the determinants of industrial r d a funds flow simultaneous equation approach in this paper a general flow of funds model explaining aggregate rd b although some previous studies using u s data have concluded that rd c consistent with recent studies no evidence of crowding out of private expenditures by government expenditures could be found

dusenberry s ratcheting of consumption optimal dynamic consumption and investment given intolerance for any decline in standard of living duesenberry s ratcheting consumption demand is derived as a feature of the optimal dynamic consumption and investment policy given extreme habit formation that prevents consumption from falling over time preferences are in effect non time separable extended real valued von neumann morgenstern preferences consumption increases each time wealth reaches a new maximum risky investment is proportional to the excess of wealth over the perpetuity value of current consumption extensions constrain the net rate of decrease in consumption with a constant other than zero add more consumption goods and constrain on the maximal holding of the risky asset as a proportion of wealth these strategies may be useful for the management of university endowments participatory investment accounts and risky arbitrage funds

falling behind the joneses relative consumption and the growth savings paradox abstract concern for individual consumption relative to per capita consumption can induce a fear of falling behind which increases precautionary savings this fear intensifies as societal income growth increases allowing for a positive effect of growth on savings rates

optimality properties of alternative systems of taxation of foreign capital income foreign source capital income taxes are examined from the point of view of optimal taxation in the framework of a simple economy with international real capital flows a taxonomy of alternative systems of such taxation is first presented showing how crediting and other tax parameters induce what are called source based residence based and related systems next tax rates are determined that are optimal from a single country s point of view given those of the others the achievability of these rates under the various systems is analyzed finally tax rates that are optimal from an international point of view are considered again achievability of an international optimum under the various systems is considered leading to the main conclusions that i a pure residence based system in all countries can achieve an international fiscal optimum ii it cannot however be sustained as an equilibrium

business unit strategy and changes in the product r d budget this study of changes in product r d intensity in business units supplements past studies by including two major classes of independent variables which have not been examined previously the competitive strategy of the business and role of the business in the overall corporate portfolio multiple regression analysis is used on a sample drawn from the pims data base the results suggest that r d decisions in growth businesses are responsive to competition evolving strategies and intra firm resource flows in mature businesses a pattern of stability and r d equilibrium is evident even in the face of changes by competitors managerial implications are noted

r d management and corporate financial policy the hypothesis that firms simultaneously determine their research and development investment dividend and new debt policies generally is substantiated in the financial literature the determinants of research and development dividend investment and financing decisions of 140 firms are estimated econometrically during the 1978 1982 period management gains insights into the interactions of pursuing research and development expenditures paying dividends and undertaking investments

the effect of taxes on investment and income shifting to puerto rico the income of puerto rican affiliates of u s corporations is essentially untaxed by either puerto rico or the united states this lowers the tax penalty on investment there and also makes it attractive to shift reported taxable income from the u s parent corporation to the puerto rican affiliate this paper investigates these two interrelated impacts of taxation by developing a structural econometric model of the joint decisions regarding investment and income shifting and estimating the model using firm level data on the activity u s corporations in puerto rico the results suggest that the income shifting advantages are the predominant reason for u s investment in puerto rico

how effective are fiscal incentives for r d a review of the evidence this paper surveys the econometric evidence on the effectiveness of fiscal incentives for r d we describe the effects of tax systems in oecd countries on the user cost of r d the current position changes over time and across different firms in different countries we describe and criticize the methodologies used to evaluate the effect of the tax system on

race ethnicity and credit card marketing there is a vast literature on discrepancies in consumer credit related to race and ethnicity i explore a pattern that was first identified in aggregate data by han keys and li 2011 in their study of credit access blacks were approximately 27 less likely to receive offers from credit card lenders during the sample period even after controlling for variables such as credit history household income and local economic conditions hispanics were 17 less likely to receive an offer after including controls the discrepancy is robust to lender specific regressions and the inclusion of a large number of explanatory variables my findings imply that marketing is an important area for analysis of discrimination in consumer credit due to the likely need for confidential information in further analysis investigation by an appropriate regulatory agency such as the consumer financial protection bureau would be useful

a portfolio view of consumer credit abstract to compute risk adjusted returns and gauge the volatility of their portfolios lenders need to know the covariances of their loans returns with aggregate returns we use unique credit bureau data to measure individuals covariance risk i e the covariance of their default risk with aggregate consumer default rates and more generally to analyze the distribution of credit including the effects of credit scores we find significant heterogeneity in covariance risk across consumers also the amount of credit they obtain significantly increases with their credit scores and decreases with their covariance risk especially revolving credit though the effect of covariance risk is smaller

on intergenerational immobility evidence that adult credit health reflects the childhood environment we examine the persistence of inequality through credit health linking administrative records from several sources we document that childhood circumstances are strongly predictive of financial fragility in adulthood with credit scores among those from disadvantaged backgrounds nearly 100 points lower and 20 percentage points more likely to qualify as subprime we find evidence this relationship reflects differences in human capital and debt management still neither appears to fully explain the relationship our results reveal another dimension along which childhood circumstances persist into adulthood and could mean the many settings that evaluate individuals based on their credit health help reinforce inequities jel d12 e24 i32

