assessing interactions among education social insurance and labor market policies in morocco this paper develops a general equilibrium model to assess the impact that integrated reforms of macroeconomic education and social protection policies can have on employment the model presents three innovations first it formalizes the production of skills in the economy by following sex age cohorts through the various levels of the education and training systems given dropout and repetition rates second it incorporates a module that projects social insurance expenditures as a function of the demographic structure of the country and the rules of the pension system finally it develops a very detailed description of the labor market where informality reflects strategic decisions by workers and not necessarily exclusion the model is applied to morocco the results of various simulations illustrate the importance of coordinating macro education and social protection policies in order to achieve meaningful effects on employment levels in particular the author show that isolated interventions to improve the internal efficiency of the education system can aggravate the unemployment problem that subsidies to investments are more efficient in sectors intensive in skilled labor and that not controlling the growth of pension expenditures and the tax wedge can depress employment in the formal sector

do r d tax credits work evidence from a panel of countries 1979 1997 this paper examines the impact of fiscal incentives on the level of r d investment an econometric model of r d investment is estimated using a new panel of data on tax changes and r d spending in nine oecd countries over a 19 year period 1979 1997 we find evidence that tax incentives are effective in increasing r d intensity this is true even after allowing for permanent country specific characteristics world macro shocks and other policy influences we estimate that a 10 fall in the cost of r d stimulates just over a 1 rise in the level of r d in the short run and just under a 10 rise in r d in the long run

durations of non default free securities a bond subject to default risk trades at a higher interest rate than a comparable default free bond in order to compensate investors for expected loss resulting from reduced or delayed promised payments the difference between the yields to maturity on the two bonds is called the default yield premium bonds with the same default yield premium however may differ in regard to the timing of their reductions in payment each time pattern of cash payments translates into a different duration value for a given stochastic process of default free interest rates failure to take this time pattern into account when computing durations of nondefault free bonds will result in misspecification of risk exposure for instance the duration of a bond that defaults on the first coupon will differ from the duration of a bond that defaults on the last payment even if both bonds have the same default yield premium and initial maturity early defaulters will have durations that are consistently longer than their simple unadjusted macaulay durations while later defaulters will have consistently shorter durations furthermore the error from not taking the stochastic process of default into account will be larger the greater the default yield premium more common than outright default is the situation where the issuer delays coupon and principal payments but eventually pays them in full some time after default all defaultadjusted durations for these bonds will exceed their corresponding unadjusted durations with the size of the adjustment increasing with term to maturity and exceeding the length of the delay in payments

government trade and comparative advantage a country in the theory of international trade is a collection of households endowed with a given supply of productive factors preferences and technologies for producing goods that can be traded on world markets the state plays a rather limited role usually that of impeding the free flow of goods across national borders with tariffs or other trade restrictions and perhaps transferring income from the winners to losers from international trade by tradition the function of the invisible hand of the price system requires little or nothing from an invisible government which may for most inquiries be safely ignored this tradition in contrast to many others in economics does not date back to adam smith smith regarded governments as performing essential tasks that provide the framework for the efficient operation of private markets maintaining law and order supporting the physical and social infrastructure of the country and enforcing the contracts that private agents enter into are just several among the many duties of the sovereign without which according to this smithian view a market economy cannot function while douglass north 1981 and a few

duration measures immunization and utility maximization abstract this paper explores the conditions under which a risk averse investor behaves like an immunizer in choosing the maturity structure of a balance sheet the setting is similar to grove s study in that the liabilities are assumed fixed but differs in the assumed evolution of interest rates m a grove on duration and the optimal maturity structure of the balance sheet bell journal of economics and management science 5 1974 696 709 it transpires that the circumstances under which a risk averse investor behave like an immunizer are not as limited as concluded in grove s study the model thus explains the extensive use of immunization by the business community

how responsive is business capital formation to its user cost an exploration with micro data abstract the response of business capital formation to its user cost is critical to evaluating tax reform deficit reduction and monetary policy evidence for a substantial user cost elasticity however is sparse most evidence has been based on aggregate data although several recent studies with firm level data report substantial effects with a particularly rich micro dataset containing over 26 000 observations this paper explores what can be learned about the user cost elasticity while the results depend to some extent on the specification and econometric technique various diagnostics lead us to prefer a precisely estimated but small elasticity of approximately 0 25 this paper is dedicated to the memory of robert eisner who labored early and ably on uncovering the determinants of investment spending and highlighting the importance of the question found in the title of this paper

default risk yield spreads and time to maturity this paper extends the default model of yield spreads for bonds by showing that in gen eral they are a complex function of maturity and in particular are not always monotoni cally increasing contrary to what one traditional view suggests our results may help explain the apparently conflicting empirical results found in the literature

