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Institutional transparency makes future contingencies more easily predictable for investors. Greater transparency can be achieved through vertical and horizontal integration of policy rules, which may result in lower Knightian uncertainty (ambiguity). In a model based on cumulative prospect theory, for a given probability and payoff structure, expected return on investment is higher in more transparent countries; therefore, those countries attract more investment and grow faster than less transparent countries. Lower transparency may result in inherently higher volatility.

Corporate governance --- Investments --- Rate of return --- Investment return --- Investment yield --- Return on equity --- Return on investment --- ROI (Rate of return) --- Capital investments --- Profit --- Ratio analysis --- Risk-return relationships --- Investing --- Investment management --- Portfolio --- Finance --- Disinvestment --- Loans --- Saving and investment --- Speculation --- Governance, Corporate --- Industrial management --- Directors of corporations --- Econometric models. --- Insurance --- Investments: General --- Taxation --- Analysis of Collective Decision-Making: General --- Criteria for Decision-Making under Risk and Uncertainty --- Firm Organization and Market Structure --- Insurance Companies --- Actuarial Studies --- Taxation, Subsidies, and Revenue: General --- Investment --- Capital --- Intangible Capital --- Capacity --- Insurance & actuarial studies --- Public finance & taxation --- Macroeconomics --- Tax incentives

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Ambiguity, as opposed to uncertainty, reflects lack of sufficient information about distribution and payoffs of infrequent events. Reforms are infrequent events, undertaken in ambiguous second-best environments where bad reform outcomes are feasible. A general case for the gradualist reform strategy is that it may pay to defer some reforms until relevant information about possible reform outcomes and associated probabilities is revealed, and ambiguity is reduced over time. Gradualism may dominate the big bang strategy, if some of the reforms in a reform sequence are not sure bets and waiting costs do not dominate reversal costs under some information sets forthcoming over time. The relation to Ellsberg's Paradox is discussed. Some cases for and against gradualism are reviewed.

Investments: Options --- Macroeconomics --- Taxation --- Industries: Financial Services --- Environmental Economics --- Social Choice --- Clubs --- Committees --- Associations --- Positive Analysis of Policy-Making and Implementation --- Criteria for Decision-Making under Risk and Uncertainty --- Personal Income, Wealth, and Their Distributions --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- Environmental Economics: General --- Trade Policy --- International Trade Organizations --- Financial Institutions and Services: General --- Finance --- Environmental economics --- Public finance & taxation --- Personal income --- Options --- Environment --- Tariffs --- Financial sector --- National accounts --- Financial institutions --- Taxes --- Economic sectors --- Income --- Derivative securities --- Environmental sciences --- Tariff --- Financial services industry --- United States

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The recent Boskin Commission Report (1996) underscores a significant upward bias in CPI measurement in the United States. This may result in excessive cost-of-living adjustment (COLA) of some entitlements in the federal budget because COLA is indexed to CPI. This paper presents some evidence that overall CPI may be biased against lower income elderly households, the primary beneficiaries of COLA. Although a downward adjustment in CPI resulting in an across-the-board cut in COLA of entitlements may yield significant budgetary savings, it may result in a deterioration in income distribution against lower income elderly households.

Inflation --- Macroeconomics --- Public Finance --- Demography --- Price Level --- Deflation --- National Government Expenditures and Welfare Programs --- Social Security and Public Pensions --- Personal Income, Wealth, and Their Distributions --- Economics of the Elderly --- Economics of the Handicapped --- Non-labor Market Discrimination --- National Government Expenditures and Related Policies: General --- Population & demography --- Public finance & taxation --- Personal income --- Aging --- Consumer price indexes --- Expenditure --- National accounts --- Population and demographics --- Prices --- Income --- Population aging --- Price indexes --- Expenditures, Public --- United States

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Excess wages tax (EWT) is a tax-based incomes policy instrument introduced in many centrally-planned economies and still used in some FSU and Eastern European countries in transition. The main macroeconomic goal of EWT is to curb inflationary pressures by penalizing through taxation the “excessive” wage awards granted by enterprises in the course of wage and price liberalization. In this paper, effects of EWT on the behavior of a profit-maximizing enterprise under monopsony, its incidence on wages and profits, and its impact on inflation are analyzed. The effect of EWT on an enterprise that maximizes workers’ income is also examined with some observations on EWT’s impact on managerial behavior. Finally, recent experience with EWT is assessed and compared to that suggested by the model.

Labor --- Macroeconomics --- Corporate Taxation --- Business Taxes and Subsidies --- Fiscal Policies and Behavior of Economic Agents: Firm --- Firm Behavior --- Employment --- Unemployment --- Wages --- Intergenerational Income Distribution --- Aggregate Human Capital --- Aggregate Labor Productivity --- Wages, Compensation, and Labor Costs: General --- Wages, Compensation, and Labor Costs: Public Policy --- Labor Economics: General --- Labour --- income economics --- Corporate & business tax --- Minimum wages --- Wage adjustments --- Corporate income tax --- Taxes --- Minimum wage --- Corporations --- Taxation --- Labor economics --- Poland, Republic of

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