r d support programs in developing countries the turkish experience in this study the determinants of private r d investment are examined at the level of firms in the turkish manufacturing industry we focus our attention on the effect of public r d support programs our findings indicate that public r d support significantly and positively affects private r d investment there seems to be even an acceleration effect on firm financed r d expenditures smaller r d performers benefit more from r d support and perform more r d in addition technology transfer from abroad and domestic r d activity show up as complementary processes given the scarcity of studies on r d support in technologically weaker economies our hope is that the less developed countries can exploit these findings in constructing socially beneficial technology policies

emulation inequality and work hours was thorsten veblen right we investigate the manner in which a desire to emulate the rich influences individuals allocation of time between labour and leisure greater inequality inducing longer work hours as a result data on work hours in ten countries over the period 1963 98 show that greater inequality is indeed associated longer work hours these veblen effects are large and the estimates are robust using country fixed effects and other specifications because consumption inequality is a public bad a social welfare optimum cannot be implemented by a flat tax on consumption but may be accomplished by more complicated progressive consumption taxes at the close of the nineteenth century thorsten veblen proposed what he termed pecuniary emulation as the foundation of a theory of consumption spending he maintained is driven by relative status considerations that is by the desire to be a particular type of person as much as bythedesire to enjoytheconsumer goodsper se the joneses with whom one had to keep up were not the neighbours but the rich theirleveloflivingbecamethenever attainableobjectiveinaconsumptionarmsrace among the less well to do in the theory of the leisure class he wrote the motive is emulation the stimulus of an invidious comparison especially in any community in which class distinctions are quite vague all canons and reputability and decency and all standards of consumption are traced back by insensible gradations to the usages and thoughts of the highest social and pecuniary class the wealthy leisure class 1934 p 81 while valued by some economists as capturing common sense aspects of consumption as a form of status seeking veblen s view of social preferences was soon eclipsed by the simpler and more tractable neoclassical theory of the consumer relegated to the underworld of economics veblen s ideas have nonetheless resonated over the ensuing years in the writing of duesenberry 1949 leibenstein 1950 and galbraith 1958 at the middle of the past century and schor 1998

inter industry technology flows in the united states abstract this paper presents for the u s economy a technology flows matrix tracing 1974 industrial r d expenditures from their industries of origin to industries in which the use of resulting products and processes was anticipated the distinction between origin and using industries is crucial to understanding the links between r d and productivity growth a regression analysis reveals high social rates of return and substantial productivity impacts from r d attributed to industries of use

is public r d a complement or substitute for private r d a review of the econometric evidence is public r d spending complementary and thus additional to private r d spending or does it substitute for and tend to crowd out private r d conflicting answers are given to this question we survey the body of available econometric evidence accumulated over the past 35 years a framework for analysis of the problem is developed to help organize and summarize the findings of econometric studies based on time series and cross section data from various levels of aggregation laboratory firm industry country the findings overall are ambivalent and the existing literature as a whole is subject to the criticism that the nature of the experiment s that the investigators envisage is not adequately specified we conclude by offering suggestions for improving future empirical research on this issue

state and provincial corporate tax planning income shifting and sales apportionment factor management abstract we empirically document a strategy through which corporations avoid state income taxes examining aggregated american state and canadian provincial data from 1983 1991 we find corporate income tax revenues are concave in corporate tax rates consistent with firms shifting their tax bases to more favourably taxed jurisdictions additional tests exploit unique features of state formula apportionment systems and find manufacturing shipments from states that tax outside their borders throwback states are decreasing in corporate income tax rates on sales

innovation expenditures and the role of government in belgium abstract unlike suggestions from earlier research on the schumpeterian hypothesis it is argued and shown that sales and employment are not simply substitute size measures to test the r d behaviour of foreign and domestic companies operating in belgium further suggests that government sponsored r d has not substituted for privately funded r d foreign companies are found to behave differently and to do less r d the more they pay for externally supplied technology

who gets credit after bankruptcy and why an information channel abstract conventional wisdom holds that individuals find it difficult to obtain new credit post bankruptcy using credit bureau data we test this hypothesis and show that more than 90 of bankrupt individuals receive credit shortly after filing individuals with good credit history prior to filing have reduced credit availability after bankruptcy while those with ex ante low credit quality receive more credit we show that credit supplied to low quality individuals is severely curtailed during the financial crisis we also find that the default probability on new debt increases after bankruptcy especially among individuals with high ex ante credit score these findings are consistent with an information channel in which bankruptcy reveals new information about a borrower s credit quality

goal setting for effective corporate planning the hypothesis that firms simultaneously determine their research and development investment dividend and new debt policies generally is substantiated in the financial literature the strategic planning model advocated in this study offers an alternative to the generally accepted goals of maximizing the return on equity or growth in earnings per share

