problem in each case — of findingthe most preferred tax for the median voter and the welfare maximisingtax for an independent judge or decision-maker — can be simplystated, it is usually not possible to obtain explicit solutions even forsimple assumptions about preferences and population heterogeneity.The present paper instead gives special attention to a formulation ofthe required conditions in terms of easily interpreted magnitudes, theelasticity of average earnings with respect to the tax rate and a measureof inequality. The inequality measure takes the same basic formin each model (depending either on median earnings or a weightedaverage of earnings, where the weights depend on value judgementsregarding inequality aversion. The approach enables the comparativestatic effects of a range of parameter changes to be considered. Theresults are reinforced using numerical examples based on the constantelasticity of substitution utility function.