Applied Welfare Economics

Hardcover | May 15, 2005

byChris Jones

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Applied Welfare Economics uses important results in the welfare economics literature to extend a conventional Harberger cost-benefit analysis. After reviewing the properties of different welfare measures a conventional welfare equation is used to evaluate marginal policy changes in a generalequilibrium economy with tax distortions. The analysis is extended to accommodate trade and income taxes, time, internationally traded goods, and non-tax distortions, including externalities, non-competitive behaviour, public goods and price quantity controls. The welfare analysis is developed instages, and where possible is explained using diagrams, to make it more adaptable to the different institutional arrangements encountered in applied work. With this in mind, computable welfare expressions are solved using demand and supply elasticities for each good. The lump-sum transfers used in aconventional analysis to separate welfare effects are carefully examined to identify the role of the marginal social cost of public funds (MCF) in policy evaluation. The main contribution in the book is to separate income effects for marginal policy changes in the shadow value of government revenue,which converts efficiency effects into dollar changes in private surplus. It is a scaling coefficient that makes income effects irrelevant in single (aggregated) consumer economies, and conveniently isolates distributional effects in heterogeneous consumer economies. The decomposition is used totest for Pareto improvements, and to examine the separate but related roles of the shadow value of government revenue and the MCF in applied work.

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Applied Welfare Economics uses important results in the welfare economics literature to extend a conventional Harberger cost-benefit analysis. After reviewing the properties of different welfare measures a conventional welfare equation is used to evaluate marginal policy changes in a generalequilibrium economy with tax distortions. The...

Chris Jones is Senior Lecturer in Economics at the Australian National University. He has also held positions in the Department of Health in Western Australia and the Reserve Bank of Australia.
Format:HardcoverDimensions:332 pages, 9.21 × 6.14 × 0.9 inPublished:May 15, 2005Publisher:Oxford University PressLanguage:English

The following ISBNs are associated with this title:

ISBN - 10:0199281971

ISBN - 13:9780199281978

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Table of Contents

1. Measuring welfare changes- a brief overview2. Conventional shadow prices3. Distributional effects4. Non-tax distortions in markets5. International trade6. Revised shadow prices7. The marginal social cost of public funds8. Time and the social discount rate9. Optimal commodity taxation10. The optimal provision of public goods11. Problems