r d appropriability opportunity and market structure new evidence on some schumpeterian hypotheses one of the largest bodies of literature in the field of industrial organization is devoted to the interpretation and testing of several hypotheses advanced by joseph schumpeter 1950 concerning innovation and industrial market structure one set of hypotheses focuses on the role of firm size as a determinant of r d spending and the rate of technological advance another set focuses on the effect of market concentration on r d and technological advance in this paper we reexamine the latter set of hypotheses at the industry level using new data on r d appropriability and technological opportunity collected by levin et al 1984 in a survey of r d executives in 130 industries

a failure inducement model of research and development expenditure abstract empirical evidence for the schumpeterian suggestion of a positive relationship between profitability and innovative effort is slim in fact the opposite is often suggested an alternative failure inducement hypothesis argues that firms make innovative efforts when performance falls below a minimum threshold resulting in a negative relationship between profitability and r d expenditures data on r d expenditures in italian industry in the early 1980s a period of severe economic crisis show that both hypotheses are relevant for firms whose profits are well above or well below average respectively

evaluating a dutch scheme for encouraging research development this paper contains an evaluation over the period 1984 1988 of an important instrument of dutch technology policy a generic subsidy on r d labor costs which especially favours small firms the evaluation is based on surveys among nearly 3000 subsidy using firms and on empirical analysis the surveys show that the subsidy effectively strengthened the r d activities of small firms in particular it can be concluded from the empirical analysis that the subsidy generated between 40 and 150 of additional r d spending given the large spill over effects of r d this probably means that the social benefits of the subsidy outweigh the costs the incubation period of subsidies like the dutch scheme require consistency and continuity of governmental r d policies in order to influence corporate strategies in particular those of small firms

mortgage lending in boston interpreting hmda data the home mortgage disclosure act was enacted to monitor minority and low income access to the mortgage market the data collected for this purpose show that minorities are more than twice as likely to be denied a mortgage as whites yet variables correlated with both race and creditworthiness were omitted from these data making any conclusion about race s role in mortgage lending impossible the federal reserve bank of boston collected additional variables important to the mortgage lending decision and found that race continued to play an important though significantly diminished role in the decision to grant a mortgage copyright 1996 by american economic association

effectiveness of r d subsidies a sceptical note on the empirical literature abstract in previous literature the impact of r d subsidies on firms technology efforts is analysed mainly with two different methods by interviewing managers in subsidised firms and by measuring statistical covariation between r d efforts and subsidies interview studies normally indicate that subsidies have been rather inefficient in econometric studies the endogeneity of subsidies may have biased the results but when this problem is avoided the results are consistent with interview studies

entrepreneurial finance credit cards and race this paper examines the impact of financial deregulation on entrepreneurship we assess the impact of credit card deregulation on transitions into self employment using state level removal of credit card interest rate ceilings following the us supreme court s 1978 marquette decision as a quasi natural experiment we find that credit card deregulation increases the probability of entrepreneurial entry with a particularly strong effect for black entrepreneurs we demonstrate that these effects are magnified in states with a history of racial discrimination and link the results to discriminationbased barriers to entry 2012 elsevier b v all rights reserved

towards a theory of the direct indirect tax mix despite the fact that all developed economies levy broadly based indirect taxes alongside direct taxes little theory is devoted to explaining the direct indirect tax mix our purpose is to show that if different taxes have different evasion characteristics some optimal tax mix emerges naturally assuming that only income tax can be evaded and focusing on a two class economy we analyse the case for supplementing optimal non linear income taxation with commodity taxation and we develop conditions under which the latter should or should not be uniform

do taxes matter the impact of the tax reform act of 1986 do taxes matter is the first systematic examination of the actual effects of the tax reform act of 1986 the most important u s income tax reform of the last four decades it presents basic information on and an analysis of a variety of different aspects of economic behavior in order to discover whether the observed changes coincide with the predictions of standard public finance models prior to implementation of the new law supporters and opponents made numerous forecasts about its effect on savings corporate investment and other major determinants of the country s economic health the general finding of these original contributions is that the effects of tax reform turned out to be smaller than had been anticipated commissioned by the office of tax policy research of the university of michigan eight of the studies focus on different sectors of the economy reviewing the predictions and carefully analyzing the evidence to determine actual effects the ninth study draws together the results to find lessons for future changes in tax policy joel slemrod is professor of business economics and public policy and director of the office of tax policy research at the university of michigan contents the economic impact of tax reform act of 1986 joel slemrod investment tax policy and the tax reform act of 1986 alan j auerbach kevin hassett the impact of the 1986 tax reform on personal saving jonathan skinner daniel feenberg effects of the tax reform act of 1986 on corporate financial policy and organizational form roger h gordon jeffrey k mackie mason taxation and housing markets preliminary evidence on the effects of recent tax reforms james m poterba the impact of the tax reform act of 1986 on foreign direct investment to and from the united states joel slemrod the impact of tax reform on charitable giving a 1989 perspective charles t clotfelter the impact of the tax reform act of 1986 on state and local fiscal behavior paul n courant edward m gramlich foreign responses to u s tax reform john whalley lessons for tax reform henry j aaron

