Showing papers in "Canadian Journal of Economics in 2014"

Determinants of foreign direct investment

Abstract: Empirical studies of bilateral foreign direct investment (FDI) activity show substantial differences in specifications with little agreement on the set of included covariates. We use Bayesian statistical techniques that allow one to select from a large set of candidates those variables most likely to be determinants of FDI activity. The variables with consistently high inclusion probabilities include traditional gravity variables, cultural distance factors, relative labour endowments and trade agreements. There is little support for multilateral trade openness, most host-country business costs, host-country infrastructure and host-country institutions. Our results suggest that many covariates found significant by previous studies are not robust.

How important are school principals in the production of student achievement

Abstract: As school leaders, principals can influence student achievement in a number of ways, such as hiring and firing of teachers, monitoring instruction and maintaining student discipline, among many others. We measure the effect of individual principals on gains in math and reading achievement between grades 4 and 7 using a value-added framework. We estimate that a one standard deviation improvement in principal quality can boost student performance by 0.289 to 0.408 standard deviations in reading and math, while the principal at the 75th percentile improves scores by 0.170 to 0.193 relative to the median principal. Our results imply that isolating the most effective principals and allocating them accordingly between schools can have a significant positive effect on reducing achievement gaps.

Occupations, fields of study and returns to education

Abstract: This paper considers several possible channels behind the well-documented effect of education on earnings. The first channel is that education makes workers more productive on a given task, as in a conventional human capital framework. The second channel is based on the idea that education helps workers get assigned to higher-paying occupations where output is more sensitive to skill. A third and final channel is that workers are more productive and earn more when they are matched to a job related to their field of study. Using data from the 2005 National Graduate Survey and the 2006 Canadian Census, I find that channels two and three account for close to half of the conventionally measured return to education. The results indicate that the return to education varies greatly depending on occupation, field of study and the match between these two factors.

Viewpoint: Boosting Recessions

Abstract: This paper explores the effectiveness of boosting, often regarded as the state of the art classification tool, in giving warning signals of recessions 3, 6, and 12 months ahead. Boosting is used to screen as many as 1,500 potentially relevant predictors consisting of 132 real and financial time series and their lags. Estimation over the full sample 1961:1–2011:12 finds that there are fewer than 10 important predictors and the identity of these variables changes with the forecast horizon. There is a distinct difference in the size and composition of the relevant predictor set before and after mid-1980. Rolling window estimation reveals that the importance of the term and default spreads are recession specific. The Aaa spread is the most robust predictor of recessions three and 6 months ahead, while the risky bond and 5-year spreads are important for 12 months ahead predictions. Certain employment variables have predictive power for the two most recent recessions when the interest rate spreads were uninformative. Warning signals for the post-1990 recessions have been sporadic and easy to miss. The results underscore the challenge that changing characteristics of business cycles pose for predicting recessions. Prevoir les recessions. Ce texte explore l'efficacite de la methode dite du ‘boosting’, qu'on considere souvent comme un instrument de classification qui est a la fine pointe de l'art de prevoir les recessions 3, 6 et 12 mois a l'avance. Cette methode est utilisee pour passer au crible quelques 1500 predicteurs potentiellement pertinents construits a partir de 132 series chronologiques de variables reelles et financieres plus ou moins decalees. Des estimations de l'echantillon complet pour la periode du debut de 1961 a la fin de 2011 revelent qu'aussi peu que dix predicteurs sont importants, et que l'identite de ces variables change selon l'horizon de prevision considere. Il y a aussi une difference marquee dans la taille et la composition de cet ensemble de predicteurs avant et apres le milieu des annees 1980. Il appert que l'importance des ecarts de credit (ecarts des taux d'interet et des risques de defaut de paiement) est specifique a la recession particuliere. L'ecart Aaa est le predicteur le plus robuste des recessions dans trois et six mois, alors que la debenture risquee et l'ecart des taux d'interet pour la fenetre de 5 ans sont les predicteurs importants pour un horizon temporel de 12 mois. Certaines variables reliees a l'emploi ont eu un certain pouvoir de prediction pour les deux dernieres recessions quand les ecarts de taux d'interet n'ont pas ete eclairants. Les signaux des clignotants pour les recessions d'apres 1990 ont ete sporadiques et faciles a manquer. Les resultats soulignent le defi que posent a ceux qui font des previsions de recessions les caracteristiques changeantes des cycles economiques.

