Economic Policies to Address the Environmental Consequences of Global Reuse

This paper summarizes a two-country model that solves for optimal tax rates to achieve efficiency in an economy with international trade in used consumer electronics. If only the developed nation can tax the disposal of e-waste, then the global Pareto Optimum can be obtained by either imposing an import tariff on used consumer electronics or subsidizing the return of e-waste for disposal in the developed country. The global Pareto Optimum can also be obtained by reducing the disposal tax in the developed country to a level below the external marginal cost of disposal should no other policy option be available.

Running Hot and Cold: Economic Liberalization and Foreign Direct Investment in Latin America by Sector

This article examines the effects of market–oriented economic reforms on foreign direct investment (FDI) flows to Latin America from 1985 to 2006. In contrast with most existing scholarship, we disaggregate FDI into its destination in the primary resource, manufacturing, and service sectors allowing us to determine that different kinds of investments exhibit distinct behavior. Notably, manufacturing FDI appears to be erratic; previous investment is not a predictor of current investment. FDI across sectors is associated with varying policy environments, with service and primary resource investment attracted to hosts with policies associated with more stable economic and political contexts. Overall, manufacturing FDI appears to function more like “hot” portfolio investment and is less likely to provide some of the positive spillover effects thought to be associated with more permanent FDI. These findings have an array of implications for economic, development, and industrial policies throughout Latin America and the developing world.

The Effect Of Conformity On Economic Decision Making

Inspired by research in the field of behavioral economics as well as social psychology, this study aimed to explore if conformity plays a role in the occurrence of herd behavior in the financial market. Participants received one of nine different versions of a survey either online or on paper. They answered questions related to riskiness when making decisions, dependency on others when making decisions, and investment preferences among other questions. In experimental conditions, participants were told the majority of investors, either sixty percent or eighty percent, invested in a certain stock or won a game. It was predicted that individuals would conform to the group behavior in both experimental conditions with the highest level of conformity in the high pressure to conform condition. Results of experiments revealed that when the overwhelming majority of other investors behaved a certain way (80%), participants were more likely to behave that same way. Results of the third experiment supported previous research stating that emotion affects economic decision-making and facilitates herd behavior.