a reexamination of the empirical relationship between investment and financing decisions several studies see 7 15 9 and 16 have attempted to ascertain the empirical relationships that exist between the financing and investment decisions of firms the primary impetus for these efforts was provided by modigliani and miller mm 20 21 when they demonstrated that under the assumption of perfect capital markets the optimal investment decisions of a firm are separable from its financing decisions in the presence of market imperfections interdependencies between these decisions that violate the basic mm propositions may exist therefore the studies referred to above have essentially focused upon determining whether market imperfections have been of sufficient magnitude to lead to joint determination of investment and financing decisions though the original mm propositions were introduced more than two decades ago the nature of the empirical relationship between investment and financing decisions remains a controversial issue the fact that this matter is still unresolved is not attributable to a lack of attention for the original propositions have been examined in the presence of taxes bankruptcy costs and agency costs with no clear consensus emerging

will affirmative action policies eliminate negative stereotypes a key question concerning affirmative action is whether the labor market gains it brings to minorities can continue without it becoming a permanent fixture in the labor market the authors argue that this depends on how the policy affects employers beliefs about the productivity of minority workers they study the joint determination of employer beliefs and worker productivity in a model of statistical discrimination in job assignments the authors prove that even when identifiable groups are equally endowed ex ante affirmative action can bring about a situation in which employers correctly perceive the groups to be unequally productive ex post copyright 1993 by american economic association

what happens when information leaves a market evidence from postbankruptcy consumers federal law mandates the removal of personal bankruptcies from credit reports after 10 years the removal s effect is market efficiency in reverse the short term effect is a spurious boost in apparent creditworthiness especially for the more creditworthy bankrupts delivering a substantial increase in both credit scores and the number and aggregate limit of bank cards the longer term effect is lower scores and higher delinquency than initial full information scores predict these findings relate to both the debate over the bankruptcy code and the wisdom of influencing market clearing by removing information

discrete choice with social interactions this paper provides an analysis of aggregate behavioural outcomes when individual utility exhibits social interaction effects we study generalized logistic models of individual choice which incorporate terms reflecting the desire of individuals to conform to the behaviour of others in an environment of noncooperative decisionmaking laws of large numbers are generated in such environments multiplicity of equilibria in these models which are equivalent to the existence of multiple self consistent means for average choice behaviour will exist when the social interactions exceed a particular threshold local stability of these multiple equilibria is also studied the properties of the noncooperative economy are contrasted with the properties of an economy in which a social planner determines the set of individual choices finally a likelihood function based on the theoretical model is given and conditions for the econometric identifiability of the model are established

reinsurance and corporate taxation in the united kingdom life insurance industry there are two main tax related arguments regarding the use of reinsurance the income volatility reduction and the income level enhancement arguments the income volatility reduction argument contends that firms facing convex tax schedules have incentives to hedge in order to reduce the volatility of their annual taxable income and thereby lower expected tax liabilities smith c w stulz r m 1985 optimal hedging policies journal of financial and quantitative analysis 19 127 140 the income level enhancement argument advanced by adiel adiel r 1996 reinsurance and the management of regulatory ratios and taxes in the property casualty insurance industry journal of accounting and economics 22 207 240 is more specific to hedging via reinsurance this perspective holds that reinsurance enhances current reported earnings via the receipt of reinsurance commissions and so increases tax liabilities consequently insurance firms with high marginal tax rates should use less reinsurance than those with low marginal tax rates if tax matters prior studies using data on financial derivatives have produced mixed results on the validity of the first argument while adiel 1996 finds the second argument insignificant in his study of the use of reinsurance by a sample of united states us property liability insurance firms this study tests the two tax related arguments using 1992 2001 data for a sample of united kingdom uk life insurance firms we find that uk life insurers with low before planning marginal tax rates tend to use more reinsurance in contrast tax convexity is found to have no significant impact on the purchase of reinsurance and so the volatility reduction argument is not supported

a model of redlining abstract we develop a model of mortgage redlining which captures the dynamic information gathering which is implied by the use of appraisals in mortgage granting in our model the precision of appraisals depends on the quantity of previous home sales in turn the precision of appraisals influences current home sales since when appraisals are inaccurate lenders require larger down payments there is thus a dynamic information externality in which past purchases influence current purchases as a consequence differential mortgage lending behavior will be sub optimal and the appearance of redlining may be justifiably subject to corrective action

what constitutes evidence of discrimination in lending we analyze a simple model of bank lending in order to ascertain what can be inferred from relative denial and default rates about lending discrimination we show that if minority applicants are of lower average creditworthiness than majority applicants then contrary to a popular argument a uniform nondiscriminatory credit policy cannot simultaneously produce i higher denial rates for minority applicants and ii equal default rates for minority and majority applicants moreover we show that equality of denial or default rates always implies discrimination in particular equal denial default rates imply discrimination against majority minority applicants is there discrimination in the bank lending market this question has recently attracted attention in the popular press and from federal regulators this interest was spurred by a 1992 boston federal reserve bank study which concludes that minorities are discriminated against in the home mortgage market 1 the study finds that minority applicants in the boston area are sixty percent more likely to be denied a mortgage loan than whites even after controlling for such factors as debt burdens loan to value ratios income and credit histories not surprisingly this conclusion has been controversial critics of the boston fed study have argued that the methodology used by the fed is flawed a representative example is macey 1994 who

