The Effect of Inflation on the Income Elasticity of Taxes
This paper defines the relationship between the nominal (or money) income elasticity and the real income elasticity of a tax system. Under most circumstances, the real and the nominal income elasticities differ. This difference has not been recognized by economists who rely strictly on nominal elasticities as an indicator of revenue adequacy or tax burden, a practice which can be misleading, especially under conditions of general price inflation. The income tax, sales tax and property tax are analyzed briefly in terms of their elasticity features.
INCOME ELASTICITY OF THE PROPERTY TAX: A POST-MORTEM NOTE
OOME six years ago, expressions of ^shocked surprise greeted an assertion that the evidence of the postwar period supported what would appear to be two rather unsurprising propositions; that, in medium-long periods of say 10 to 15 years during which cyclical movements are mild, the market value of taxable property should rise roughly as fast as gross national product and that, since in such periods assessment ratios probably would not fall appreciably, the property tax base therefore should rise about as fast as GNP.1 This was construed to be in conflict with the received doctrine, that assessed values and thus property tax revenues respond only slowly and modestly to sharp cyclical fluctuations in the short run. However unwarranted this construction, it had the positive result of stimulating some useful empirical work, of a quality superior to that underlying the original assertion, by McLoone, Mushkin, Hogan, and Kurnow, among others.2 One had hoped that this mass of evidence had given the controversy a decent burial, but Professor Davies has exhumed the corpse in his note in the December 1963 issue of this Journal.3 The context is his comment on Morgan's handling of the relative stability or income elasticity of sales and property taxes. Now, Davies is almost surely correct in his conclusion that, in general, sales taxes are likely to have a higher income elasticity coefficient than property taxes. But the outcome in particular comparisons depends a good deal on both the length and nature of the time period under consideration and the specific
Definitions of efficiency
This is the third in a series of occasional notes on economics

Decision makers are increasingly faced with the challenge of reconciling growing demand for health care services with available funds.1 Economists argue that the achievement of (greater) efficiency from scarce resources should be a major criterion for priority setting. This note examines three concepts of efficiency: technical, productive, and allocative.

Efficiency measures whether healthcare resources are being used to get the best value for money.1 Health care can be seen an intermediate product, in the sense of being a means to the end of improved health. Efficiency is concerned with the relation between resource inputs (costs, in the form of labour, capital, or equipment) and either intermediate outputs (numbers treated, waiting time, etc) or final health outcomes (lives saved, life years gained, quality adjusted life years (QALYs)). Although many evaluations use intermediate outputs as a measure of effectiveness, this can …