Risk, Transaction Costs, and Tax Assignment: Government Finance in the Ottoman Empire

Risk and transaction costs often provide competing explanations of institutional outcomes. In this paper we argue that they offer opposing predictions regarding the assignment of fixed and variable taxes in a multi-tiered governmental structure. While the central government can pool regional risks from variable taxes, local governments can measure variable tax bases more accurately. Evidence on tax assignment from the mid-sixteenth century Ottoman Empire supports the transaction cost explanation, suggesting that risk matters less because insurance can be obtained in a variety of ways.

Monetary Policy Delegation, Contract Costs, and Contract Targets

We reconsider the optimal central banker contract derived in Walsh (1995). We show that if the government's objective function places weight (value) on the cost of the contract, then the optimal inflation contract does not completely neutralize the inflation bias. That is, a fraction of the inflation bias emerges in the resulting inflation rate after the central banker's monetary policy decision. Furthermore, the more concerned the government is about the cost of the contract or the less selfish (more benevolent) is the central banker, the smaller is the share of the inflation bias eliminated by the contract. No matter how concerned the government is about the cost of the contract or how unselfish (benevolent) the central banker is, the contract always reduces the inflationary bias by at least half. Finally, a central banker contract written in terms of output (i.e., incorporating an output target) can completely eradicate the inflationary bias, regardless of concerns about contract costs.

Transaction Costs, Production Costs, and the Passage of Time

No abstract available.

The Nature of Genetic Engineering and the Uses and Potential Abuses of Biotechnology

Over the past decade the topic of genetic engineering has been has been readily debated in the media, but often these debates consist of political rhetoric and fail to offer objective information on the methods and the potential benefits to human health and their environment. In truth, humans have been manipulating the genomes of organisms for thousands of years, and it has been an evolution of scientific knowledge that has led to the more precise methods of genetic engineering. This paper discusses how scientists utilize natural processes to alter the genetic constituents of both prokaryotic and eukaryotic organisms, benefits to human health and the environment, as well as potential misuses of biotechnology such as bioterrorism.