Publications - 1969

A Complete Example of an Optimal Two-Bracket Income Tax

I provide a simple model that is solved analytically to yield tidy expressions for the Pareto efficient tax structures and the optimal two-bracket marginal tax rates. It is for the special case of equally-sized groups of two skill types and no exogenous spending requirements of the government. The results and the exposition give a self-contained treatment of the central ideas of optimal income taxation.

An Empirical and Qualitative Assessment of Terrorism Sentencing Decisions in Canada since 2001

In this paper, we take a comprehensive and multi-disciplinary look at terrorism sentencing decisions over a 17-year period, between September 2001 when the ATA was first conceived of and September 2018.

Are the Responses of the U.S. Economy Asymmetric to Positive and Negative Money Supply Shocks?

A Spatial Approach to Energy Economics: Theory, Measurement and Empirics

This paper sets out a simple spatial model of energy exploitation to ask how the location and productivity of energy resources may affect the distribution of economic activity around the globe. This is a very large research question, and we take one small step towards answering it by combining elements from resource and energy economics into one framework that links the spatial productivity of energy sources (both renewable and non-renewable) to the incentives for economic activity to concentrate. Our theory provides a novel scaling law; a magnification effect; and reveals a complementarity between infrastructure investment and spatially productive energy resources. Our empirical work provides estimates of key model attributes and reviews related empirical work supporting our approach.

Back to the Future of Green Powered Economies

Bayesian Persuasion in Credit Ratings, the Credit Cycle, and the Riskiness of Structured Debt

Biased Technological Change and the Relative Abundance of Natural Resources

This paper documents that natural resources that are more abundant have higher production, lower prices, higher primary industry revenues, and higher R&D. These empirical facts are explained by a model of biased technological change in which relatively more abundant resources attract greater R&D because the return from obtaining a patent is higher in larger markets. Resource specific R&D may be targeted either towards upstream extraction technologies or towards downstream production technologies, and R&D is subject to diminishing knowledge spillovers and diminishing productivity of labor. The estimated elasticity of substitution between natural resources is greater than one, implying that natural resources are substitutes in production. Declining real resource prices in the face of rising resource production are explained by the increasing productivity of labor as knowledge stocks grow.

Can Gender Quotas in Candidate Lists Empower Women? Evidence from a Regression Discontinuity Design

We provide a comprehensive analysis of the short- and medium-term effects of gender quotas in candidate lists using evidence from Spain, where quotas were introduced in 2007 in municipalities with more than 5,000 inhabitants, and were extended in 2011 to municipalities with more than 3,000 inhabitants. Using a Regression Discontinuity Design, we find that quotas raise the share of women among council members but they do not affect the quality of politicians, as measured by their education attainment and by the number of votes obtained. Moreover, within three rounds of elections, women fail to reach powerful positions such as party leader or mayor, and we do not observe any statistically or economically significant changes in the size and composition of public finances.

Capacity Constraints in Durable Goods Monopoly: Coase and Hotelling

We examine the effect of a capacity constraint on the profi ts of a durable goods monopoly (DGM) in a two-period model when rationing is efficient. For sufficiently high discount factors, output rises through time without a constraint and a constraint increases the DGM profi ts: it restricts production in the second period, thereby lowering expectations of future prices and the incentive for intertemporal substitution. For lower values of the discount factor, output falls through time without a constraint. Regardless of the discount factor a constraint that binds in both periods may also be profi table. It reduces output in both periods, leading consumers to expect higher prices in the second period and thus increasing market power and prices in the first period.

Carbon Pricing in a Federal State: The Case of Canada

This short paper reviews the evolution of emissions pricing policies in Canada, and the political changes that led to implementation and political retreat from emissions pricing.

Conditional Correlation Demand Systems

We address the estimation of singular demand systems with heteroscedastic disturbances. As in Serletis and Isakin (2017) and Serletis and Xu (2019) we assume that the covariance matrix of the errors of the demand system is time-varying, and contribute to the literature by considering the constant conditional correlation (CCC) and dynamic conditional correlation (DCC) parameterizations of the variance model. We derive a number of important practical results and also provide an empirical application to support our methodology.

