Browsing by Author "Levi, Maurice D."
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- ItemOpen AccessConverting Technology to Mitigate Environmental Damage(INFORMS, 2004-08) Nault, Barrie R; Levi, Maurice D.There are many situations where policy makers would like to induce firms to make a major discrete conversion in production technology to help the environment. This paper examines how heterogeneity in the operating condition of firms’ plant and equipment, which cannot be observed by policy makers, can affect the choice between incentives to encourage conversion to a cleaner technology. By relating different conditions of firms’ plant and equipment to production costs, extent of environmental damage, and cost of conversion to a cleaner technology, we show when a perfectly discriminating incentive to encourage conversion is not feasible. In addition, we show that firms with plant and equipment in better condition will convert their technology to mitigate their environmental damage, and firms with plant and equipment in poorer condition will not. This and a series of additional results lead to conditions under which an administratively simple uniform lump-sum incentive to switch to cleaner technology is preferable to one based on output. These results and conditions extend to cases where there are network externalities in conversion, and where there is strategic timing in firms’ choice of when to convert.
- ItemOpen AccessFreely Determined Versus Regulated Prices: Implications for the Link Between Money and Inflation(Wiley, 1993-05) Nault, Barrie R; Dexter, Albert S.; Levi, Maurice D.This paper explores the importance for the measured link between money and inflation of measuring inflation from indices that include prices that, by virtue of being regulated, are unlikely to respond systematically to the forces of supply and demand. 1 The inclusion of regulated prices for such items as property taxes, telephone and postal charges, vehicle registration, and public transportation means that even if supply and demand are systematically related to money, the measured overall rate of inflation may not be. Certainly, it would seem reasonable to believe that the nature of the setting and subsequent maintenance of regulated prices would result in them responding differently market forces that might themselves be affected by money, than would relatively unfettered prices such as those of many food items, furniture, insurance, household repairs, and automobile servicing. Indeed, it would seem reasonable to believe that the link between money and freely determined market prices would be more systematic than that between money and regulated prices, a belief that our results strongly confirm.
- ItemOpen AccessInternational Trade and the Connection Between Excess Demand and Inflation(Wiley, 2005-09) Nault, Barrie R; Dexter, Albert S.; Levi, Maurice D.This paper demonstrates that globalization, taking the form of a higher import component of consumption and a larger export component of GDP, is the cause of the apparent breakdown in the relationship between excess demand and inflation. Within a parsimonious empirical framework, we show that increasing openness of the US economy is all that is needed to re-establish the relationship between inflation and capacity utilization. We also show that international trade has a significant separate influence on inflation, and is important for identifying a Phillips curve relationship between unemployment and inflation.
- ItemOpen AccessSticky Prices: The Impact of Regulation(Elsevier, 2002-07) Nault, Barrie R; Dexter, Albert S.; Levi, Maurice D.This paper finds that approximately one-third of the items in the CPI are governed by price regulations that can slow and add noise to the response of prices to changes in cost or demand conditions. Consequently, regulation is a possible partial explanation of sticky prices in the overall rate of inflation, and delayed response to changes in the money supply. A survey is used to decompose the CPI into freely determined and regulated sub-components. Evidence is provided that prices in the regulated sector of the economy respond approximately two quarters after prices in the freely determined sector, thereby contributing a source of stickiness in overall inflation and in the response of inflation to monetary policy.