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Creator: Dahl, David S. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 052 La description:
Second cover page indicates report dated February 12, 1976.
Mot-clé: State government, Local government, Ninth district economy, and Expenditures Assujettir: H50 - National Government Expenditures and Related Policies: General and H72 - State and Local Budget and Expenditures
Creator: Stutzer, Michael J. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 350 Mot-clé: Intergovernmental aid, Tax policy, Minnesota, Local government aid, Tax reform, Public finance, and LGA Assujettir: R51 - Finance in Urban and Rural Economies and H71 - State and Local Taxation, Subsidies, and Revenue
Creator: Bridgman, Benjamin, Maio, Michael, Schmitz, James Andrew, and Teixeira, Arilton Series: Staff report (Federal Reserve Bank of Minneapolis. Research Department) Number: 477 Abstract:
Beginning in the early 1900s, Puerto Rican sugar has entered the U.S. mainland tariff free. Given this new status, the Puerto Rican sugar industry grew dramatically, soon far outstripping Louisiana’s production. Then, in the middle 1960s, something amazing happened. Production collapsed. Manufacturing sugar in Puerto Rico was no longer profitable. Louisiana, in contrast, continued to produce and grow sugar. We argue that local economic policy was responsible for the industry’s demise. In the 1930s and 1940s, the local Puerto Rican government enacted policies to stifle the growth of large cane-farms. As a result, starting in the late 1930s, farm size fell, mechanization of farms essentially ceased, and the Puerto Rican sugar industry’s productivity (relative to Louisiana) rapidly declined until the industry collapsed. The overall Puerto Rican economy also began to perform poorly in the late 1930s. In particular, Puerto Rico’s per capita income was converging to that of the poorest U.S. states until the late 1930s, but since then it has lost ground to these states. One naturally wonders: was the poor overall performance of the Puerto Rican economy also the result of policy? We show that Puerto Rico embarked on other economic policies in the early 1940s that proved to be major setbacks to its economic development.
Mot-clé: Industrial policy, Sugar, Puerto Rico , and Land Assujettir: N56 - Economic History: Agriculture, Natural Resources, Environment, and Extractive Industries: Latin America; Caribbean and L52 - Industrial Policy; Sectoral Planning Methods
Creator: Hevia, Constantino and Nicolini, Juan Pablo Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 726 Abstract:
We study a model of a small open economy that specializes in the production of commodities and that exhibits frictions in the setting of both prices and wages. We study the optimal response of monetary and exchange rate policy following a positive (negative) shock to the price of the exportable that generates an appreciation (depreciation) of the local currency. According to the calibrated version of the model, deviations from full price stability can generate welfare gains that are equivalent to almost 0.5% of lifetime consumption, as long as there is a significant degree of rigidity in nominal wages. On the other hand, if the rigidity is concentrated in prices, the welfare gains can be at most 0.1% of lifetime consumption. We also show that a rule - formally defined in the paper - that resembles a "dirty floating" regime can approximate the optimal policy remarkably well.
Mot-clé: Dutch disease, Foreign exchange intervention, and Inflation targeting Assujettir: F31 - Foreign Exchange and F41 - Open Economy Macroeconomics
Creator: Hevia, Constantino and Nicolini, Juan Pablo Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 702 Abstract:
We analyze optimal policy in a simple small open economy model with price setting frictions. In particular, we study the optimal response of the nominal exchange rate following a terms of trade shock. We depart from the New Keynesian literature in that we explicitly model interna-tionally traded commodities as intermediate inputs in the production of local final goods and assume that the small open economy takes this price as given. This modification not only is in line with the long-standing tradition of small open economy models, but also changes the optimal movements in the exchange rate. In contrast with the recent small open economy New Keynesian literature, our model is able to reproduce the comovement between the nominal exchange rate and the price of exports, as it has been documented in the commodity currencies literature. Although we show there are preferences for which price stability is optimal even without flexible fiscal instruments, our model suggests that more attention should be given to the coordination between monetary and fiscal policy (taxes) in small open economies that are heavily dependent on exports of commodities. The model we propose is a useful framework in which to study fear of floating.