Demand Systems with Heteroscedastic Disturbances

We address the estimation of singular demand systems with heteroscedastic disturbances. We relax the homoscedasticity assumption and instead assume that the covariance matrix of the errors of the demand system is time-varying. In doing so, we consider the VECH and BEKK parameterizations of the variance model. We analytically prove the invariance of the maximum likelihood estimator with respect to the choice of the good deleted from a singular demand system, and also prove a number of important practical results regarding how to recover the mean and variance equation parameters (and their standard errors) of the full demand system from those of any subsystem obtained by deleting an arbitrary good.

Divisia Monetary Aggregates, the Great Ratios, and Classical Money Demand Functions

Employer Loyalty, Training, and Female Labor Supply

This paper develops and calibrates a game theoretical model of statistical discrimination against women. It then quantitatively analyzes the effects of tax credits in the form of child-care subsidies on female labor supply, gender wage differences, and labor allocation efficiency using Japanese data. In my model, employers finance employee training without directly observing individual workers' labor force intentions. In an attempt to distinguish female workers who will exit the labor market from those who will stay with the firm, the employers use long-term wage contracts as a screening device. The model suggests that child-care subsidies can bring a drastic change in allocation efficiency by altering the type of equilibrium that characterizes the worker-firm game. I build on this theoretical prediction by applying the model empirically to the Japanese labor market. I find that the Japanese female labor market as it currently stands is best captured by a pooling equilibrium, where employers cannot distinguish between women who will leave the firm and women who will stay, thereby allowing statistical discrimination. I simulate the effect of tax credits and find that a decrease in child-care subsidies could raise efficiency because the equilibrium shifts from pooling to separating, where employers can discern individual women's labor force intentions and provide training opportunities accordingly.

Environmental Regulation and Safety Outcomes: Evidence from Canadian Energy Pipelines

This paper investigates the effects of more stringent environmental regulation—specifically, paying amortized abandonment fees as accrued and absolute liability for adverse events—on the safety performance of Canadian oil and gas pipelines. We construct a comprehensive monthly data set that includes pipeline incidents and accidents, throughput, regulatory intensiveness, and physical characteristics for fourteen federally regulated energy pipelines in Canada. The results show that imposingabandonment fees is positively and significantly related to increases in the probability and number of pipeline incidents. A 10% increase in the share of abandonment fees in sale revenues is associated with 1.63 more incidents per month. Establishing absolute liability since 2016 is significantly associated with decreases in the probability of pipeline serious accidents: The probability of accidents decreased by 3% per month since the establishment of absolute liability. Also, imposing absolute liability is most effective for large oil pipelines, which are subject to the highest liability. Oil pipelines subject to the highest liability reduced accidents by 0.343–0.389 per month, while accidents of natural gas pipelines declined by 0.048–0.052 per month.

Evaluating Environmental Benefits from Driving Electric Vehicles: The Case of Shanghai

Replacing internal combustible engine vehicles with electric vehicles is the most direct pathway to decarbonize the transportation sector. This paper investigates the environmental benefits of electric vehicle adoption in Shanghai—China’s largest regional electric vehicle market. Using vehicle registration data and Well-to-Wheel analysis, we calculate the potential emissions reductions of carbon dioxide and air pollutants for each electric vehicle model sold in Shanghai in 2018. We find that electric vehicles have been over–subsidized: The average environmental benefit was less than one–fourth of the mean subsidy received. Environmental benefits were not distributed uniformly: About 80% of electric vehicle models generated less than 20% of the aggregate environmental benefits. We suggest three policy recommendations to improve the environmental benefits of electric vehicle adoption.