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

effectiveness of r d tax incentives in small and large enterprises in quebec in this paper we evaluate the effectiveness of r d tax incentives in quebec using manufacturing firm data from 1997 to 2003 originating from r d surveys annual surveys of manufactures and administrative data the estimated price elasticity of r d is 0 10 in the short run and 0 14 in the long run with slightly higher elasticities for small firms than for large firms we show that there is a deadweight loss associated with level based r d tax incentives that is particularly acute for large firms for small firms it is not sizeable enough to suppress the r d additionality at least not for quite a number of years after the initial tax change incremental r d tax credits do not suffer from this deadweight loss and are from that perspective preferable to level based tax incentives

a catalytic and evolutionary approach to horizontal technology policies htps abstract this paper presents an evolutionary framework for horizontal technology policies htps especially market friendly ones involving project based incentives e g rd and they complement the more specific and well known selective and vertical policies aimed at individual sectors and technologies the analysis is conducted within a learning to innovate framework with emphasis on collective organizational learning search and market building the outcome is a technology policy cycle with distinct infant growth and mature phases proactive generation of a critical mass of projects for efficient learning and diffusion of innovation routines becomes the aim of the infant phase while the mature phase of the policy should focus on policy restructuring including drastic reductions in the support of routi projects and enhanced support of more complex types of innovation the paper also emphasizes the importance of a neutrality component in incentives in the infant phase of increasing selectivity and of building policy capabilities for efficient policy design and implementation

evaluating the impact of r d tax credits on innovation a microeconometric study on canadian firms this study examines the effect of r d tax credits on innovation activities of canadian manufacturing firms over the 1997 1999 period the federal and provincial r d tax credit programs were used by more than one third of all manufacturing firms and by close to two thirds of firms in high technology sectors we investigate the average effect of r d tax credits on a series of innovation indicators such as number of new products sales with new products originality of innovation etc using a non parametric matching approach compared to a hypothetical situation in the absence of r d tax credits recipients of tax credits show significantly better scores on most but not all performance indicators we therefore conclude that tax credits increase the r d engagement at the firm level and that the r d activities induced by fiscal incentives lead to additional innovation output

how effective are level based r d tax credits evidence from the netherlands this paper examines the impact of the r d fiscal incentive program on r d by dutch firms taking a factor demand approach we measure the elasticity of firm r d capital accumulation to its user cost econometric models are estimated using a rich unbalanced panel of firm data covering the period 1996 2004 with firm specific r d user costs varying with tax incentives using the estimated user cost elasticity we perform a cost benefit analysis of the r d incentive program we find some evidence of additionality suggesting that the level based program of r d incentives in the netherlands is effective in stimulating firms investment in r d however the hypothesis of crowding out can be rejected only for small firms the analysis also indicates that the level based nature of the fiscal incentive scheme leads to a substantial social dead weight loss

the effectiveness of tax incentives for r d i in developing countries the case of argentina abstract there is increasing interest in developing countries in granting tax incentives in order to encourage private investment in research development and innovation r d i however evidence on the effectiveness of such schemes in achieving policy goals in weak innovation systems contexts is still very scarce this paper aims at narrowing this knowledge gap by focusing on the effects of a tax credit scheme for promoting firm level innovation investment in argentina the analysis applies dynamic panel data techniques to a novel dataset merging several waves of the national innovation survey collected by the national institute of statistics and censuses the results suggest that the elasticity of r d i investment to its user cost of capital is a greater than 1 in absolute terms which implies that the intervention has been effective in increasing firms innovation efforts however effects vary depending on the type of innovation investment being subsidized industrial sector and size of the firm moreover when innovation investment is divided into innovation related capital goods expenditures and only r d the results suggest that the absolute value of the elasticity for the r d component of the innovation investment is less than 1 these heterogeneous effects should be exploited for further policy design

