Economics - Research Publications
Now showing items 1-12 of 624
Economies with complex property rights: the role of exclusion
(Association for Computing Machinery (ACM), 2021-06)
We discuss the exclusion core, a solution concept for object-allocation and object-exchange problems. The exclusion core is based on the right of exclusion and is especially useful for the analysis of economies with complicated property arrangements, such as those with shared ownership. The exclusion core coincides with the (strong) core in classic settings, and is closely related to the celebrated Top Trading Cycles algorithm.
Cognitive heterogeneity and complex belief elicitation
The Stochastic Becker-DeGroot-Marschak (SBDM) mechanism is a theoretically elegant way of eliciting incentive-compatible beliefs under a variety of risk preferences. However, the mechanism is complex and there is concern that some participants may misunderstand its incentive properties. We use a two-part design to evaluate the relationship between participants' probabilistic reasoning skills, task complexity, and belief elicitation. We first identify participants whose decision-making is consistent and inconsistent with probabilistic reasoning using a task in which non-Bayesian modes of decision-making lead to violations of stochastic dominance. We then elicit participants' beliefs in both easy and hard decision problems. Relative to Introspection, there is less variation in belief errors between easy and hard problems in the SBDM mechanism. However, there is a greater difference in belief errors between consistent and inconsistent participants. These results suggest that while the SBDM mechanism encourages individuals to think more carefully about beliefs, it is more sensitive to heterogeneity in probabilistic reasoning. In a follow-up experiment, we also identify participants with high and low fluid intelligence with a Raven task, and high and low proclivities for cognitive effort using an extended Cognitive Reflection Test. Although performance on these tasks strongly predict errors in both the SBDM mechanism and Introspection, there is no significant interaction effect between the elicitation mechanism and either ability or effort. Our results suggest that mechanism complexity is an important consideration when using elicitation mechanisms, and that participants' probabilistic reasoning is an important consideration when interpreting elicited beliefs.
Road to recovery: Managing an epidemic
(ELSEVIER SCIENCE SA, 2021-03-01)
Without widespread immunization, the road to recovery from the current COVID-19 lockdowns will optimally follow a path that finds the difficult balance between the social and economic benefits of liberty and the toll from the disease. We provide an approach that combines epidemiology and economic models, taking as given that the maximum capacity of the healthcare system imposes a constraint that must not be exceeded. Treating the transmission rate as a decreasing function of the severity of the lockdown, we first determine the minimal lockdown that satisfies this constraint using an epidemiology model with a homogeneous population to predict future demand for healthcare. Allowing for a heterogeneous population, we then derive the optimal lockdown policy under the assumption of homogeneous mixing and show that it is characterized by a bang-bang solution. Possibilities such as the capacity of the healthcare system increasing or a vaccine arriving at some point in the future do not substantively impact the dynamically optimal policy until such an event actually occurs.
Modelling the Spread of the Coronavirus: A View from Economics
This article reviews the modelling of the spread in Australia of COVID‐19 from the point of view of the discipline of Economics. After a brief overview of the epidemiological approach, we show that other modelling is needed for policy purposes and especially to provide a full understanding of the economic and social costs of disease control. We look at microeconomic aspects of infection, focusing on individual behaviour, the choices facing the individual and implications for policy. The use of a cost–benefit approach and macroeconomic aspects of the pandemic are examined together with the economic consequences of policy response.
Obituary for Joseph Ezra Isaac, AO FASSA: 1922–2019
Celebrated academic and public servant emeritus professor the Hon. Joseph Isaac died on 17 September 2019 at the age of 97. He was one of the most influential contributors to both academic scholarship and public policy in Australian industrial relations for more than 60 years.
Reform State Taxes to Increase Productivity
A larger and more productive economy would facilitate the reduction of COVID‐19 government deficits and their future repayment. Reform of state taxes is among the low‐hanging fruit to include in a broad supply‐side agenda to increase national productivity. Approximate aggregate revenue neutral reform packages to reduce tax distortions and improve productivity are discussed for state taxes on property, payroll and motor vehicles.
Should We Worry about Government Debt? Thoughts on Australia's COVID-19 Response
No. While the COVID-19 crisis has required a dramatic increase in debt-financed government spending, in the current conditions the benefits from this debt are unusually high and the costs unusually low. While conditions can change, the Australian Government can right now hedge against these risks by lengthening the maturity structure of government debt, even at the cost of a modest increase in its current servicing costs.
The Australian Labour Market and the Early Impact of COVID-19: An Assessment
From March to June 2020 was the most dramatic four months in the history of the Australian labour market. Never before has a such a substantial decrease in labour demand (and partial reversal) occurred so quickly. In this article, we present an overview of the early impact of COVID-19: the main drivers it brought into play and the consequent labour market developments. Aggregate effects and how impacts differed by type of job and worker are described. We conclude with a brief review of the main government response to COVID-19, the JobKeeper program.
Big Economic History
This paper reviews the history of human economic activity from the time Homo sapiens appeared to the present. The first aim is to provide a coherent narrative of the economic history of this period. The second aim is to quantify economic activities where time series data is available and to use economic theory to explain the trends and turning points. It examines the history of three central time series – the aggregate human population, output per capita and human-induced species extinctions. It concludes with some brief observations on the contribution of Big Economic History to Big Human History.
The ATO Longitudinal Information Files (ALife): A New Resource for Retirement Policy Research
The Australian Taxation Office release of annual longitudinally linked individual tax and superannuation records, known as the ATO Longitudinal Information Files (ALife), opens up opportunities for new research. In this study, we provide an overview of ALife, focusing on its use for retirement income research. To this end, we provide the first longitudinal estimates of superannuation outcomes for 1-year birth cohorts. Results show marked increase in disparity of super balances in the lead-up to retirement as those in the top quartile ramp-up their contributions, possibly to take advantage of the favourable tax treatment of superannuation income in retirement years.
The Economics of Ageing—What Do We Face?
We, as taxpayers, face challenging problems in assisting the well‐being of old people mainly because preparing for and living through old age is a risky business. Through government, taxpayers can provide some insurance against the risks of old age, especially the risk of bad health and the risk of a long life. However, the ageing population suggests that maintaining this support will require increased taxation. This article quantifies this challenge for Australia and concludes that although increased taxation may be required it will be easily affordable from the much higher incomes generally received due to the secular increase in productivity.
In this paper I adapt a common model used in economics to study the diffusion of innovations to model the transmission of a virus. Emphasis is placed on the evolution of the number of new infections and the cumulative total number of infections over time and how they might be influenced by different policies. Although the model is very simple it does yield some useful implications for public policy.