File Sharing and Film Revenues: An Empirical Analysis

This study quantifies the impact of file sharing on the theatrical film industry. Using a large data set of torrent downloads observed on three popular peer-to-peer (P2P) file-sharing networks, we find evidence of a small and statistically significant sales displacement effect on theatrical box-office revenue: the estimated daily displacement elasticity for theatrical admissions is 0.3 for an increase in downloads over a four week period. The release gap between the domestic (North American) and international markets is a key contributor to piracy early in a film's theatrical life, providing a partial explanation of the industry's move toward coordinated day-and-date worldwide releases.

Fiscal Integration with Internal Trade: Quantifying the Effects of Equalizing Transfers

Fiscal transfers between regions exist within many countries. Explicit transfers, such as Canada's equalization program, redistribute funds directly. Countless federal revenue and spending programs do so indirectly. Like capital flows between countries, such transfers interact with trade and affect the distribution of economic activity within and between subnational jurisdictions. Previous research has largely abstracted from trade considerations; we fill this gap. With the aid of a rich quantitative model and detailed data on within-country trade and financial flows, we uncover important effects of fiscal transfers on provincial income, migration, and national GDP in Canada. The effects are large. Transfers lower Alberta's real income by over 8 per cent and its population by over 12 per cent, and increase PEI's real income by 30 per cent and its population by 50 per cent. As employment shifts to lower productivity regions, we find transfers shrink Canada's real GDP by 0.8 per cent and income-sensitive transfers do so by as much as 1.2 per cent — equal to $19-28 billion today. Finally, fiscal transfers affect the size and distribution of gains from internal trade liberalization and spread gains across all regions, even if policy (like the New West Partnership) liberalizes trade only among some.

Fracking and Structural Shifts in Oil Supply

The adoption of hydraulic fracturing (fracking) and horizontal drilling technology substantively altered the structure of oil supply. Using disaggregate state-level data from the U.S, this paper provides empirical evidence that oil supplies are now asymmetric with respect to price changes as a result of the adoption of new production methods. The changed structure of U.S. oil supply---particularly the low supply elasticities for price declines and large supply elasticities for price increases---is consistent with the ineffectiveness of OPEC policies intended to drown fracking American producers in oil.

Having it Easy: Consumer Discrimination and Specialization in the Workplace

Most studies analyzing the adjustments of workers to discrimination focus on sorting decisions, such as occupations workers pursue. We instead analyze on-the-job adjustments, focusing on the effects of discrimination by consumers. Specifically, using extraordinary data from a large-scale restaurant, we investigate the effects of an out-ward yet immutable physical trait - symmetry of the facial attributes of workers - on trade offs workers make, and the extent to which the trade offs are shaped by consumer preference for the trait. A large scale restaurant is well-suited for studying these issues because, as with many jobs in the services sector, workers must trade off quality of service for the quantity of consumers they serve. Using a combination of observational data and data generated by a field experiment, we find consumers have a preference for the trait and that preferred workers deliver lower service quality. Instead they specialize in serving more consumers. The findings imply that when outward physical traits substitute for service quality in consumer preferences, preferred workers specialize in tasks having no services component because consumers punish them less for poor performance. We conclude that consumer discrimination shapes comparative advantage and, in doing so, generates earnings inequality in the workplace.

How Does the U.S. Natural Gas Market React to Demand and Supply Shocks in the Crude Oil Market?

Identification and Estimation of Dynamic Games when Players' Beliefs Are Not in Equilibrium