Mot-clé: Optimal monetary policy, Terms of trade shocks, Devaluations, and Small open economy Assujettir: F41 - Open Economy Macroeconomics and E52 - Monetary Policy
Creator: Stolz, Richard W. Series: Staff report (Federal Reserve Bank of Minneapolis. Research Department) Number: 011 Abstract:
Although many studies have investigated the relationship between market structure and the prices of bank services, most have been concerned with metropolitan areas. These studies generally have used bank balance sheet and income statement ratios as bank conduct proxies. Moreover, prior studies have approximated local banking markets with county or SMSA boundaries.
This study develops a methodology for delineating the geographic boundaries of local banking markets through the use of secondary economic and demographic data. This methodology is utilized to delineate rural banking markets in the states of Iowa, Minnesota, and Wisconsin. The relationship between those markets and rural bank conduct is investigated. Conduct is measured with explicit price and nonprice information generated by telephone survey.
The market determination methodology is based on the assumption that people will bank where they live, work, or obtain goods and services. Using a classification system which categorizes communities according to variety and amount of retail business transactions, a gradient concept is developed which initially approximates market boundaries according to local minima in the gradient.
This procedure, which determines where residents are likely to shop, is supplemented with commuting data based on minor civil divisions to determine where residents work. The resulting “areas of convenience” designate the locale where local customers will ordinarily select banking services.
The natural banking markets determined for the entire state of Minnesota are compared with banking markets approximated by county or SMSA boundaries. The counties or SMSAs are allowed to underestimate or overestimate the natural market by as much as 30 percent of total deposits before being classified as unacceptable approximators. According to these criteria, 61 percent of the counties and SMSAs are found to be unacceptable approximators. When the criteria are tightened to permit only 10 percent underestimation or overestimation, 79 percent of the counties and SMSAs are rated unacceptable. This implies that researchers and policy makers should be cautious about approximating local banking markets with political boundaries. Additional methods for testing the procedure and making it operational are suggested.
The methodology is used to delineate local banking markets in Iowa, Minnesota, and Wisconsin. Twenty-five rural markets are randomly selected from each state. A total of 333 banks from these markets forms the basis for the structure-conduct analysis. These banks are surveyed by telephone to determine explicit price and nonprice information.
Three estimation models (linear, hyperbolic, and cubic) are developed to analyze the relationship between rural bank market structure and the survey variables. The basic linear model generally provides the best fit.
Increases in concentration are significantly associated with increases in the rates rural banks charge on each type of loan included in the study. Moreover, increases in market share are significantly associated with increases in nonprice effort. Consequently, policy makers are confronted with selecting between: (1) higher prices and increased provision of ancillary banking services, or (2) lower prices and less service.
Creator: Stutzer, Michael J. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 345 Mot-clé: Business tax, Rental tax, Tax policy, Property tax, Income tax, Tax distribution, Tax systems, and Tax burden Assujettir: H20 - Taxation, Subsidies, and Revenue: General and H71 - State and Local Taxation, Subsidies, and Revenue
Creator: Dinkelman, Taryn and Schulhofer-Wohl, Sam Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 700 Abstract:
The direct benefits of infrastructure in developing countries can be large, but if new infrastructure induces in-migration, congestion of other local publicly provided goods may offset the direct benefits. Using the example of rural household electrification in South Africa, we demonstrate the importance of accounting for migration when evaluating welfare gains of spatial programs. We also provide a practical approach to computing welfare gains that does not rely on land prices. We develop a location choice model that incorporates missing land markets and allows for congestion in local land. Using this model, we construct welfare bounds as a function of the income and population effects of the new electricity infrastructure. A novel prediction from the model is that migration elasticities and congestion effects are especially large when land markets are missing. We empirically estimate these welfare bounds for rural electrification in South Africa, and show that congestion externalities from program-induced migration reduced local welfare gains by about 40%.
Mot-clé: Migration, South Africa, Program evaluation, Welfare, Congestion, and Rural infrastructure Assujettir: O18 - Economic Development: Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure, O15 - Economic Development: Human Resources; Human Development; Income Distribution; Migration, H54 - National Government Expenditures and Related Policies: Infrastructures; Other Public Investment and Capital Stock, R13 - General Equilibrium and Welfare Economic Analysis of Regional Economies, H23 - Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies, and H43 - Project Evaluation; Social Discount Rate