How Would One Extra Year of High School Affect Academic Performance in University? Evidence from an Educational Policy Change

Abstract: This paper uses a unique policy change in Ontario, Canada, to provide direct evidence on how reducing the length of high school would impact student performance in university. After a five-year educational program was eliminated from Ontario high schools and replaced with a four-year program, two graduating cohorts with different amounts of high school education simultaneously entered university. The results demonstrate that students who receive one less year of high school education perform significantly worse than their counterparts in all subjects, even after the age difference between the cohorts is accounted for. Comment est-ce qu'une annee additionnelle au secondaire affecte la performance scolaire a l'universite? Resultats d'un changement de politique educationnelle. Ce memoire utilise un changement particulier de politique en Ontario (Canada) pour produire directement des renseignements sur l'impact de la reduction du temps passe au secondaire sur la performance des etudiants a l'universite. Apres l'elimination d'un programme de cinq ans et son remplacement par un programme de quatre ans dans les ecoles secondaires de l'Ontario, deux cohortes de diplomes avec un bagage scolaire different sont entrees a l'universite en meme temps. Les resultats montrent que les etudiants qui ont recu un an de moins d'education au secondaire ont performe moins bien et de maniere significative que leurs collegues dans tous les sujets, meme apres avoir pris en compte la difference d'âge entre les cohortes.

The Growth Effects of Tax Rates in the OECD

Abstract: This paper explores the merits of macro- and micro-based tax rate measures within an open economy ‘fiscal policy and growth’ model. Using annual data for 15 OECD countries we find statistically small, non-robust long-run growth effects of macro-based average tax rates on capital income and consumption, but some evidence for average labor income tax effects. Changes in ‘micro’ marginal income tax rates at both the personal and corporate levels yield statistically robust GDP responses of modest size. Both domestic and foreign corporate taxes appear relevant. In general, tax effects on GDP operate largely via factor productivity rather than factor accumulation.

The Impact of Placing Adolescent Males into Foster Care on Education, Income Assistance, and Convictions

Abstract: Understanding the causal impacts of taking at-risk youth into government care is part of the evidence base for policy. Two sources of exogenous variation affecting alternative subsets of the at-risk population provide causal impacts interpreted as local average treatment effects. Placing 16- to18-year-old males into care decreases or delays high school graduation, increases income assistance receipt, and has alternative effects on criminal convictions depending upon the instrument employed. This suggests that asking whether more or fewer children should be taken into care is insufficient; it also matters which, and how, children are taken into care. L'impact du fait de placer des jeunes hommes adolescents en foyer d”accueil sur l’education, l'assistance pour maintenir le revenu, et les condamnations. Comprendre les impacts causes par la prise en charge par le gouvernement d”un jeune a risques est partie integrale d'une politique fondee sur des donnees probantes. Deux sources de variation exogene affectant differentes portions de la population a risque engendrent des impacts qui sont interpretes comme ayant des effets sur le traitement local moyen. Placer des jeunes hommes de 16 a 18 ans en foyer d'accueil diminue ou retarde la diplomation au secondaire, accroit la dependance de l'aide sociale, et a des effets differents sur les condamnations au criminel selon les instruments employes. Voila qui suggere qu'il n'est pas suffisant de se demander si plus ou moins d'enfants devraient etre mis en foyer d'accueil, ce qui est important est plutot de se demander comment on prend soin des enfants.

The transatlantic productivity gap: Is R&D the main culprit?