This paper deals with the identification and estimation of dynamic games when players’ beliefs about other players’ actions are biased, i.e., beliefs do not represent the probability distribution of the actual behavior of other players conditional on the information available. First, we show that a exclusion restriction, typically used to identify empirical games, provides testable nonparametric restrictions of the null hypothesis of equilibrium beliefs. Second, we prove that this exclusion restriction, together with consistent estimates of beliefs at several points in the support of the special state variable (i.e., the variable involved in the exclusion restriction), is sufficient for nonparametric point-identification of players’ payoff and belief functions. The consistent estimates of beliefs at some points of support may come either from an assumption of unbiased beliefs at these points in the state space, or from available data on elicited beliefs for some values of the state variables. Third, we propose a simple two-step estimation method and a sequential generalization of the method that improves its asymptotic and finite sample properties. We illustrate our model and methods using both Monte Carlo experiments and an empirical application of a dynamic game of store location by retail chains. The key conditions for the identification of beliefs and payoffs in our application are the following: (a) the previous year’s network of stores of the competitor does not have a direct effect on the profit of a firm, but the firm’s own network of stores at previous year does affect its profit because the existence of sunk entry costs and economies of density in these costs; and (b) firms’ beliefs are unbiased in those markets that are close, in a geographic sense, to the opponent’s network of stores, though beliefs are unrestricted, and potentially biased, for unexplored markets which are farther away from the competitors’ network. Our estimates show significant evidence of biased beliefs.

Income Instability and Fiscal Progression

We construct the ratio of the post-fisc transitory income variance to the pre-fisc transitory income variance of family incomes as a measure of fiscal progressivity in Canada between 1993 and 2008. This ratio can be interpreted as measuring the extent to which the fiscal system attenuates personal income instability. We find that the tax and transfer system has been less effective in stabilizing market incomes after 1998 compared to the previous years. This is attributable to the provincial and federal tax reforms from 1999-2001, which particularly affected families headed by individuals with less than high school education. While the reforms reduced the effective marginal tax rates faced across all educational groups, the reduction is relatively larger among families with highly educated main earners. Moreover, the group with less than high school education is distinct in that the average effective tax burden in this group increased. Changes to Social Assistance also appear to have played a role.

Interest Rates, Money, and Economic Activity

In this paper, we are motivated by the fact that little is known about the relative performance of broad and narrow Divisia monetary aggregates, and by recent work that tests and rejects the appropriateness of the aggregation assumptions that underlie the various monetary aggregates published by the Federal Reserve as well as a large number of monetary asset groupings suggested by earlier studies. We present a comprehensive comparison of narrow versus broad Divisia monetary aggregates within three classes of empirical models. We compute correlations between the cyclical components of Divisia monetary aggregates at different levels of aggregation and the cyclical component of industrial production. We test for Granger causality running from the Divisia aggregates to industrial production and various other measures of real economic activity. We also reestimate a structural VAR based on earlier work by Leeper and Roush (2003) and Belongia and Ireland (2015, 2016), modifying that earlier work by using monthly rather than quarterly data and extending it, both by using broad as well as narrower Divisia monetary aggregates and by allowing for GARCH behavior in the structural shocks.

International Monetary Policy Spillovers

This paper explores for spillovers from monetary policy in the United States to a number of advanced countries, namely Canada, Denmark, the Eurozone, Japan, Sweden, Switzer- land, and the United Kingdom. We use monthly data, from January 1997 to December 2017, and a bivariate structural GARCH-in-Mean VAR to investigate the e¤ects of positive and negative U.S. monetary policy shocks, and also whether monetary policy uncertainty in the United States has had statistically signi…cant spillover e¤ects on each of the other advanced countries. Our evidence suggests that positive (negative) U.S. monetary policy shocks increase (reduce) the policy rate in each of the other countries, and that monetary policy uncertainty in the United States has a negative and statistically signi…cant e¤ect on the monetary policy rate of each of the other countries.

International Technology Diffusion via Goods Trade: Theory and Evidence from China

This paper develops a multi-product firm model of international trade with the endoge- nous decisions on export and import to study technology diffusion via goods trade. In our model, a firm’s productivity in a product is a combination of its general ability which applies to all the goods the firm produces and product expertise which applies only to a particular good. Within each firm, the decisions of export and import are based on product expertise. Technology diffuses via goods trade, therefore a firm can improve its productivity by reverse-engineering the imported advanced foreign prod- ucts. We use Chinese trade data to empirically analyze our theory. The results show that a firm will import the product in the category where it already has higher expertise, which is consistent with the theoretical prediction. We find that a firm’s productivity in a category gets improved when it imports in the same category, but only product expertise gets accumulated, not the firm ability.

