States are ill equipped to meet the challenges of a globalized world. The concept of citizenship with its rights and obligations, including the allegiance owed, is too narrowly defined to exist only between individuals and a state. Today, people identify with, and pay allegiance to, many organizations beyond the state. This paper suggests that citizenship could be extended further and be possible between individuals and quasi-governmental organizations, as well as non-governmental organizations, such as churches, clubs, interest groups, functional organizations and profit firms. Due to the larger set of types of citizenship individuals could choose from, their preferences would be better fulfilled and, due to the competition for citizens induced among organizations, the efficiency of public activity would be raised.
In their seminal paper, Bovenberg and De Mooij (1994) elucidate why an ecological tax reform will not yield a double dividend, i.e. fails to increase the efficiency of the tax system. The present paper slightly modifies the Bovenberg and De Mooij model by introducing money illusion. With this modification, an environmental tax reform that raises the price level may generate a double dividend, since the additional tax on the dirty good does not reduce labor supply. A prerequisite for the double dividend to occur is a sufficiently small elasticity of substitution between clean and dirty consumption. Moreover, accounting for money illusion always reduces the intertemporal gross cost of the tax reform.
"Moderne Ökonomie und Sozialpsychologie beschäftigen sich beide mit der Erklärung menschlichen Verhaltens. Dieser Artikel gibt eine Übersicht über die Interaktion zwischen den beiden Wissenschaften. Zum einen werden einige grundlegende Aspekte dieser Beziehung diskutiert; zum anderen werden die Ergebnisse neuerer empirischer Arbeiten dargestellt. Im Zentrum stehen Erweiterungen des ökonomischen Verhaltensmodells aufgrund (i) der begrenzten Rationalität der Menschen, (ii) des begrenzten Eigennutzes der Individuen und (iii) einem begrenzten Nutzenkonzept, welches der Ökonomik zugrunde liegt."
The paper analyzes the process of market selection of investment strategies in an incomplete asset market. The payoffs of the as-sets depend on random factors described in terms of a discrete-time Markov process. Market participants make dynamic investment de-cisions based on their observations and time. We show that a trader distributing wealth across available assets according to the relative expected returns eventually accumulates the entire market wealth. The result obtains under the assumption that the trader's strategy is asymptotically distinct from the CAPM strategy (prescribing in-vestment in the market portfolio). This assumption turns out to be essentially necessary for the conclusion.
This paper studies the performance of self-financing constant proportions trading strategies, i.e. dynamic asset allocation strategies that keep a fixed constant proportion of wealth invested in each asset in all periods in time. We prove that any self-financing constant proportions strategy yields a strictly positive exponential rate of growth of investor's wealth in a financial market in which prices are described by stationary stochastic processes and the price ratios are non-degenerate. This result might be regarded as being counterintuitive because any such strategy yields no increase of wealth under constant prices. We further show that the result also holds under small transaction costs, which is important for the viability of this approach, since constant proportions strategies require frequent rebalancing of the portfolio.
This paper studies a monetary economy with heterogenous agents in which trade takes place in a centralized market. Each agent is a potential producer and consumer of a service (or perishable good) but has stochastic preferences that determines his taste for the good in each period in time. Money serves as a medium of exchange as well as a store of value. We prove existence of stationary fix-price equilibria with exogenously given quantity of money in which transactions can take place at non-Walrasian prices. Precautionary savings, under- and oversupply, dynamics on moneynholdings, and the effects of changes in the quantity of money are discussed.
Globalization is often seen to result in a smaller (Liliput) or larger (Leviathan) state. But future public activity will be more flexible. Persons have multiple identities. They can be citizens of sub- and supra-national jurisdictions, semi- and non-governmental organizations and private units, even profit-oriented firms. Such attachment may be temporary, multiple or partial. To actively choose strengthens loyalty and identification, which raises the willingness to pay for publicly supplied services (in the sense of quasi-voluntary taxation). On the supply side, Functional, Overlapping and Competing Jurisdictions (FOCJ) will develop. Such flexibility of the future European integration will make it successful.
In this paper we analyze the long-run dynamics of the market selec-tion process among simple trading strategies in an incomplete asset market with endogenous prices. We identify a unique surviving finan-cial trading strategy. Investors following this strategy asymptotically gather total market wealth. This result generalizes findings by Blume and Easley (1992) to any complete or incomplete asset market.
An empirical investigation of the term structure (the relation of the long interest rate to the short interest rate) showed structural change as the deadline for the euro became closer. Our empirical analysis of the term structures (yield curves) in 12 OECD countries uncovers that econometrically estimated behavioural equations for most EMU countries were stable even in the light of the creation of the euro. This finding would seem to defy the Lucas Critique. However, the significant structural instability found for the euro area's core country Germany suggests that the Lucas Critique is relevant in the analysis of the impact of the creation (and future extensions) of EMU.
"Die Entlohnung von Topmanagern ist in den westlichen Industrieländern über die letzten Jahre markant angestiegen. Wir stellen verschiedene Ansätze dar, welche diese Entwicklung zu erklären versuchen, und prüfen sie auf ihren Erklärungsgehalt: (1) Die Entwicklung ist das Ergebnis eines gut funktionierenden Marktprozesses; sie beruht auf strukturellen Veränderungen auf der Nachfrage- bzw. auf der Angebotsseite des Managermarktes; (2) Die Entwicklung reflektiert ‚rent seeking': infolge von Marktunvollkommenheiten können Manager als Anbieter von Managementdienstleistungen die Nachfrage nach diesen Leistungen beeinflussen. Managerentlohnung wird dabei mit der Qualität der corporate governance in Verbindung gebracht; (3) Ein eigener Erklärungsvorschlag bringt die Entwicklung in den USA mit der Einführung von Offenlegungsvorschriften für Spitzenentschädigungen im Jahre 1992 in Zusammenhang: diese haben einen sich selbst verstärkenden Prozess der Referenzgruppenentlohnung in Gang gesetzt."