Abstract: The literature has pointed to different causes to explain the productivity gap between Europe and United States in the last decades. This paper tests the hypothesis that the lower European productivity performance in comparison with the US can be explained not only by a lower level of corporate RD however – using different estimation techniques – the R&D coefficients for the US firms always turn out to be significantly higher. To see to what extent these transatlantic differences may be related to the different sectoral structures in the US and the EU, we differentiated the analysis by sectors. The result is that both in manufacturing, services and high-tech sectors US firms are more efficient in translating their R&D investments into productivity increases.

A fractionally cointegrated VAR analysis of economic voting and political support

Abstract: We use a fractionally cointegrated vector autoregressive model to examine the relationship between Canadian political support and macroeconomic conditions. This model is well suited for the analysis because it allows multiple fractional time series and admits simple asymptotic inference for the model parameters and tests of the hypotheses of interest. In the long-run equilibrium, we find that support for the Progressive Conservative Party was higher during periods of high interest rates and low unemployment, while support for the Liberal Party was higher during periods of low interest rates and high unemployment. We also test and reject the notion that party support is driven only by relative (to the United States) economic performance. Indeed, our findings suggest that US macroeconomic variables do not enter the long-run equilibrium of Canadian economic voting (political opinion poll support) at all. Resume Une application du modele vecteur autoregressif fractionnellement cointegre sur le vote economique et le support politique. On utilise un modele du type vecteur autoregressif fractionnellement cointegre pour examiner la relation entre le support politique canadien et les conditions macroeconomiques. Le modele est bien adapte a l'analyse parce qu'il permet l'usage de multiples series chronologiques fragmentees, et une inference asymptotique simple des parametres du modele ainsi que des tests d'hypothese pertinents. En equilibre a long terme, on decouvre que le support pour le Parti Progressiste Conservateur a ete plus eleve au cours des periodes de hauts taux d'interet et bas taux de chomage, alors que le support pour le Parti Liberal a ete plus eleve au cours des periodes de bas taux d'interet et de hauts taux de chomage. On met au test l'hypothese (qu'on rejette d'ailleurs) que la notion que le support politique est enclenche seulement par la performance economique du Canada par rapport a celle des Etats-Unis. En fait, les resultats suggerent que les variables macroeconomiques americaines n'ont pas du tout d'impact sur l'equilibre a long terme du vote economique canadien (support dans les sondages d'opinion politique).

Post‐secondary attendance by parental income in the U.S. and Canada: Do financial aid policies explain the differences?

Abstract: We examine the extent to which tuition and needs-based aid policies explain important differences in the relationship between family income and post-secondary attendance relationships between Canada and the U.S. Using data from recent cohorts, we estimate substantially smaller attendance gaps by parental income in Canada relative to the U.S., even after controlling for family background, cognitive achievement, and local-residence fixed effects. We next document that U.S. public tuition and financial aid policies are actually more generous to low-income youth than are Canadian policies. Equalizing these policies across Canada and the U.S. would likely lead to a greater difference in income-attendance gradients. Resume Nous etudions les frais de scolarite et l'aide financiere afin d'expliquer d'importantes differences entre le Canada et les Etats-Unis quant a la relation entre le revenu parental et la frequentation des etudes postsecondaires. Nous trouvons que les ecarts entre les taux de frequentation des jeunes adultes de differents niveaux de revenu familial sont considerablement plus faibles au Canada qu'aux Etats-Unis, et ce, meme en tenant compte des acquis cognitifs, des effets fixes residentiels, et d'autres caracteristiques familiales. Nous documentons aussi le fait que l'aide financiere aux etudiants de famille a bas revenus est beaucoup plus genereuse aux Etats-Unis qu'au Canada. S'ils avaient les memes politiques d'aide financiere, les differences entre les Etats-Unis et le Canada quant a la relation entre le revenu parental et les etudes postsecondaires seraient plus prononcees.