Introduction to Internally Consistent Modeling, Aggregation, Inference, and Policy

Introduction to Macroeconomic Dynamics Special Issue on Dynamics of Oil and Commodities Prices

Markov Switching Oil Price Uncertainty

We investigate whether the United States economy responds negatively to oil price uncertainty and whether oil price shocks exert asymmetric e¤ects on economic activity. In doing so, we relax the assumption in the existing literature that the data are governed by a single process, modifying the Elder and Serletis (2010) bivariate structural GARCH-in-Mean VAR to accommodate Markov regime switching in order to account for changing oil price dynamics over the sample period. We find evidence of asymmetries, against those macroeconomic theories that predict symmetries in the relationship between real aggregate economic activity and the real price of oil.

Minimum Wage, Selection and Welfare: A General Equilibrium Analysis

I study the effects of a permanent increase in minimum wage on unemployment, income and welfare in a general equilibrium setting. The increase in minimum wage affects the demand for labor on both intensive and extensive margins. On the intensive margin, individual firms respond to the increase by reducing their demand for low-wage workers. One the extensive margin, the increase affects the equilibrium number of firms by altering their incentives to enter and exit. I build on the general equilibrium model in Hopenhayn and Rogerson (Journal of Political Economy, October 1993, volume 102, issue 5, pp. 915--938) to quantify these effects. There are three types of consumers in my model: type 1 are the minimum-wage earners; type 2 are other workers; and type 3 are entrepreneurs who own firms and consume profits. Firms are heterogenous with respect to productivity and produce according to a labor-only decreasing-returns-to-scale constant-elasticity-of-substitution production function. The model features entry and exit, and the cost of entry is positively related to the mass of entrants. I calibrate the model to US data and use it to quantify the effects of a counterfactual 25% permanent increase in minimum wage. In my preferred post-increase scenario, in which the wages of other workers are downward rigid, overall unemployment increases by 3.2%, and income and welfare decrease by 2.1% and 1.5%, respectively. On the intensive margin, the average firm size (as measured by the number of workers) is 1.4% smaller. On the extensive margin, there are 1.7% fewer firms in the new equilibrium.

Monetary and Fiscal Policy Switching with Time-Varying Volatilities

Monetary Policy and Leverage Shocks

Money, Velocity, and the Stock Market

Notes on Foreign Aid Selectivity Based on Human Capital

In order to achieve developmental goals more effectively, international communities have paid increasing attention to the pros and cons of "Aid Selectivity." However, the empirical results on the effects of international aid on economic growth in the recipient countries are mixed. This note proposes a theoretical framework to reconcile those mixed findings on aid effectiveness. In particular, I focus on the growth consequences of a poverty-efficient aid allocation in the recipient’s economy, and theoretically illustrate that an important determinant of aid efficacy is the achieved growth of human capital accumulation in recipient countries.

One Sided Matching: Choice Selection With Rival Uncertain Outcomes

Optimal Educational investment Programme in an Economic Planning Model

Press and Leaks: Do Newspapers Reduce Toxic Emissions?

This paper investigates whether media presence affects corporate environmental decisions. Using data on plant-level toxic emissions in 1996-2009 from the US Environmental Protection Agency's Toxics Release Inventory and newly collected data on newspapers locations and content, I find that an increase in the number of newspapers near a plant raises the press coverage of the plant's toxic emissions and reduces the amount of these emissions. The effect of newspapers on toxic emissions is specific to industries that produce consumer goods, and is larger in counties that were subject to extreme levels of cancer incidence in the recent past.