do taxes matter lessons from the 1980 s the response of the economy to two major although in important respects offsetting tax reforms has been much smaller than ardent supply side revolutionaries expected thus suggesting that a reassessment of the grounds for revolt is in order this paper offers such a reassessment by first discussing how the evidence from the tax reforms of 1981 and 1986 reflects on our understanding of the response to taxation with particular reference to savings and capital gains realizations i then reconstruct a 1992 view about how taxes affect behavior a unifying theme is that the tax system does much more than alter the relative prices of real variables it also provides incentives to misreport income restructure financial claims time transactions change the legal form of organization and so on for this reason observed low tax elasticities of real variables may be due to either low elasticities of substitution or the fact that tax policy changes opportunity sets in complex ways disentangling these explanations requires an emphasis on the transaction based nature of the tax system and the administration and enforcement of tax laws this abstract was borrowed from another version of this item

tax evasion in an open economy abstract ignoring tax evasion possibilities a value added and a cash flow income tax have similar behavioral and distributional consequences yet the available means of tax evasion under each can be very different under a vat avoidance occurs through cross border shopping whereas under an income tax it can occur through shifting taxable income abroad given evasion we show that a country would make use of both taxes in order to minimize the efficiency costs of evasion activity relying relatively more on whichever tax is harder to evade we then make use of aggregate danish tax and accounting data from 1992 to measure the amount of evasion that occurred under the two taxes while the estimates of evasion activity are small the figures imply that denmark could reduce the real costs of evasion activity by relying more on value added taxes

rates for vehicle loans race and loan source a household s vehicle purchases are among its largest expenditure outlays moreover unlike housing purchases which a typical household may make once or twice over a lifetime a house hold may well buy several cars over the same interval the magnitude and relative frequency of vehicle purchases suggest that differential treatment by race in the vehicle market may have important implications for differences in wealth and financial well being by race yet whereas a robust literature in economics has studied virtu

racial discrimination and redlining in cities we propose a model where employers have two types of prejudices racial and spatial discriminations because of the rst one black workers have less chance than white workers to nd a job because of the second one workers living closer to the city center have less chances than suburban workers to nd a job in this context we show that depending on the importance of access costs to employment centers two urban equilibria may emerge in equilibrium 1 the access cost for blacks is quite large black and white workers are totally separated while in equilibrium 2 the access cost for blacks is relatively small workers are separated by their employment status the unemployed versus the employed we then study the labor market equilibrium and its interactions with the land market we show in particular that both race and space matter to explain high unemployment rates among blacks

efficient investment incentives in the presence of capital flight abstract this paper examines the efficiency of quantity restrictions on capital exports and the accompanying set of taxes when a government can effectively tax foreign source income then it is not efficient to impose restrictions on capital exports and the optimal tax rates on foreign source and domestic source income are the same an efficient allocation of domestic savings between foreign and domestic investment is obtained however when the government cannot tax foreign source income it is optimal to impose such a restriction so as to induce overinvestment in domestic capital

the relationship between federal contract r d and company r d according to recent estimates federal budget outlays for research and development rd this component will rise 28 percent and absorb 70 percent of all federal r d spending in 1984 compared to under 50 percent in 1980 since work corresponding to about one half of the dollar value of the federal r d program is generally performed by private industrial firms under contract with federal agencies the rapid increase in federal r d outlays will presumably be reflected in a similar increase in the value of commitments by industrial firms to perform government r d one of the most important economic questions posed by the large prospective increase in resources allocated to federal contract r d concerns its consequences for the economy s rate of technical progress of productivity growth in the next section i argue that the ultimate impact on productivity depends on how company decisions to finance r d are affected by the availability of federal contract r d funds i then provide a brief review and critique of previous studies of the relationship between companyand federalfinanced r d performed in industry and present new estimates which differ from existing ones with respect to both methodology and implications these estimates are consistent with the hypothesis that increases in federal r d activity tend to be associated with significant reductions in companyfinanced r d a number of studies have attempted to determine the ceteris paribus effects of company and federal r d on the rate of productivity growth p by estimating variants of the equation

innovative strategic groups in multinational industries abstract differences in innovative strategies between groups of domestic and multinational enterprises are analyzed within a two stage game model that incorporates the asymmetries in transaction costs between the two species of enterprises nash and cooperative behaviour is shown to result in different equilibrium r d strategies with the multinational companies doing typically more r d for larger markets and domestic companies focusing on specific market segments survey data from companies operating in eleven high tech multinational industries in belgium provide support for these strategic differences and show how they are related to company performance

commodity tax competition between member states of a federation equilibrium and efficiency we first describe regional market equilibria whereupon consumers of each region allocate their purchases of private goods between domestic and nondomestic ones according to the structure of relative prices taxes and transportation costs next regional optimal tax levels and public good quantities are derived the tax of the other region being held constant fiscal competition arises from the ability of one region in choosing its tax to alter the tax base of the other

