Subsidies versus public provision of private goods as instruments for redistribution

Article Abstract:

The use of indirect commodity taxes and quantity controls together with the optimal nonlinear income tax as policy instruments to enhance the efficiency of redistribution by expanding the second-best utilities possibility frontier was investigated. A mathematical model with two classes of households where the government has access to both public provision of a good substitutable for leisure and subsidy policy was employed. Results showed that both quantity controls and indirect commodity taxes improve redistribution efficiency by relaxing economic incentive constraints.

Tax Law, Public Finance Activities, Taxation, Distribution (Economics), Income tax, Public goods, Commodities, Subsidies, Utility theory, Utility functions

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Savings account versus stocks and bonds in household portfolio allocations

Article Abstract:

A mathematical model is developed to determine the factors that guide household in the Netherlands in apportioning their investments between risky and risk-free assets. An analysis of data from 3,077 households to determine investments placed in savings accounts or those invested in stocks and bonds showed a household's level of wealth and marginal tax rates as determinants of the types of investments.

Personal Investing, Personal finance, Investments, Investment analysis, Securities analysis

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Nominal interest rates as indicators of inflation expectations

Article Abstract:

An analysis of UK and US economic data reveals that nominal interest rates may be used as an effective tool for determining inflation expectations. The study points out however, that interest rate changes are poor indicators of changes in inflation expectations and that variation in the level of inflation expectations may be determined by as much as three quarters using nominal interest rates.

Analysis, Usage, Testing, Inflation (Finance), Interest rates, Economic indicators, Inflation (Economics)

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