Removing Disability Insurance Coverage: The Effects on Work Incentive and Occupation Choice

This paper studies how removing disability insurance coverage affects workers' work incentive and occupation choice. To do so, we exploit the 1997 Canadian Pension Plan (CPP) disability program reform, which required longer work experience for individuals to be eligible for disability insurance. The empirical strategy includes difference-in-difference and triple-difference estimations. The results show that the reform significantly increased work incentive for male individuals with a long non-employment spell. However, the rise in work incentive increased only unemployment, not employment. We also find that the reform barely affected the distribution of employment across occupation.

Residential Wireline Telecommunications Services in Canada: Primary Exchange Services and Broadband 2015

This report is a survey and compilation of the data available that documents aspects of residential telecommunications services in Canada. The two residential telecommunication services are local telephony (primary exchange services) and high speed internet access (broadband). The data compiled documents performance measures, including prices, output, and quality, and metrics relevant to assessing competition.

“Should Archie Marry Betty or Veronica?” in Twelve-Cent Archie, 2015, Bart Beaty (ed.), Rutgers.

Stochastic Volatility Demand Systems

Technical Change in U.S. Industries

We use the normalized quadratic cost function, introduced by Diewert and Wales (1987),to measure and analyze the rate and biases of technical change at the sectoral level in eleven major U.S. industries - manufacturing, construction, mining, agriculture, finance, health, wholesale, transportation, education, hospitality, and utilities - using annual KLEM (capital, labor, energy, and intermediate materials) data from the World KLEMS database, over the period from 1947 to 2010. We extend the work in Feng and Serletis (2008), by taking a new approach to econometric modeling, merging the econometric approach to productivity measurement with recent state-of-the-art advances in financial econometrics. In particular, we relax the homoskedasticity assumption and instead assume that the covariance matrix of the errors of the flexible interrelated factor demand systems is time-varying. We also pay explicit attention to theoretical regularity, treating the curvature property as a maintained hypothesis, thus achieving superior modeling in the context of a parametric nonlinear factor demand system that captures certain important features of the data.

The Coevolution of Beliefs and Networks

Social psychologists have shown that people experience cognitive dissonance when two or more of their cognitions diverge, and that they actively manage the dissonance. With this in mind, we develop a model of social learning in networks to understand the coevolution of beliefs and networks. We focus on beliefs concerning an objective phenomenon. Initial beliefs are based on noisy, private and unbiased information. Because the information is noisy, initial beliefs differ,creating dissonance. In our model, behavior is motivated by a desire to minimize this dissonance. In many circumstances this behavior adversely affects the efficiency of social learning, such that in equilibrium the mean aggregate belief is biased and there is significant variation of beliefs across the population. The parameterizations of our model that result in the most inefficient learning produce a fractionalized network structure in which there are a number of distinct groups: within any group all beliefs are identical; beliefs differ from group to group, sometimes greatly; there is no intergroup interaction. Since dissonance minimizing behavior is apparently a deeply rooted feature of humans, we are led to ask: What policies could improve the situation? Our results suggest that policies that improve the availability of objective information and/or increase the size of networks enhance efficiency of social learning. On the other hand, anything that makes changing networks more attractive as a dissonance minimizing strategy has the opposite effect. 1

The Demand for Gasoline: Evidence from Household Survey Data

The Impact of Foreign Investment Restrictions on the Stock Returns of Oil Sands Companies

On December 7, 2012 the Government of Canada released a policy statement and revised the guidelines for investments by State-Owned Enterprises in the Canadian oil sands. This policy statement was in response to the proposed purchase of Nexen by the Chinese SOE, CNOOC. According to the new guidelines, foreign investors must convince the Minister of Industry that a particular investment is likely to be of net benefit to Canada and those investments by foreign SOEs to acquire controlling interests in a Canadian oil sands company will be found to be of net benefit on an exceptional basis only. The purpose of this paper is to examine the impact of this announced policy change on the stock returns of firms operating in the oil sands. We employ an event study analysis to examine the impact of the policy change on the oil sands share price return after the announcement. We find that the announced changes to foreign investment in the oil sands significantly reduced stock returns in that industry and had a much larger negative impact on smaller oil sands companies (the juniors).

