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International Comparison of Income, Prices and Production
May 22-23, 2015
CERGE-EI, Prague

FRIDAY, May 22, 2015

Session I: International Comparisons of Living Standards and Prices

9:30–10:30     
International Comparisons of Living Standards with Heterogeneous Tastes
Ingvild Almås, NHH (with Ian Crawford and Peter Neary)

10:45–11:45  
International Comparisons of Prices Using Spatial Chaining: Weighted-GEKS and Shortest Paths
Robert Hill, University of Graz (with Prasada Rao, Sriram Shankar and Reza Hajargasht)

11:45-12:00    
World Bank research on PPP applications and big data to inform the ICP
Nada Hamadeh, World Bank

Session II: Collecting Prices across Borders

1:00–2:00       
Cross-Country Comparison of Prices from the Billion Prices Project
Alberto Cavallo, MIT Sloan

2:15–3:15       
Price setting in online markets: Basic facts, international comparisons, and cross-border integration
Oleksandr Talavera, University of Sheffield (with Yuri Gorodnichenko)

3:30–4:30       
How High are Prices in China, and Why?
Robert Feenstra, UC Davis (with Alexis Antoniades and John Romalis)

SATURDAY, May 23, 2015

Session III: Wages and Prices over Time and Space

8:45–9:45        
Prices and Poverty: the Political Lives of Numbers
Angus Deaton, Princeton University

10:00–11:00
Porridge to Progress:  World Development Through the Lens of Wage and Price History
Robert Allen,University of Oxford

11:15–12:15   
Cross-country Income Levels Over Time: Did the Developing World Suddenly Become Much Richer?
Robert Inklaar, University of Groningen (with Prasada Rao)

Session IV: Housing, Prices, and Output Accounting

1:15–2:15       
Housing Demand and Expenditures: How Rising Rent Levels Affect Behavior and Costs-of-Living over Space and Time
David Albouy, University of Illinois (with Gabriel Ehrlich and Yingyi Liu)

2:30–3:30       
Using Micro-data to Improve Measures of International Price Comparisons
Alexis Antoniades, Georgetown University (with Prasada Rao and Robert Hill)

3:30–4:30       
A McWage Check on Output Accounting
Štěpán Jurajda, CERGE-EI (with Orley Ashenfelter)

Please note that registration to the conference has been closed.

The conference is organized jointly with UC Davis.

Facundo Piguillem, Ph.D.

Einaudi Institute for Economics and Finance, Rome, Italy

Authors: Facundo Piguillem and Alessandro Riboni

Abstract: In modern democracies public policies are negotiated by elected policymakers. When they agree to replace the current status quo, the approved policy becomes the status quo in the next period. Yet, these two ingredients, bargaining and endogenous status quo, are absent in most macroeconomic models. We revisit the classical capital taxation problem adding legislative bargaining with an endogenous status quo. We analyze a growth model where agents (legislators and consumers) are heterogenous in wealth. We find that legislators may not propose or accept high taxes because doing so may improve, via a change of the status quo, the bargaining power of "poorer" legislators in future negotiations. On average equilibrium capital taxes are between 12% and 55%, depending on the distribution of wealth and other variations on the institutional environment. We also find that a large status quo bias could lead to political growth cycles: decades with low taxes and growing capital are followed by decades with high taxes and decreasing capital (and vice versa).

JEL Classification: E6, H0.

Keywords: Redistribution, Time Consistency, Capital taxes, Legislative Bargaining, Markov-perfect Equilibria, Political Growth Cycles.

Full Text:  “Dynamic Bargaining over Redistribution in Legislatures”