Papers by Ching-chong Lai
Macroeconomic (in)stability and endogenous market structure with productive government expenditure
Studies in Nonlinear Dynamics & Econometrics
We consider the congestion effect of productive government spending in a monopolistic competition... more We consider the congestion effect of productive government spending in a monopolistic competition model with endogenous entry, and analyze the possibility of local indeterminacy. Some main findings emerge from the analysis. First, the indeterminacy condition is independent of the monopoly power. Second, productive government expenditure can be a source of local indeterminacy, while a higher degree of public goods congestion lessens the beneficial effect of productive government expenditure, and therefore reduces the possibility of indeterminacy. Third, a higher degree of internal returns to scale is associated with a lower possibility for the emergence of indeterminacy when production externalities are present.
The B.E. Journal of Economic Analysis & Policy
This paper sets up an imperfectly competitive macroeconomic model that features the strategic int... more This paper sets up an imperfectly competitive macroeconomic model that features the strategic interaction between the patent-holding firm and licensees, and uses it to analyze the relevant macro-variables under various licensing arrangements. Some main findings emerge from the analysis. First, the equilibrium aggregate output and aggregate consumption under fixed-fee and royalty licensing regimes are always greater than those under the no licensing regime. Moreover, the equilibrium aggregate output and consumption under the fixed-fee licensing regime are always greater than those under the royalty licensing regime. Second, with the higher (lower) technology level the patent holder prefers the fixed-fee (royalty) contract. Third, welfare could be improved through technology transfer, and the level of welfare under the fixed-fee licensing regime is higher than that under the royalty licensing regime. Lastly, this paper discusses some extensions of the baseline model.
By allowing for various degrees of asset substitutability between bonds and agricultural products... more By allowing for various degrees of asset substitutability between bonds and agricultural products, this paper reexamines the robustness of the overshooting hypothesis of agricultural product prices. It is found, in both a closed economy and an open economy, that the crucial factor determining whether agricultural prices overshoot or undershoot their long-run response following an expansion in the money stock depends
Casino regulations and economic welfare
Canadian Journal of Economics/Revue canadienne d'économique, 2010
Abstract. This paper studies the entry and tax regulation of oligopolistically competitive privat... more Abstract. This paper studies the entry and tax regulation of oligopolistically competitive privately run casinos and government-run casinos in a jurisdiction. We highlight three important external effects from casino-style gambling: non-casino income creation, social disorder costs, and cross-border gambling. The laissez-faire equilibrium need not be overcrowding compared with regulated or government-run regimes. Entry regulation may lead to higher jurisdiction welfare than
Tax Evasion and Efficient Bargains
The Composition of Government Spending and the Assignment of Instruments to Targets in a Small Open Economy: Comment
Southern Economic Journal, 1990
How could the non-sustainable Easter Island have been sustained?
International Review of Economics & Finance, 2014
International Review of Law and Economics, 2000
This article revisits the Bowles-Garoupa model with regard to corruption and crime. We interpret ... more This article revisits the Bowles-Garoupa model with regard to corruption and crime. We interpret additional costs inflicted on a caught corrupt officer as psychological costs, and we incorporate social norms into these psychological costs. In the Bowles-Garoupa model, the deterrent effect of raising fines on crime is weakened but is not perverse in the presence of corruption. Here, due to
Environmental consciousness, economic growth, and macroeconomic instability
International Review of Economics & Finance, 2014
ABSTRACT This paper develops an endogenous growth model to examine the linkages between environme... more ABSTRACT This paper develops an endogenous growth model to examine the linkages between environmental consciousness and economic growth. It is found that macroeconomic instability can arise in a simple AK-type growth model when the pollution externality is present only in the agent’s utility function. It is also found that the impact of environmental consciousness on the economic growth rate is ambiguous. The economic systems (a decentralized versus centralized economy) and the ecological evolution (the specific pollution growth rate) are two crucial factors that determine the relationship between environmental consciousness and economic growth.
