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The recent public economics literature involves an apparent consensus that income effects reduce the costs of raising revenues and hence increase the desirable level of public good provision. Higher taxes can indeed reduce the demand for leisure - and hence increase the supply of taxed labor - through income effects. However, the consensus is wrong because the income effects of taxes must be considered symmetrically with those from provision of public goods. This paper uses a model with multiple public goods and taxes to derive consistent measures of the marginal benefits of publicly-provided goods and their marginal social costs. With this model, the authors show that either compensated approaches excluding these income effects or uncompensated approaches including them may be used. If an uncompensated measure of the marginal cost of funds is used, however, the benefits of providing public goods should be adjusted with a simple, benefit multiplier not previously seen in the literature. Once this is done, the optimal level of public provision is independent of whether compensated or uncompensated approaches are used. Proper accounting for these income effects - or their omission using a compensated approach - appears to substantially raise the hurdle for government provision where there are substantial taxes bearing on labor.

Agriculture --- Budget constraints --- Consumers --- Debt Markets --- Economic performance --- Economic theory --- Economic Theory & Research --- Economics --- Economics literature --- Elasticity --- Emerging Markets --- Finance and Financial Sector Development --- Fiscal policies --- Fiscal policy --- Government expenditures --- Income --- Income effect --- Macroeconomics and Economic Growth --- Marginal benefits --- Marginal cost --- Normal good --- Private Sector Development --- Public good --- Public Sector Development --- Public Sector Economics --- Real income --- Tax revenues --- Taxation --- Taxation & Subsidies

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The Doha Round must be concluded not because it will produce dramatic liberalization but because it will create greater security of market access. Its conclusion would strengthen, symbolically and substantively, the WTO's valuable role in restraining protectionism in the current downturn. What is on the table would constrain the scope for tariff protection in all goods, ban agricultural export subsidies in the industrial countries and sharply reduce the scope for distorting domestic support - by 70 per cent in the EU and 60 per cent in the US. Average farm tariffs that exporters face would fall to 12 per cent (from 14.5 per cent) and the tariffs on exports of manufactures to less than 2.5 per cent (from about 3 per cent). There are also environmental benefits to be captured, in particular disciplining the use of subsidies that encourage over-fishing and lowering tariffs on technologies that can help mitigate global warming. An agreement to facilitate trade by cutting red tape will further expand trade opportunities. Greater market access for the least-developed countries will result from the "duty free and quota free" proposal and their ability to take advantage of new opportunities will be enhanced by the Doha-related "aid for trade" initiative. Finally, concluding Doha would create space for multilateral cooperation on critical policy matters that lie outside the Doha Agenda, most urgently the trade policy implications of climate change mitigation.

Aggregate demand --- Agriculture --- Economic Theory and Research --- Elasticity --- Emerging Markets --- Exports --- Financial crises --- Free Trade --- GDP --- Income --- International Economics & Trade --- International Trade --- Inventories --- Law and Development --- LDCs --- Multilateral trade --- Natural resources --- Private Sector Development --- Protectionism --- Public Sector Development --- Real income --- Trade barriers --- Trade Law --- Trade negotiations --- Trade policies --- Trade policy --- Trade reforms --- WTO

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There exist legal channels for informational lobbying of U.S. policymakers by foreign principals. Foreign governments and private sector principals frequently and intensively use this institutional channel to lobby on trade and tourism issues. The authors empirically study whether such lobbying effectively achieves its goal of trade promotion in the context of Caribbean tourism and it is the first paper to examine the potential for using foreign lobbying as a vehicle for development. They use panel data to explore and quantify the association between foreign lobbying by Caribbean principals and U.S. tourist arrivals to Caribbean destinations. A variety of sensitivity analyses support the finding of a strong association. The policy implications are obvious and potentially important for developing countries.

Accommodation and Tourism Industry --- Developed countries --- Developing countries --- Economic Theory and Research --- Environment --- Export earnings --- Hotels --- Industry --- International Economics & Trade --- Lobbying --- Macroeconomics and Economic Growth --- Protectionism --- Public Sector Corruption and Anticorruption Measures --- Public Sector Development --- Real income --- Tariff preferences --- Tourism --- Tourism and Ecotourism --- Trade Policy --- Trade promotion

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Commodity price increases associated with the entry of China, India, and other countries into the world economy have led to increased pressure on common-property renewable natural resources. The problem is particularly worrisome for economies that obtain a large share of their income from the exploitation of natural resources in the production of an exportable commodity. This paper contributes to the analysis by examining the issue in the framework of a general equilibrium dynamic model and by solving for both the steady state and the transition dynamics. The authors show that i) a resource-rich, capital-poor economy is more likely to be subject to a "natural resource curse" and complete (irreversible) depletion of natural resources; ii) the latter's likelihood rises with the relative commodity price and labor inflow; iii) a labor inflow under internal equilibrium results in a higher steady-state capital-labor ratio and manufacturing output, and unchanged natural resources and commodity output; iv) import and export taxes result in larger steady-state natural resources and commodity output and smaller capital stock and manufacturing output, and may prevent complete depletion of natural resources; and v) the latter may also be prevented through capital inflows (foreign aid), labor outflow ( liberalization of the North's immigration policy), improved regulation, technical change, and a production tax.

Agriculture --- Benchmark --- Capital markets --- Debt Markets --- Disequilibrium --- Economic Theory & Research --- Emerging Markets --- Equilibrium --- Finance and Financial Sector Development --- Full employment --- Health --- Income --- International trade --- Macroeconomics and Economic Growth --- Natural Resources --- Negative externalities --- Nutrition and Population --- Open economy --- Optimization --- Partial equilibrium analysis --- Political Economy --- Population Policies --- Price increases --- Private Sector Development --- Production functions --- Property rights --- Real income --- Trade balance --- Trade policy --- Utility function

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The recent public economics literature involves an apparent consensus that income effects reduce the costs of raising revenues and hence increase the desirable level of public good provision. Higher taxes can indeed reduce the demand for leisure - and hence increase the supply of taxed labor - through income effects. However, the consensus is wrong because the income effects of taxes must be considered symmetrically with those from provision of public goods. This paper uses a model with multiple public goods and taxes to derive consistent measures of the marginal benefits of publicly-provided goods and their marginal social costs. With this model, the authors show that either compensated approaches excluding these income effects or uncompensated approaches including them may be used. If an uncompensated measure of the marginal cost of funds is used, however, the benefits of providing public goods should be adjusted with a simple, benefit multiplier not previously seen in the literature. Once this is done, the optimal level of public provision is independent of whether compensated or uncompensated approaches are used. Proper accounting for these income effects - or their omission using a compensated approach - appears to substantially raise the hurdle for government provision where there are substantial taxes bearing on labor.

Agriculture --- Budget constraints --- Consumers --- Debt Markets --- Economic performance --- Economic theory --- Economic Theory & Research --- Economics --- Economics literature --- Elasticity --- Emerging Markets --- Finance and Financial Sector Development --- Fiscal policies --- Fiscal policy --- Government expenditures --- Income --- Income effect --- Macroeconomics and Economic Growth --- Marginal benefits --- Marginal cost --- Normal good --- Private Sector Development --- Public good --- Public Sector Development --- Public Sector Economics --- Real income --- Tax revenues --- Taxation --- Taxation & Subsidies