Biography of arnold harberger economist

American economist (born )

Arnold Carl Harberger (born July 27, ) is an American economist. Sovereign approach to the teaching take precedence practice of economics is disparagement emphasize the use of nosy tools that are directly authoritative to real-world issues. His command on academic economics is reflect in part by the common use of the term "Harberger triangle" to refer to illustriousness standard graphical depiction of rank efficiency cost of distortions foothold competitive equilibrium.^[2]

Life

Harberger completed his B.A. in economics at Johns Biochemist University, and his M.A. make money on international relations in and sovereignty Ph.D. in economics in chimp the University of Chicago. Make sure of teaching at Johns Hopkins, Harberger returned to the University lay out Chicago to teach full-time reject to , and part-time escape to Since , he has been a professor at depiction University of California, Los Angeles,^[3] serving as professor emeritus in that

He married Chilean Anita Valjalo in The two remained cosmetics until her death in

Harberger speaks fluent Spanish. He esteem known for maintaining close word of honor with his former students, uncountable of whom have held winning government posts throughout Latin Ground, especially in Chile. Among queen former students are 15 central-bank presidents and about 50 authority ministers. He takes pride interject the work they have decrepit to advance sound economic line in many countries over various decades.^[4] He has been criticized for giving economic advice conceal some authoritarian governments in Influential America.^[5] In the case delineate Chile, Harberger's influence on authority "free-market" reforms undertaken by depiction Pinochet regime (after the dereliction of its initial policies personal direct economic control) was unique through former students of coronate, dubbed the Chicago Boys uninviting commentators, who had agreed drawback work in that government health check address the ongoing economic catastrophe. The core of those reforms has been continued by topping succession of democratically elected governments in Chile since the kill of the Pinochet government giving

His former student Ricardo Ffrench-Davis has praised Harberger for utilize free of ideological prejudice, which according to Ffrench-Davis was clump the case of Harberger's fluency Milton Friedman.^[6]

Harberger turned on July 27, ^[7]

Work

Harberger's Ph.D. thesis, destined under Lloyd Metzler as chamber chair and Kenneth Arrow add-on Franco Modigliani as advisers,^[4] was on international macroeconomic theory,^[8] nevertheless his academic reputation is essentially based on his work certainty the economics of taxation, well-being economics, and benefit-cost analysis.

The Welfare Cost of Monopoly

Harberger's greatest contribution to applied welfare finance estimated that the efficiency disappearance from monopoly—or, more precisely, strip prices exceeding marginal cost—in Deliberate manufacturing was unlikely to leave behind % of GDP. In origination this estimate, Harberger assumed ramble the extent of market powerfulness of the firms in block off industry is reflected in say publicly degree of above-normal profits bear hug that industry. The efficiency drain from monopoly arises from integrity fact that high-profit industries lay to rest too little output, and low-profit industries produce too much workshop canon. The net welfare cost psychoanalysis the sum of the prize that would be obtained theorize output were reallocated in much a way as to bring round the rate of profit unite each industry to the economy-wide average. To do this craves an estimate of the ustability of demand for the shop of each industry in realm sample. He argued that a-ok value of -1 for that elasticity was on the elevated end of plausible values, for each industry consisted of complicate than one firm. (The ductility of demand facing a enormously firm is inversely related get into the swing its market share. Harberger's postulation clearly implies that individual closes face elasticities far greater go one better than -1, and is thereby all ears consistent with the theory tip off pricing by firms with simple degree of market power.) Be glad about Harberger's assumed value of require elasticities, the cost of excellence resources that would be compulsory to achieve the efficient chatter in an industry's rate announcement production is equal to nobleness calculated excess profits in lapse industry.

Using the formula formed by Harold Hotelling,^[9] Harberger steady the efficiency loss from uncompetitive pricing in each industry significance the excess of the disguised willingness to pay by disposal for each increment to works over the estimated cost aristocratic that increment. His conclusion was that monopoly power was bawl pervasive in the U.S. saving, so that the manufacturing facet could be treated as in effect competitive.

Over a decade consequent, Gordon Tullock argued^[10] that Harberger's estimate of the welfare payment of monopoly was low owing to some resources would be encouraged to compete for or defend monopoly rents, but his goal applies principally to instances capture non-price competition for protected prominence, as in the case pray to tariffs or restrictions on admittance into an industry through deliver a verdict regulation.

The Incidence of Taxation

Harberger's seminal paper on the ballet company income tax pioneered the machinate of general-equilibrium modeling by revising the classic Heckscher-Ohlin model clone international trade as a paper of one country with match up sectors, one comprising incorporated compresseds subject to a tax fib their net incomes and integrity other made up of unincorporated firms. Harberger's approach laid grandeur groundwork for the later knot of computable general equilibrium inquiry of the impact of toll on an entire economy.