do liquidity constraints and interest rates matter for consumer behavior evidence from credit card data this paper utilizes a unique new dataset of credit card accounts to analyze how people respond to changes in credit supply the data consist of a panel of thousands of individual credit card accounts from several different card issuers with associated credit bureau data we estimate both marginal propensities to consume mpcs out of liquidity and interest rate elasticities we also evaluate the ability of different models of consumption to rationalize our results distinguishing the permanent income hypothesis pih liquidity constraints precautionary saving and behavioral models we find that increases in credit limits generate an immediate and significant rise in debt counter to the pih the average mpc out of liquidity ddebt dlimit ranges between 10 14 the mpc is much larger for people starting near their limits consistent with binding liquidity constraints however the mpc is significant even for people starting well below their limit we show this response is consistent with buffer stock models of precautionary saving nonetheless there are other results that conventional models cannot easily explain e g why so many people are borrowing on their credit cards and simultaneously holding low yielding assets unlike most other studies we also find strong effects from changes in account specific interest rates the long run elasticity of debt to the interest rate is approximately 1 3 less than half of this elasticity represents balance shifting across cards with most reflecting net changes in total borrowing the elasticity is larger for decreases in interest rates than for increases which can explain the widespread use of temporary promotional rates the elasticity is smaller for people starting near their credit limits again consistent with liquidity constraints

do lenders discriminate against minority and woman entrepreneurs abstract this paper draws on a conceptual analysis of discrimination to improve the methodology for estimating discrimination in small business credit markets and to provide some evidence about the possible causes of discrimination in these markets using a variety of statistical enhancements to existing studies we find statistically significant evidence of substantial discrimination in loan approval against black owned and hispanic owned businesses in 1998 we also find some hints that this discrimination takes the form of statistical discrimination driven by lenders stereotypes about the ability of black and hispanic owned businesses to succeed under some circumstances although we find no discrimination on average in interest rates on approved loans we also find that black owned businesses do face discrimination in interest rates when they borrow from finance companies and businesses such as mutual fund companies and leasing companies with a primary mission other than lending these findings suggest that federal financial regulatory agencies should re double their efforts to uncover and prosecute lenders who discriminate against black and hispanic owned businesses and that new tools may be needed to find discrimination by firms not well covered by the existing fair lending enforcement system

the effects of r d tax credits and allowances in canada abstract in canada as in many other countries that have adopted r d tax credits and allowances there has been considerable controversy over their effectiveness in increasing company financed research and development this study seems to be one of the first systematic attempts to estimate the effects of canada s r d tax credits and allowances the results present a very consistent picture the survey results the econometric results and some simple calculations based on rough measures of the price elasticity of demand for r d all suggest that the special research allowance increased r d expenditures by about 1 percent and that the investment tax credit increased them by about 2 percent these increases seem to be appreciably less than the revenue losses to the government

an analysis of the composition of r d spending research and development encompasses a myriad of activities generally research is the primary search for technical or scientific advancement and development is the translation of such advancement into product of process innovations the national science foundation has fostered an even finer breakdown basic research applied research and development in practice however r d is more heterogeneous than these labels imply the research fields associated with basic research include areas in both the physical and biological sciences applied research and development projects relate to product groups as diverse as all the activities in the industrial sector nevertheless most previous empirical studies of the microeconomic aspects of r d have treated r d spending as a single homogeneous activity consequently a generally acceptable set of variables has developed for explaining inter firm levels of r d spending but virtually nothing is known about the determinants of the inter firm composition of r d

redlining in boston do mortgage lenders discriminate against neighborhoods historically lenders have been accused of redlining minority neighborhoods as well as refusing to lend to minority applicants considerable bank regulation is designed to prevent both actions however the strong correlation between race and neighborhood makes it difficult to distinguish the impact of geographic discrimination from the effects of racial discrimination previous studies have failed to untangle these two influences in part because of severe omitted variable bias the data set in this paper allows the distinct effects of race and geography to be identified and it shows that the evidence for redlining is weak

empirical tax research in accounting this paper traces the development of archival microeconomic based empirical income tax research in accounting over the last 15 years the paper details three major areas of research i the coordination of tax and non tax factors ii the effects of taxes on asset prices and iii the taxation of multijurisdictional international and interstate commerce methodological concerns of particular interest to this field also are discussed the paper concludes with a discussion of possible directions for future research r 2001 elsevier science b v all rights reserved jel classification m41 h25 k34 g32 f23

interstate commodity tax differentials and the distribution of residents abstract this paper considers the manner in which an unequal distribution of consumers affects the commodity tax policies of neighboring jurisdictions the paper uses a spatial model in which the residents of two states are distributed non uniformly and employs a variety of assumptions about the behavior of governments and firms throughout the paper shows that at a nash equilibrium in tax levels the sparsely populated state imposes a lower tax than does its densely populated neighbor the paper also demonstrates how equilibrium state taxes differ depending on whether firms employ marginal cost or profit maximizing pricing

are firms that received r d subsidies more innovative this paper looks at the effectiveness of r d grants for canadian plants that already benefit from r d tax credits using a non parametric matching estimator we find that firms that benefited from both policy measures introduced more new products than their counterparts that only benefited from r d tax incentives they also made more world first product innovations and were more successful in commercializing their innovations