does governmental venture capital spur invention and innovation evidence from young european biotech companies this paper explores whether and how governmental venture capital investors gvcs spur invention and innovation in young biotech companies in europe to gauge invention we focus on the simple patent stock at the company level while innovation is proxied by the citation weighted patent stock our findings indicate that gvcs as stand alone investors have no impact on invention and innovation however gvcs boost the impact of independent venture capital investors ivcs on both invention and innovation we conclude that gvcs are an ineffective substitute but an effective complement of ivcs we also distinguish between technology oriented gvcs tvcs and development oriented gvcs dvcs we find that dvcs are better at increasing firm s inventions and that tvcs combined with ivcs support innovations

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

duration for bonds with default risk abstract does approximating duration estimates by ignoring default risk lead to error in the two major duration applications measuring interest rate price elasticity and immunization we derive a general expression for duration in the presence of default risk based on jonkhart s term structure model on the term structure of interest rates and the risk of default journal of banking and finance 3 253 262 1979 extended to encompass risk aversion the model includes terms for default probabilities and default payoffs in each period as well as for a delay between the occurrence of default and the final default payoff our main conclusion is that practical duration applications involving bonds with default risk must employ duration measures adjusted for default risk

beggar thy neighbor the in state out of state and aggregate effects of r d tax credits abstract the proliferation of r d tax incentives among u s states in recent decades raises two questions i are these tax incentives effective in increasing in state r d ii how much of any increase is due to r d being drawn away from other states this paper answers i yes and ii nearly all the paper estimates an augmented r d factor demand model using state panel data from 1981 to 2004 i estimate that the long run elasticity of in state r d with respect to the in state user cost is about 2 5 while its elasticity with respect to out of state user costs is about 2 5 suggesting a zero sum game among states

tax incentives and r d activity firm level evidence from taiwan this paper investigates the effect of tax incentives on r d activities in taiwanese manufacturing firms specifically we assess the potential r d enhancing effect on recipients of r d tax credits compared with their non recipient counterparts moreover the potential difference in the r d enhancing effect between high tech and non high tech firms is also examined utilizing a firm level panel dataset during 2001 and 2005 empirical results obtained by propensity score matching show that recipients of r d tax credits appear on average to have 93 53 higher r d expenditures and a 14 47 higher growth rate for r d expenditures than non recipients with similar characteristics the r d enhancing effect of r d tax credits is not found to be particularly relevant to high tech or non high tech firms we further employ a generalized method of moment gmm of the panel fixed model to control for the endogeneity of r d tax credits and firm heterogeneity in determining r d expenditure various estimates based on the entire sample and high tech firms are quite similar and there is a significantly r d enhancing effect of r d tax credits this result suggests that the r d preferential policy has induced more r d expenditure by firms in taiwan while the existence of the r d enhancing effect brought on by tax incentives is intuitive the estimates can provide insightful implications for the r d tax policy

effective duration of callable corporate bonds theory and evidence abstract this paper computes the effective duration of callable corporate bonds using a contingent claims model that incorporates both default risk and call risk the model generates empirical implications regarding the cross sectional variation and the firm specific determinants of duration and demonstrates that the effect of the call feature is to shorten duration except for low grade bonds the effective duration is also estimated empirically for a large sample of long term corporate bonds using monthly bond price and interest rate data cross sectional regression analysis is used to test the empirical implications of the model regarding the determinants of effective duration and the empirical results are quite supportive of the model s predictions

explicit and implicit tax effects of the r d tax credit this paper investigates the effects of the 1981 research and development r d tax credit first by examining the impact of the credit on the level of r d investment and second by estimating the magnitude of the implicit tax created by the credit the two effects are interrelated because an increase in the level of r d investment will increase the demand for r d inputs thus reducing the pretax rate of return from r d activity 1 i test the credit s investment effect using a time series r d spending model that includes both factors from the industrial organization literature to control for nontax effects and an r d credit usability variable to capture the incentive created by the credit previous research has produced mixed evidence on whether the credit had any positive