Additive versus Multiplicative Trade Costs and the Gains from Trade Liberalizations

Abstract: This paper addresses welfare effects from trade liberalization in a Melitz (2003) heterogeneous-firms trade model including the empirically important per-unit (i.e., additive) trade costs in addition to the conventional iceberg (i.e., multiplicative) and fixed trade costs. The novel contribution of the paper is the result that the welfare gain for a given increase in trade openness is higher for reductions in per-unit (additive) trade costs than for reductions in iceberg (multiplicative) trade costs. The ranking derives from differences in intra-industry reallocations and, in particular, from dissimilar impacts on the number of exporters (i.e., the extensive margin of trade). Resume Couts du commerce additifs versus multiplicatifs et les gains des liberalisations du commerce. Ce texte examine les effets de bien-etre attribuables a la liberalisation du commerce dans un modele de commerce de firmes heterogenes a la Melitz (2003) en tenant compte a la fois des couts de commerce unitaires (c.-a-d., additifs) empiriques importants, en plus des couts de type iceberg (c.-a-d., multiplicatifs, en pourcentage de la valeur) et des couts fixes du commerce. La contribution inedite de ce texte est qu'il montre que le gain de bien-etre pour un accroissement donne de l'ouverture du commerce est plus grand pour les reductions dans les couts unitaires (additifs) du commerce que pour les reductions dans les couts de type iceberg (multiplicatifs). Ceci est attribuable aux reallocations intra-industrie et en particulier aux impacts dissemblables sur le nombre des exportateurs (c.-a-d., la marge extensive du commerce).

Tariff Structure, Trade Expansion, and Canadian Protectionism, 1870–1910

Abstract: Canada's trade policy at the end of the 19th century is commonly viewed as protectionist and extremely costly. In this paper, we employ the Anderson-Neary Trade Restrictiveness Index to re-examine this view. Based on product-level customs data, we show that Canadian trade policy between 1870 and 1910 was more restrictive than previously understood, but created smaller welfare losses than previously believed. These results are primarily driven by high tariffs on inelastic, non-competing import goods. Although Canada's tariff structure becomes more restrictive over the period, our findings indicate it was not as protectionist or as costly as once thought. Structure tarifaire, expansion du commerce et protectionnisme canadien entre 1870 et 1910. La politique commerciale canadienne a la fin du 19e siecle est habituellement consideree comme protectionniste et extremement couteuse. Dans ce memoire, on emploie l'indice de restriction du commerce de Anderson-Neary pour reexaminer ce point de vue. A partir de donnees du service des douanes au niveau du produit, on montre que la politique commerciale canadienne entre 1870 et 1910 a ete plus restrictive que ce qu'on avait pense autrefois, mais qu'elle a cree des pertes de bien-etre moindres que ce qu'on avait cru anterieurement. Ces resultats sont d'abord engendres par des droits de douanes eleves sur des biens d'importation qui ne concurrencent pas les biens domestiques et dont la demande est inelastique. Meme si la structure tarifaire du Canada devient plus restrictive au cours de cette periode, les resultats montrent qu'elle n'est ni aussi protectionniste ni aussi couteuse qu'on l'a deja pense.

The impact of product market competition on training provision: Evidence from Canada

Abstract: While standard models of training focus on how input market affects firms' training decisions, this paper investigates the impact of product market competition on training provision. Using the longitudinal data from Statistics Canada's Workplace and Employee Survey, we find that increased competition is strongly associated with more training provision. This association is unlikely to be driven by unobserved heterogeneity, specific measures used and other relevant factors. To the extent that training is a significant source of human capital and industry competitiveness, our results suggest that increasing training is an important channel through which competition raises productivity.