The Money-Creation Model: Graphic Illustration
The Journal of Economic Education, 2004
... NOTES 1. Ekelund and Delorme (1987) also propose a graphic illustration, similar to Thornton,... more ... NOTES 1. Ekelund and Delorme (1987) also propose a graphic illustration, similar to Thornton, Ekelund, and Delorme (1991), to address the money-creation process. 2. The graphic apparatus we developed is similar to Chen's ...
A Note on Inflation Targeting
The Journal of Economic Education, 2001
The Annals of Regional Science, 2004
This paper uses efficiency wage model embodying the firm's choice of location to show the existen... more This paper uses efficiency wage model embodying the firm's choice of location to show the existence of an optimal intermediate location without assuming a transport rate that increases with distance. Based on the viewpoint of Shapiro and Stiglitz, we demonstrate that the more time that the worker spends traveling to the plant, the higher will be the wage that the firm will need to pay to motivate the worker not to shirk. To avoid paying a higher wage, the firm may choose its optimal location at an intermediate rather than a polar location.
The Relative Performance of Macroeconomic Policies Under Alternative Exchange Rates with Wage Indexation and Rational Expectations: The Fleming Proposition Revisited
Scottish Journal of Political Economy, 1990
Scottish Journal of Political Economy, 2002
This paper illustrates a shirking-type efficiency wage model to explain why shorter working hours... more This paper illustrates a shirking-type efficiency wage model to explain why shorter working hours cause an ambiguous effect on employment as the empirical result. We find that shorter working hours have an uncertain impact on the work effort, and the relationship between work effort and shorter working time is a decisive factor in the employment effect of working time reduction. Moreover, it is also found that, given the zero profit constraint, the long-run employment effect of reducing working hours will intensify the short-run employment effect.
Is the Efficiency Wage Efficient? The Social Norm and Organizational Corruption
Scandinavian Journal of Economics, 2002
... Juin-jen Chang ... find that if the status quo bribery rate within the firm is high, social n... more ... Juin-jen Chang ... find that if the status quo bribery rate within the firm is high, social norms can no longer serve as a sufficient sanction against a corrupt supervisor; pandemic organizational corruption tends to generate a critical mass effectÐthe snowball effectÐwhich intensifies ...
Review of Development Economics, 2012
Using an endogenous growth model, this paper examines the growth and welfare effects of the alloc... more Using an endogenous growth model, this paper examines the growth and welfare effects of the allocation of foreign aid in the recipient economy. As public inputs are a productive factor, a rise in the allocation of aid to the public inputs increases growth and hence the welfare of the economy. However, raising the ratio of aid to pollution abatement may not help an economy, because it crowds out public inputs. Since public inputs are also partly financed by income taxation, the welfare-maximizing income tax rate is larger than the growthmaximizing rate, because a portion of the aid constitutes a lump-sum transfer and can increase household consumption and hence welfare.
Regional Science and Urban Economics, 2003
This paper uses the Anas [Regional Science and Urban Economics 22 (1992) 243] model to provide an... more This paper uses the Anas [Regional Science and Urban Economics 22 (1992) 243] model to provide an economic explanation of the cause of honeybee swarming. We assume that a honeybee is rational in choosing to stay in the old hive or to leave to build a new one. Rationality here refers to a bee's behavior to maximize the food (honey) that it can share or contribute. We show that all bees will live together when the total number of bees is small. As soon as the total number of bees grows over a threshold, half of the population will immediately swarm to another hive. Contrary to the traditional wisdom that the queen bee leads the swarm, our model demonstrates that swarming may be a collective action of the rational choices of many selfish individual bees.
Pacific Economic Review, 2002
This paper considers the choice between nominal income and money supply targeting in an open econ... more This paper considers the choice between nominal income and money supply targeting in an open economy with efficiency wages. The results show that, when real unemployment benefits are rigid, both nominal income and money supply targeting have the same stabilizing performance. On the contrary, if nominal unemployment benefits are rigid, then we come to a conclusion that either in the face of goods demand shocks or aggregate supply shocks, a sufficient condition for nominal income targeting to be preferable is that the income elasticity of money demand be less than unity.
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Papers by Ching-chong Lai