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The other type is called ex-post heterogeneity which refer to the conflict (of interests) arising due to distributional implications of the public policy. Thus when a public policy has some distributional consequences, representative agents will be in conflict over distribution due to their respective "self interests". Ex-ante heterogeneity is important not only for distributive implications but also for understanding of the political aspects of the representative agents. It is also important in understanding of the time inconsistency problem of the policy process which arises when a policy maker maximizes welfare of a ‘representation agents'. In such situation, agents may, with respect to policy benefits, be identical ex-ante but are not identical ex-post.
Among non-political dimensions, we find markets being driven by heterogeneity but then the effects of heterogeneity are quite different. Further, in multiple agent welfare economics ex-ante and ex-post heterogeneity of agents is central to the analysis of optimal policy. Here it should be understood that welfare economics takes multi agent objective function as given, and weights the importance of heterogeneous agents for social welfare. Here ‘opinions' of different agents are taken as exogenous while determining the policy outcomes. Thus the focus of analysis remains only the calculations of optimal policy given the objective function.
In contrast, in public process, the main focus is often the endogenous determination of the objective which is maximized implicitly. Here weighs of the implied objective function are not exogenous. They are determined by the political process which in turn determines the outcome of the policy.
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Probelm 1: (a) What are the main roles of Government in the economic development of a country? (b) What are some of the emerging issues affecting the role of Government?
It has been accepted to most policy and development economists that among the most important sets of institution in an economy are those that provide for enforcement of contracts.
The term Public Economics came into existence only in 1960s however a few titleswith nomenclature such as Public Finance had already started covering much ground,which is today cov
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1.Suppose you are interested in assessing the value of a statistical life for individuals. You ?nd a dataset on risk and wages. You consider running the following OLS regression.
1. is pareto improved demonstrated using the edgeworth box daigram?
Question 1: Briefly (three or four paragraphs) give reasons for your answer. (a) In studying the public sector, economists should use either positive or normative economics
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