To Ban or Not to Ban: Foreign Lobbying and Cross‐National Externalities

Abstract: This paper studies the costs and benefits of foreign lobbying. We show how and when foreign lobbying can help internalize cross-national externalities. We argue that this is an often overlooked benefit of foreign lobbying. We also study under what conditions a constitutional rule banning foreign lobbying is in the national interest of a country. A key factor in this calculus is whether the interests of foreign lobby groups and domestic unorganized groups coincide or not. We illustrate the logic with examples from trade policy and environmental regulation. Bannir ou ne pas bannir : lobbying etranger et effets externes transnationaux. Ce texte etudie les couts et avantages du lobbying etranger. On montre quand et comment que le lobbying etranger peut aider a internaliser des effets externes transnationaux. On suggere que c'est souvent un avantage qu'on est porte a negliger du lobbying etranger. On etudie sous quelles conditions une regle constitutionnelle bannissant le lobbying etranger peut etre dans l'interet national d'un pays. Un facteur cle dans ce calcul est le fait que les interets des groupes etrangers coincident ou non avec ceux des groupes nationaux non-organises. On illustre la logique sous-jacente a l'aide d'exemples portant sur la politique commerciale et la reglementation environnementale.

Social Security and Family Support

Abstract: This paper shows how the role of the market, the state and the family in providing financial support at old age has evolved over time with changes in factors such as the reliability and the effectiveness of family support, the rate of interest, the cost of public funds and earning inequality. We model a society in which agents with different productivity are asked to vote over the existence of a Beveridgian pension system. We show that when children assistance is certain and large, agents may rely exclusively on family to finance old-age consumption and prefer to vote for a zero tax rate. Only if income inequalities are very large, a majority will be in favor of a pension system. However, when the size and the likelihood of family generosity decreases, a pension system is more likely to emerge. In that case, agents supplement children assistance with pension benefits. A pension system is also more likely to emerge when the cost of public fund is small and the return from private savings is high.

Cross‐border mergers and acquisitions in services: The role of policy and industrial structure

Abstract: This paper presents evidence on the determinants of cross-border mergers and acquisitions in services sectors. It develops a stylized model of mergers and acquisitions that predicts that the incidence of merger and acquisition deals depends, inter alia, on the target economy's size, industrial structure and investment policies, as well as on bilateral transactions costs. These predictions are examined with bilateral merger and acquisition flow data and detailed information on policy barriers from a new database of restrictions on services investment. The analysis finds that: (1) geographical factors affect mergers and acquisitions in services and manufacturing similarly but cultural factors affect mergers and acquisitions in services more than in manufacturing. (2) Controlling for these bilateral factors, restrictive investment policies reduce the probability of merger and acquisition inflows but this negative effect is mitigated in countries with relatively large shares of manufacturing and (to a lesser extent) services in gross domestic product. The same results hold for the number of merger and acquisition deals received. These findings suggest that the impact of policy is state-dependent and related to the composition of gross domestic product in the target economy.

Foreign direct investment, heterogeneous workers and employment security: Evidence from Germany

Abstract: We analyze how foreign direct investment (FDI) affects employment security using administrative microdata for German employees. Measuring FDI intensity at the industry level enables us to take into account the sum of direct effects at multinationals as well as indirect effects of FDI throughout the affected industry. We find that both inward and outward FDI significantly reduce employment security. This is particularly the case for inward FDI coming from the western part of the European Union as well as for outward FDI going to Central and Eastern Europe. The effects are sizeable for older and low-skilled workers.

The impact of public ownership in the lending sector

Abstract: We examine the effects of increased government ownership of suppliers in the lending sector, which induces increased concern with total welfare and reduced concern with profit. Such increased ownership of a lender can have unanticipated effects. For instance, it can increase lender profit. Furthermore, borrower welfare often declines as government ownership increases in a lender with a relatively limited ability to discern the true quality of borrowers’ projects. In addition, there are settings in which increased government ownership of a lender has no impact on either lender profit or borrower welfare. Resume L'impact de la propriete publique sur le secteur des prets. Les auteurs examinent les effets de la propriete gouvernementale croissante des offreurs dans le secteur des prets – un phenomene qui se traduit en un plus grand interet pour le bien-etre global et un interet moindre pour le profit. Un tel accroissement de la propriete publique peut avoir des effets non-anticipes. Par exemple, cela peut accroitre les profits des preteurs. De plus, le bien-etre des emprunteurs decline souvent a proportion que la croissance de la propriete gouvernementale d'un preteur connote une competence relativement limitee pour discerner la veritable qualite des projets des emprunteurs. Enfin il existe des circonstances dans lesquelles l'accroissement de la propriete gouvernementale d'une institution preteuse n'a aucun impact soit sur le profit du preteur soit sur le bien-etre de l'emprunteur.