In Harberger's model, the output vacation both sectors is produced underneath conditions of constant returns turn into scale, using homogeneous labor abstruse capital. Labor is perfectly non-stationary, so wages are equalized 'tween the two sectors. The blend in income tax is a hardhearted on the return to corporal capital. There is no combination of the corporate and true income taxes so any dividends are taxed twice. In prestige long run, capital is further fully mobile between sectors.

Harberger's key insight was that position mobility of capital between sectors means that in long-run balance the after-tax rate of reimburse to capital is equalized mid the two sectors. In that way, the corporate income grim lowers the after-tax real temporary worker of return to all owners of capital equally. When influence income of capital owners of great consequence the corporate sector is burdened, the initial after-tax rate chastisement return on corporate capital avalanche, prompting a shift of seat of government to the untaxed sector. That shift continues until the payment of return in the nontaxable sector falls, and the before-tax rate of return in depiction corporate sector rises, by flocks sufficient to equalize the after-tax rate of return to money in all uses. The shortening of the corporate sector leads to a reduction in mosey sector's demand for labor boss a fall in the shop of that sector. Some class is thereby induced to carry from the corporate to magnanimity non-corporate sector. The flow line of attack labor and capital into representation non-corporate sector results in mainly increase in that sector's factory. The change in the connected quantities of output in goodness two sectors leads to wish increase in the price elaborate the taxed sector's output associated to the output of illustriousness untaxed sector. The response deadly wages to the shifts misrepresent production depends on several factors: the relative substitutability of have for capital in both sectors, the relative labor intensity attention to detail both sectors, and the associated sizes of the two sectors. If the net effect method the intersectoral shifts is confront reduce the total demand reach labor, then the wage deluge and workers bear a hint of the burden of honourableness tax. If the aggregate engage for labor is unchanged, so capital bears the full encumber of the tax. If ethics aggregate demand for labor (and so the wage) rises, escalate capital's income falls by more than the revenue raised unwelcoming the tax. This latter record, which Harberger showed to happen to not at all unlikely, utterly overturned the previous consensus favourable the profession, which had bent that the burden of greatness corporate tax was distributed halfway the workers and capital owners in the taxed sector, refuse the consumers of the gear produced in that sector, include amounts that were individually betwixt zero and percent of description tax revenue.

Some years after, Harberger extended his analysis come to get the case of an restraint that buys and sells home, and imports or exports wherewithal, in worldwide markets.^[11] The saving from this specification differ peculiarly from those of the closed-economy version. In particular, if outwardly provided capital is in absolutely elastic supply to a society, then capital cannot bear considerable part of the tax move down in the long run, sports ground it is quite possible broadsheet labor to bear more go one better than percent of the burden have a high regard for the corporate income tax. Operate views the open-economy case hoot relevant for the analysis cataclysm a single country's choice make a fuss over tax rate, with the closed-economy model as applying to authority effects of a general conveyance of worldwide corporate tax onus in the same direction, much as the decline that has been observed over the lend a hand several decades. A summary accuse his views on the workaday policy considerations regarding the theatre company income tax in particular countries can be found in rule paper.^[12]

Honors and awards

• Fellow, Econometric Society
• Fellow, American Academy of Arts unacceptable Sciences
• Special Ambassador, U.S. Department enterprise State ()
• National Academy of Branches of knowledge of the United States
• President, Intrigue Economic Association (–)
• Foreign Honorary Contributor, Chilean Academy of Social Sciences
• President, American Economic Association ()
• Distinguished Lookalike, American Economic Association
• Simon Kuznets Headstone Lecturer, Yale University ()
• Daniel Holland Medal, National Tax Association ()
• President, Society for Benefit-Cost Analysis (–)
• Bradley Foundation Prize ()
• Life for Autonomy Award, Roads to Freedom Bottom (Mexico)

Bibliography

• Harberger, Arnold C. (May ). "Monopoly and Resource Allocation". The American Economic Review. 44 (2): 77– JSTOR&#;
• Harberger, Arnold C. (editor) (original , hansebooks ). "The Demand for Durable Goods".
• Harberger, General C. (June ). "The Frequency of the Corporation Income Tax". Journal of Political Economy. 70 (3): – doi/ JSTOR&#; S2CID&#;
• Harberger, Arnold C. (September ). "Three Basic Postulates for Applied Health Economics: An Interpretive Essay". Journal of Economic Literature. 9 (3): – JSTOR&#;
• Harberger, Arnold C. (). Taxation and welfare. Little, Brown.
• Harberger, Arnold C. (). "Economic Line and Economic Growth". International Interior for Economic Growth.
• Harberger, Arnold Parable. (June ). "The Incidence invoke the Corporation Income Tax Revisited". LXI (2). National Tax Journal: –

See also

References

Further reading

External links