The market for motion pictures in Thailand: Rank, revenue, and survival at the box office

We examine the theatrical market for moti on pictures in Thailand using a sample of films exhibited in 2004–2008. Using data on weekly and cumulative film revenues, we find strong evidence of increasing returns to info rmation as indicated by substantial concave departures from the Pareto size distribution. The distribution of cumulative revenues across films is consistent with the winner-take-all nature of an elimination tournament. In contrast to other markets dominated by Hollywood imports, se veral of the top-earning films in Thailand are domestically produced

The Twin Supply Shocks to Canada's Post-Pandemic Inflation and Monetary Policy

Canada's inflation rate rose from 3.1 percent in June 2021 to 8.1 percent one year later. Monetary policy is consequently tightening. We explore some causes and consequences of these developments. Using detailed price and quantity data, we separately identify demand- from supply-driven inflation. We find two-thirds of Canada's accelerating inflation since Q1 2020 is supply-driven, which complicates monetary policy. Another supply shock --- large increases in bank reserves --- may complicate it further. We estimate that ample reserves and rising interest rates may cause large financial losses for the Bank of Canada. This creates novel reputational and communications challenges for the Bank and highlights underappreciated connections between monetary and fiscal policy. These twin supply shocks --- to consumer products and overnight balances --- are important aspects of Canada's recent inflation and monetary policy experiences.

The Twin Supply Shocks to Canada’s Post-Pandemic Inflation and Monetary Policy

Canada’s inflation rate rose from 3.1 percent in June 2021 to 8.1 percent one year later. Monetary policy is consequently tightening. We explore some causes and consequences of these developments. Using detailed price and quantity data, we separately identify demand-from supply-driven inflation. We find two-thirds of Canada’s accelerating inflation since Q1 2020 is supply-driven, which complicates monetary policy. Another supply shock — large increases in bank reserves — may complicate it further. We estimate that ample reserves and rising interest rates may cause large financial losses for the Bank of Canada. This creates novel reputational and communications challenges for the Bank and highlights underappreciated connections between monetary and fiscal policy. These twin supply shocks — to consumer products and overnight balances — are important aspects of Canada’s recent inflation and monetary policy experiences.

"Transmission Capacity and the Welfare Effects of Electricity Market Interaction"

User Costs, the Financial Firm, and Monetary and Regulatory Policy

We investigate how key monetary policy instruments and financial regulation affect the banking firm. We take the user cost approach to the construction of prices for financial services and use quarterly data on the U.S. commercial banking sector, over the period from 1992 to 2016, obtained from the Federal Deposit Insurance Corporation. We use the symmetric generalized Barnett variable profit function to derive demands for and supplies of monetary and non-monetary goods and provide evidence consistent with neoclassical microeconomic theory. We find that the compensated price elasticities of banking technology are small in magnitude. Yet a hypothetical policy experiment shows that even small changes in the holding costs of financial goods can result in significant changes in user costs and the quantities demanded and supplied.

Waste Import Bans and Environmental Quality: Evidence from China's Electronic Waste Disposal Towns

In 2018, the Chinese government introduced a ban on a variety of imported waste, including waste plastics from living sources. Beginning in 2021, the ban expanded to include all foreign solid waste. This paper investigates the impact of the current ban on the air quality of China's electronic waste (e-waste) disposal towns. Using a daily panel of China's major e-waste disposal hubs from 2017 to 2019, we estimate the effect of the ban on air pollution within Difference-in-Difference (DID) and Regression Discontinuity (RD) frameworks: We find that local air pollution decreased by 15%--28% due to the ban. We also find the imported-waste ban is cost effective: the potential health benefits considerably outweigh the extra cost borne by downstream industries using recycled e-waste as an input. China's air quality improvement informs similar policies on waste import control being considered by other developing countries.

"Why Market Power? A Direct Measurement of Market Efficiency"