The propagation of U.S. shocks to Canada: Understanding the role of real financial linkages

Abstract: This paper examines the transmission of U.S. real and financial shocks to Canada and, in particular, the role of financial frictions in affecting the transmission of these shocks. These questions are addressed within the Bank of Canada's Global Economy Model (de Resende et al. forthcoming), a dynamic stochastic general-equilibrium model with an active banking sector and a detailed role for financial frictions.

Regional versus Multilateral Trade Liberalization, Environmental Taxation, and Welfare

Abstract: The paper considers trade between identical countries with imperfectly competitive markets, and compares the impacts of regional and multilateral tariff reduction on strategic environmental taxation and welfare. While both forms of trade liberalization increase production and consumption in tariff-reducing countries, regionalism also reduces production in a non-participating country and may decrease its consumption. Consequently, regionalism and multilateralism change pollution tax and welfare in the tariff-reducing countries in similar ways when pollution is local, but in dissimilar ways for global pollution. When pollution is global, regionalism is likely to be preferred to multilateralism for the establishment of free trade among countries. Liberalisation du commerce regional versus celle du commerce multilateral : fiscalite environnementale et bien-etre. Ce memoire considere le commerce entre des pays identiques avec des marches de concurrence imparfaite, et compare les impacts d'une reduction regionale et multilaterale de tarifs sur la fiscalite environnementale strategique et le bien-etre. Meme si les deux formes de liberalisation accroissent la production et la consommation dans les pays qui reduisent les tarifs, le regionalisme reduit aussi la production dans un pays non-participant, et peut reduire sa consommation. Consequemment, regionalisme et multilateralisme changent la taxe sur la pollution et le bien-etre dans les pays qui reduisent leur tarif d'une maniere similaire quand la pollution est locale, mais de maniere dissimilaire quand la pollution est globale. Quand la pollution est globale, le regionalisme est susceptible d'etre prefere au multilateralisme pour l'etablissement du libre commerce entre pays.

Viable Ramsey economies

Abstract: The Ramsey model of economic growth is revisited from the perspective of viability theory. The Ramsey model, augmented with minimal consumption and sustainability criteria, becomes a viability problem. The framework allows for a clear picture of optimal viable, optimal non-viable, and viable non-optimal paths. The drastic sacrifices in terms of present consumption required by the implementation of Brundtland sustainability are visualized, the rich countries bearing the major part of the burden. The econometric analysis of viability sets enhances the role of technological progress in ensuring Brundtland sustainability. Preference parameters such as the pure time preference rate are statistically non-significant.

Environmental regulation and technology transfers

Abstract: This paper analyzes the situation in which a national government introduces environmental regulations. Within the framework of an international duopoly with environmental regulations, an environmental tax imposed by the government in the home country can induce a foreign firm with advanced abatement technology to license it to a domestic firm without this technology. Furthermore, when the domestic firm's production technology is less efficient than that of the foreign firm, the foreign firm may freely reveal its technology to the domestic firm. These improvements through the voluntary transfer of technology imply that environmental regulations have positive impacts on innovation. Resume Reglementation environnementale et transferts de technologie. Ce texte analyse le cas d'un gouvernement national qui etablit des reglementations environnementales. Dans le cadre d'un duopole international avec reglementations environnementales, le gouvernement national impose une taxe environnementale au plan domestique qui peut induire une firme etrangere qui dispose d'une technologie avancee qui reduit l'impact environnemental a vendre une licence permettant d'utiliser cette technologie a une firme domestique qui ne l'a pas. De plus, quand la technologie de production de la firme domestique est moins efficace que celle de la firme etrangere, la firme etrangere peut reveler sa technologie a la firme domestique. Ces ameliorations a travers les transferts volontaires de technologie impliquent que les reglementations environnementales ont des impacts positifs sur l'innovation.