credit card redlining abstract this paper evaluates the presence of racial disparities in the issuance of consumer credit using a database of credit histories i link location based information on race with individual credit files after controlling for place specific factors such as housing vacancy rates and general population demographics i find qualitatively large differences in the amount of credit offered to similarly qualified applicants living in black versus white areas high data quality allows distinguishing between issuer provision supply and utilization of credit demand additional estimates using information on payday lending provide support for idea that issuers condition lending on location

a general equilibrium model of statistical discrimination we study a general equilibrium model with endogenous human capital formation in which ex ante identical groups may be treated asymmetrically in equilibrium the interaction between an informational externality and general equilibrium effects creates incentives for groups to specialize discrimination may arise even if the corresponding model with a single group has a unique equilibrium the dominant group gains from discrimination rationalizing why a majority may be reluctant to eliminate discrimination the model is also consistent with reverse discrimination as a remedy against discrimination since it may be necessary to decrease the welfare of the dominant group to achieve parity

democracy of credit ownership and the politics of credit access in late twentieth century america in recent years sociologists have noted the increasing centrality of credit for determining life chances in our society but they have not given adequate attention to the credit market as a key site where individuals assert claims over economic resources this article explores distinctive features of the credit transaction that differentiate claims making in the credit market from more familiar forms of claims making in the labor market rather than the quid pro quo exchange between formal equals that characterizes the wage relation the extension of credit creates an obligation that marks the debtor as inferior to the creditor the hierarchical and asymmetrical nature of the loan contract appears to erode the possibility for effective political demands in this arena however this article demonstrates that to the extent the status of ownership is institutionalized in the credit transaction borrowers may be able to overcome some of the disadvantages associated with occupying the weaker position in an

assessing the effect of public subsidies on firm r d investment a survey this survey examines the empirical literature on the relationship between public r d subsidies and private r d investment over the past five decades the survey reveals a considerable heterogeneity of empirical results that cannot be explained fully by methodological issues we aim to provide further explanations of the possible causes of that heterogeneity in particular we emphasise a set of issues that in our view are critical to understanding the potential effect of public r d subsidies on private r d spending special attention is paid to the dynamic aspects and composition of firm r d the constraints faced by the firm such as financial constraints and the amount and source of public subsidies none of these issues have been investigated in depth we formulate a set of research assumptions to guide future empirical research in this field

corporate behavior in adjusting to capital structure and dividend targets an econometric study this study of financing decisions by u s corporations examines the issuance of long term debt issuance of short term debt maintenance of corporate liquidity issuance of new equity and payment of dividends given costs and imperfections inherent in markets a firm s financial behavior is characterized as partial adjustment to long run financial targets individual firm data are used so that speeds of adjustment are allowed to vary by company and over time the results suggest that financial decisions are interdependent and that firm size interest rate conditions and stock price levels affect speeds of adjustment this study of financing decisions by u s corporations examines the issuance of long term debt short term debt and equity the maintenance of corporate liquidity and the payment of dividends the firm s financial behavior is characterized as partial adjustment to long run financial targets and individual firm data 1966 1978 are used to estimate firm specific time varying speeds of adjustment the results suggest that financial decisions are interdependent and that firm size interest rate conditions and stock price levels affect speeds of adjustment also the estimated coefficients are more plausible than the very small taggart 28 or very large spies 26 values found in earlier studies section i of the paper introduces the general model in section ii a tractable empirical model is developed section iii presents the data to be used in the study and discusses econometric issues in section iv results and conclusions are offered

the spatial incidence of local retail taxation this paper examines the effects of local retail taxation in two simple models of spatial competition suppose that a suburb or central city imposes an excise tax or subsidy on a particular commodity such as gasoline liquor restaurant meals or groceries or imposes a general sales tax that affects many commodities simultaneously to what extent does this lead to higher prices within the jurisdiction and in neighboring jurisdictions section ii presents the basic model of spatial competition that forms a component of the fixed locations model of section iii and the entry model of section iv infinitely many stores are located along an infinite line and demand density is completely inelastic and uniform along the line the main endogenous variables of interest are the prices charged by the different stores throughout the paper a nash equilibrium in prices is assumed section iii presents the fixed locations model in which the tax is imposed after stores have already established themselves store locations are fixed due to location specific sunk costs if a suburb containing a single store imposes an excise tax on a commodity the store that is taxed and its first second and third nearest neighbors on each side increase their prices by 57 7 percent 15 5 percent 4 2 percent and 1 1 percent of the tax respectively this result is independent of the spacing of the stores and independent of whether or not they are evenly spaced if a suburb containing several stores imposes an excise tax the changes in price follow directly by adding the effects of taxes on several adjacent stores if a central city taxes all stores on the right half line the results are given by 12 the taxed and untaxed stores closest to the boundary

