Template-type: ReDIF-Paper 1.0 Author-Name: Christos Koulovatianos Author-Name: Carsten Schroder Author-Name: Ulrich Schmidt Title: On the Income Dependence of Equivalence Scales Keywords: equivalence scales, survey method, independence of base Abstract: We suggest a simple survey method for obtaining direct subjective estimates of equivalence scales, also appropriate for testing whether equivalence scales depend on reference-household income. We implement our approach in two countries, Germany and France. In both countries independence of base is rejected. In particular, we find that equivalence scales depend negatively on reference income, an indication of increasing economies of scale in household consumption as living standards go up. Our estimation method is non-parametric, and it allows us to test generalized equivalence-scale exactness, which is not rejected in any of our samples. Length: 41 pages Creation-Date: 2004-02 File-URL: http://papers.econ.ucy.ac.cy/RePEc/papers/1-2004.pdf File-Format: Application/pdf Handle: RePEc:ucy:cypeua:1-2004 Template-type: ReDIF-Paper 1.0 Author-Name: Christos Koulovatianos Author-Name: Leonard J. Mirman Title: Endogenous Public Policy and Long-Run Growth Keywords: voting, second-best taxation, endogenous growth Abstract:. We study the determinants of voting outcomes on the provision of public consumption through marginal income taxes in the context of the simple linear growth model. We focus on how the dynamic politicoeconomic equilibrium maps the economic fundamentals to policies and long-run growth. We find that in a deterministic growth environment voters internalize, although imperfectly, the deadweight losses of taxation and vote for lower taxes when the productivity of capital is higher. Therefore, the politicoeconomic channel reinforces the positive role of productivity for growth. In a stochastic environment, we find that if business cycles are driven by productivity shocks in the endogenous growth framework, equilibrium policies imply that taxes should fall in high growth periods and rise in low-growth periods. In line with existing evidence, our model predicts procyclical public consumption and countercyclical public consumption GDP shares. Length: 31 pages Creation-Date: 2004-02 File-URL: http://papers.econ.ucy.ac.cy/RePEc/papers/2-2004.pdf File-Format: Application/pdf Handle: RePEc:ucy:cypeua:2-2004 Template-type: ReDIF-Paper 1.0 Author-Name: Sofronis Clerides Author-Name: Paris Nearchou Author-Name: Panos Pashardes Title: Intermediaries as Quality Assessors in Markets with Asymmetric Keywords: intermediaries, middlemen, asymmetric information, tourism industry. Abstract:. Intermediaries often arise in order to facilitate trade in markets characterized by asymmetric information. In this paper we study the intermediary role of tour operators in the market for package tourism. Policymakers have tried to address information asymmetries in this market by providing hotel ratings. We show that those ratings are not accurate indicators of quality and that tour operators play a vital role by pooling together information about different holiday destinations and providing their own ratings of accommodations. We also find that significant price variation exists across countries, and that some countries systematically under- or over-rate their hotels. Length: 26 pages Creation-Date: 2004-02 File-URL: http://papers.econ.ucy.ac.cy/RePEc/papers/3-2004.pdf File-Format: Application/pdf Handle: RePEc:ucy:cypeua:3-2004 Template-type: ReDIF-Paper 1.0 Author-Name: Nikos Benos Title: Education Policies and Economic Growth Keywords: Public goods, human capital, growth, economic policy. Abstract: This paper studies the general equilibrium implications of two types of education policy in an overlapping generations growth model with second-best policy. We examine vouchers, which augment inherited private education spending, and public investment on economy-wide human capital, that provides economy-wide externalities to individual human capital accumulation. The government determines jointly the allocation of tax revenues among the two types of education policy and tax policy, subject to the competitive decentralized equilibrium. Using plausible parameter values it is shown that it is socially optimal to spend heavily on economy-wide human capital accumulation and finance government spending by a modest proportional tax on initial human capital and a low tax on inherited private education expenditures. Length:32 pages Creation-Date: 2004-07 File-URL: http://papers.econ.ucy.ac.cy/RePEc/papers/4-2004.pdf File-Format: Application/pdf Handle: RePEc:ucy:cypeua:4-2004 Template-type: ReDIF-Paper 1.0 Author-Name: Sofronis Clerides Author-Name: Costas Hadjiyiannis Title: Trade-Inducing Quality Standards for Used Durables Keywords: quality standards, durable goods, used durables, trade in used goods Abstract: We construct a theoretical framework to study the impact of asymmetric quality standards on used durable goods on trade flows, profits and consumer welfare. We show that asymmetry in quality standards generates trade in used goods from high to low standard countries while at the same time reducing trade in new goods. The industry in the exporting country benefits from this change while consumers lose out. Consumers in the importing country are the biggest beneficiaries, but domestic industry is hurt. These results suggest that quality standards on used goods are a powerful policy tool whose use should be monitored by the WTO. Length: 27 pages Creation-Date: 2004-12 File-URL: http://papers.econ.ucy.ac.cy/RePEc/papers/5-2004.pdf File-Format: Application/pdf Handle: RePEc:ucy:cypeua:5-2004 Template-type: ReDIF-Paper 1.0 Author-Name: Sofronis Clerides Title: Gains from Trade in Used Goods: Evidence from the Global Market for Automobiles Keywords: automobile industry, differentiated products, gains from trade, used goods, trade liberalization Abstract: This paper investigates the welfare effects of trade liberalization by exploiting a natural policy experiment in the small open economy of Cyprus. A 1993 law relaxed import restrictions on used vehicles and facilitated the flow of used Japanese vehicles into the country. This led to a dramatic shift of consumer purchases from new to used cars and a substantial expansion of the overall market. Estimated welfare gains are of the order of several hundred dollars per purchaser. The findings are indicative of the potential for substantial gains from liberalizing trade in used goods, which could also alter trade flows and production Length: 25 pages Creation-Date: 2004-12 File-URL: http://papers.econ.ucy.ac.cy/RePEc/papers/6-2004.pdf File-Format: Application/pdf Handle: RePEc:ucy:cypeua:6-2004