Fertility, Intra-Generational Redistribution, and Social Security Sustainability

Abstract: Incorporating heterogeneity in preference to having children into an overlapping generations model of a small open economy, we examine the effects of changes in the size of pay-as-you-go (PAYG) social security on fertility choices of individuals and population growth of the economy. It is shown that PAYG social security will raise population growth by increasing the number of individuals who have children and the number of children parents have if the system involves redistribution between retirees with different contributions, whereas, if it has no redistribution, PAYG social security does not affect the fertility decisions of individuals. Fecondite, redistribution intra-generationnelle, et durabilite de la securite sociale. Incorporant l'heterogeneite des preferences pour avoir des enfants dans un modele d'une petite economie ouverte avec des generations qui se chevauchent, on examine les effets de changements dans l'importance de la securite sociale par repartition sur les choix de fecondite des individus et sur la croissance de la population dans l’economie. On montre que cette forme de securite sociale augmente la croissance de la population en accroissant a la fois le nombre de personnes qui ont des enfants et le nombre d'enfants que les parents choisissent d'avoir si le systeme implique une redistribution entre les gens a la retraite qui ont fait des contributions differentes, alors que, si le regime n'implique aucune redistribution, le regime de securite sociale par repartition n'affecte pas les decisions de fecondite des individus.

A spillover‐based theory of credentialism

Abstract: I propose a model in which credentials, such as diplomas, are instrumentally valuable to workers. The model avoids an important criticism of standard job market signalling models by tying a worker's wage to their output. A worker's productivity is influenced by the skills of their co-workers, where such skills arise from an ability-augmenting investment that is made prior to matching with co-workers. Credentials allow workers to demonstrate their investment to the labour market, thereby allowing them to match with high-skill co-workers in equilibrium. Despite the positive externality associated with a worker's investment, I show how overinvestment is pervasive in equilibrium.

Taxation and Market Power

Abstract: We analyze the incidence and welfare effects of unit sales tax increases in experimental monopoly and Bertrand markets. We find, in line with economic theory, that firms with no market power are able to shift a high share of the tax burden to consumers, independent of whether buyers are automated or human players. In monopoly markets, a monopolist bears a large share of the burden of a tax increase. With human buyers, however, this share is smaller than with automated buyers, as the presence of human buyers constrains the pricing behaviour of a monopolist. Several control treatments corroborate this finding.

Incentives for Journal Editors

Abstract: Scholars may become journal editors because editors may generate more citations of their own works. This paper empirically establishes that a scholar's publications are more likely to be cited by papers in a journal that is edited by the scholar. We then test if editors exercise influence on authors to cite editors’ papers by either pressuring authors (“editor-pressure” hypothesis) or accepting articles with references to the editors’ papers (“editor-selection” hypothesis), by using the keyword analysis and the forward citation analysis, respectively. We find no evidence for the two hypotheses, which leaves self-selection as a possible cause for the editor effect. JEL classification: J01 Motivations des directeurs de revues. Les chercheurs peuvent devenir directeurs de revues parce que ce role peut engendrer plus de citations de leurs propres travaux. Ce memoire montre empiriquement que les publications d'un chercheur sont davantage susceptibles d’etre citees dans une revue qu'il dirige. On teste deux hypotheses a savoir si les directeurs exercent de l'influence sur les auteurs pour citer leurs travaux (soit en pressant les auteurs – hypothese de pression du directeur – soit en acceptant les articles qui font reference a leurs travaux – hypothese de selection du directeur) a l'aide d'une analyse des mots-cles et des references (forward citation) respectivement. Les resultats ne supportent ni l'une ni l'autre des hypotheses, ce qui laisse l'auto-selection du chercheur comme une cause possible de l'effet-directeur.