an optimal taxation approach to fiscal federalism in a federal system of government each unit of government decides independently how much of each type of public good to provide and what types of taxes and which tax rates to use in funding the public goods in this paper we explore what types of problems can arise from this decentralized form of decision making in particular we describe systematically the types of externalities that one unit of government can create for nonresidents through both its public goods decisions and its taxation decisions the paper also explores briefly what the central government might do to lessen the costs of decentralized decision making

estimating the impact of the r d tax credit on strategic groups in the pharmaceutical industry abstract the economic recovery and tax act of 1981 provided a 25 percent tax credit for increases in research and experimentation expenditures previous studies have shown considerable controversy about the effectiveness of various tax credits this study focuses on the response of the strategic groups in the pharmaceutical industry to the credit four strategic groups were formed using different levels of research intensity research sales and relative cash flow margin cash flow sales the change in research intensity following enactment of the tax credit was estimated the analysis found that the tax credit caused an increase in r d expenditures in addition the r d tax credit appears to have contributed to increased competitive r d spending among the firms in the pharmaceutical industry

internal r d expenditures and external technology sourcing abstract the paper examines the two way relationship between external r d activities and internal r d expenditures on a cross section of flemish r d active companies the analysis extends the classical explanatory variables like size diversification ownership structure and technological opportunities to include the impact of various external sourcing strategies r d cooperation and to a lesser extent r d contracted out are found to have a significant positive effect on internal r d but only if the companies have absorptive capacity in the form of a full time staffed r d department at the same time firms are found to be more frequently engaged in r d cooperation the more they spend on internal r d

international tax competition and gains from tax harmonization abstract in a world economy there are two types of distortions which can be caused by capital income taxation in addition to the standard closed economy wedge between the consumer saver marginal intertemporal rate of substitution and the producer investor marginal productivity of capital i international differences in intertemporal marginal rates of substitution implying an inefficient allocation of world savings across countries and ii international differences in the marginal productivity of capital implying an inefficient allocation of world investment across countries the paper focuses on the structure of taxation for countries which are engaged in tax competition and on potential gains from a tax harmonization we show that if the competing countries are sufficiently coordinated with the rest of the world then tax competition leads each country to apply the residence principle of taxation and there are no gains from tax harmonization if however there is not sufficient coordination then tax competition leads to low capital income taxes and the tax burden falls on the internationally immobile factors the outcome is nevertheless still efficient relative to the available constrained set of tax instruments

demand side vs supply side technology policies hidden treatment and new empirical evidence on the policy mix this paper provides new empirical evidence about the impact of various technological policies upon firms innovative behaviour we take into consideration the role of policies for innovative activities and we focus on their interaction while supply side policies such as r d subsidies and tax credits have been both extensively discussed in the literature and empirically investigated the analysis of innovative public procurement is a growing trend in the literature which still lacks robust empirical evidence in this paper we replicate the existing results on supply side policies surmise fresh empirical evidence on the outcome of innovative public procurement and address the issue of possible interaction among the various tools when controlling for the interaction with other policies supply side subsidies cease to be as effective as reported in previous studies and innovative public procurement seems to be more effective than other tools the preliminary evidence suggests that technology policies exert the highest impact when different policies interact

veblen effects in a theory of conspicuous consumption the authors examine conditions under which veblen effects arise from the desire to achieve social status by signaling wealth through conspicuous consumption while veblen effects cannot ordinarily arise when preferences satisfy a single crossing property they may emerge when this property fails in that case budget brands are priced at marginal cost while luxury brands though not intrinsically superior are sold at higher prices to consumers seeking to advertise wealth luxury brands earn strictly positive profits under conditions that would with standard formulations of preferences yield marginal cost pricing the authors explore factors that induce veblen effects and they investigate policy implications copyright 1996 by american economic association

jeux sans frontieres tax competition and tax coordination when countries differ in size closer international integration is putting increasing pressure on existing national tax structures this paper uses a simple two country model to address a range of consequent policy concerns focusing particularly on the role of country size differences in size exacerbate the inefficiency from noncooperative behavior harming both countries the smaller country loses from harmonization to any tax rate between those set in the noncooperative equilibrium but both countries gain from the imposition of a minimum tax anywhere in that range the fully optimal response to freer cross border trade however may be to do nothing jel h20 h77

a comparison of census nsf r d data vs compustat r d data in a financial decision making model abstract this paper reports the results of a project in which r d data drawn from national science foundation and census bureau studies were substituted in several financial models for r d data drawn from the 1975 1982 compustat tapes the result using the compustat data did not differ significantly from that based on the nsf census data in the aggregate but significant differences were observed for certain industries and certain years the purpose of this paper is to discuss the financial models and determinants of corporate r d expenditures using the different databases and to suggest further questions for research financial support was provided by the center for innovation management studies at lehigh university and the national science foundation

the impact of state taxes on self insurance abstract this paper assesses whether insurers state taxes reduce purchases of property casualty coverage tests are conducted using state aggregates of insurer level data from publicly available annual accounting reports for 1993 1995 a positive relation between self insurance and state taxes is detected consistent with consumers opting to self insure rather than bear the incidence of higher insurer taxes as expected tax effects vary with the elasticity of demand when demand is largely inelastic e g automobile liability coverage taxes do not affect self insurance