Inter‐regional competition, comparative advantage and environmental federalism

Abstract: In this paper, we compare endogenous environmental policy setting with centralized and decentralized governments when regions have comparative advantages in different polluting goods. We develop a two-region, two-good model with inter-regional environmental damages and perfect competition in product markets, where both regions produce both goods. Despite positive spillovers of pollution across regions, the model predicts that decentralization may lead to weaker or stricter environmental standards or taxes, depending on the degree of regional comparative advantage and the extent of transboundary pollution. This suggests that federalism can lead to either a “race to the bottom” or a “race to the top,” without relying on inefficient lobbying efforts or capital competition. Resume Concurrence inter-regionale, avantage comparatif, et federalisme environnemental. Dans ce texte, les auteurs comparent l'appareil de definition de politique environnementale endogene pour des gouvernements centralises et decentralises quand les regions ont des avantages comparatifs dans la production de divers biens polluants. On developpe un modele a deux regions et a deux biens operant dans un cadre ou existent (1) des effets de retombees inter-regionales toxiques pour l'environnement, (2) concurrence parfaite dans les marches des produits, et (3) ou les deux regions produisent les deux biens. Malgre les effets de pollution entre regions, le modele predit que la decentralisation peut entrainer des standards et des taxes portant sur l'environnement qui sont soit plus faibles ou plus forts, selon le degre d'avantage comparatif regional et la nature de la pollution transfrontiere. On suggere que le federalisme peut conduire a une emulation soit vers le bas soit vers le haut sans avoir a avoir recours a des efforts de lobbying inefficaces ou a la concurrence pour le capital pour expliquer le resultat.

Flexible inflation forecast targeting: Evidence from Canada

Abstract: We test whether the Bank of Canada pursues a flexible inflation forecast target, one that weights output growth as well as inflation. For the period 1996–2007, we find evidence that the Bank did effectively pursue such a target over the forecast horizon of 12 to 18 months. We find the relative weight that the Bank gives to output growth in its target to be positive and statistically significant within the range of 0.2 to 0.4. Resume La poursuite de cibles de prevision d'inflation flexibles : resultats pour le Canada. On met au test la proposition a savoir si la Banque du Canada poursuit une cible flexible de prevision d'inflation—une cible qui tient compte de la croissance du produit tout autant que l'inflation. Pour la periode 1996–2007, les resultats montrent que la Banque a poursuivi une cible sur un horizon de prevision de 12 a 18 mois. On montre que la ponderation relative que la Banque donne a la croissance du produit dans son ciblage est positive et statistiquement significative dans l’eventail entre 0.2 et 0.4.

The simple analytics of tobacco taxation with illegal supply

Abstract: This paper examines the impact of tobacco excise taxes where legal and illegal supplies coexist. The government's objective is to minimize cigarettes smoked in the economy (or to maximize revenue or to minimize illegal activity). It reacts to a competitive illegal supply in an adjoining jurisdiction. A model of consumer choice is used to demonstrate how demand response to tax changes can yield counterintuitive results. While the model mimics the Canadian market, similar situations characterize the US and European markets. A novel element of the paper is the treatment of externalities on the supply side rather than the demand side. Resume Analytique simple des taxes sur le tabac quand il y a offre illegale. Ce memoire examine l'impact des taxes sur la vente de tabac quand des offres legale et illegale coexistent. L'objectif du gouvernement est de minimiser les cigarettes fumees dans l'economie (ou de maximiser le revenu fiscal ou de minimiser l'activite illegale). Il doit prendre en compte l'offre concurrentielle illegale dans une juridiction contigue. On utilise un modele de choix du consommateur pour montrer comment la reaction de la demande aux changements dans les taxes peut engendrer des resultats contre-intuitifs. Bien que le modele soit concu pour le marche canadien, on trouve des situations avec des caracteristiques similaires dans les marches americain et europeens. Un element novateur du memoire est sa prise en compte des externalites du cote de l'offre plutot que du cote de la demande.