on the stability of the excess sensitivity of aggregate consumption growth in the usa summary this paper investigates whether there is time variation in the excess sensitivity of aggregate consumption growth to anticipated aggregate disposable income growth using quarterly us data over the period 1953 2014 our empirical framework contains the possibility of stickiness in aggregate consumption growth and takes into account measurement error and time aggregation our empirical specification is cast into a bayesian state space model and estimated using markov chain monte carlo mcmc methods we use a bayesian model selection approach to deal with the non regular test for the null hypothesis of no time variation in the excess sensitivity parameter anticipated disposable income growth is calculated by incorporating an instrumental variables estimation approach into our mcmc algorithm our results suggest that the excess sensitivity parameter in the usa is stable at around 0 23 over the entire sample period copyright 2016 john wiley sons ltd

politics and the new american welfare states federal law allows states to create new welfare policies determining who can receive welfare what types of clients are exempted from new welfare work requirements and the value of cash benefits this project tests nine different theoretical explanations of welfare policy to explain why states have reacted differently to this new authority we test these explanations on temporary aid to needy families tanf policies promulgated between 1997 and 2000 our findings confirm the strong role of race in tanf politics that soss et al 2001 recently reported but we also find that other constituent characteristics and institutions paternalistic goals and state resources have a consistent influence on welfare policy these results indicate that different approaches to welfare are attributable to the unique and very potent combination of political characteristics in each state

common persistence in conditional variances since the introduction of the autoregressive conditional heteroskedastic arch model in engle 1982 numerous applications of this modeling strategy have already appeared a common finding in many of these studies with high frequency financial or monetary data concerns the presence of an approximate unit root in the autoregressive polynomial in the univariate time series representation for the conditional second order moments of the process as in the so called integrated generalized arch igarch class of models proposed in engle and bollerslev 1986 in the igarch models shocks to the conditional variance are persistent in the sense that they remain important for forecasts of all horizons this idea is readily extended to a multivariate framework even though many time series may exhibit persistence in variance it is likely that several different variables share the same common long run component in that situation the variables are naturally defined to be co persistent in variance and the co persistent linear combination is interpretable as a long run relationship conditions for co persistence to occur in the multivariate linear garch model are presented these conditions parallel the conditions for linear co integration in the mean as developed by engle and granger 1987 the presence of co persistence has important implications for asset pricing relationships and in optimal portfolio allocation decisions an empirical example relating to the time series properties of nominal u s dollar exchange rates for the deutschemark and the british pound provides a simple illustration of the ideas

welfare reform and the race to the bottom theory and evidence economists have argued that welfare migration leads to a race to the bottom in the choice of welfare benefits although a system of federal matching grants can remedy this problem the recent welfare reform law replaced the existing matching grant structure with block grants a policy change that appears undesirable to judge whether this critique of welfare reform is justified this paper evaluates the evidence in favor of a race to the bottom after explaining the theoretical effects of welfare migration the paper surveys the empirical evidence on the occurrence of such migration concluding that the evidence is mixed the discussion also considers recent empirical tests for strategic interaction which show that benefit levels in nearby states affect a given state s benefit choice the most plausible source of such interaction is a concern about welfare migration which leads policymakers to look at benefits in neighboring states when making their own choices judging that the evidence appears consistent with the existence of a race to the bottom the paper concludes that the demise of matching grants may be undesirable from a policy perspective

optimal public sector wages i build a dynamic stochastic general equilibrium model with search and matching frictions to determine the optimal public sector wage policy public sector wages are crucial in achieving efficient allocation of jobs high wages induce too many unemployed to queue for public sector jobs in turn raising unemployment the optimal wage depends on the frictions in the two sectors following technology shocks public sector wages should be pro cyclical and deviations from the optimal policy significantly increase the volatility of unemployment

migration and income redistribution responsibilities this study examines whether afdc benefits determine or discourage state to state migration flows in the united states a pooled cross section time series model is developed to estimate afdc benefits in a state and recipients and whether benefits in one state affect benefits in other states a second model using data from the 1980 census and the panel study of income dynamics estimates migration of afdc recipients and the level of benefits in in migration and out migration states both models indicate that small but statistically significant amounts of migration occur which may be quite important but only in the long run movers although small in number are much more likely to move to a state with higher benefits states perceive this migration as important indicating that states should have less control and the federal government more control over income redistribution

political institutions and sorting in a tiebout model we construct a computational model of tiebout competition and show that political institutions differ in their ability to sort citizens effectively in particular we find that certain types of institutions those that become more politically unstable as citizen heterogeneity increases perform relatively poorly given a single jurisdiction yet these same institutions perform relatively well when there are multiple jurisdictions we provide an explanation for this phenomenon which draws upon simulated annealing a discrete nonlinear search algorithm jel

output effects of government purchases the theoretical analysis focuses on the distinction between temporary and permanent movements in government purchases under plausible conditions the temporary case involves an output response that is positive less than one to one with the change in government purchases and larger than that generated by an equal sized but permanent shift in purchase the equilibrium real rate of return rise in the temporary case but changes little in the permanent one defense purchases are divided empirically into permanent and temporary components by considering the role of temporary wars no temporary shifts in nondefense purchases were isolated empirical results verify an expansionary output effect for temporary purchases that exceeds that of permanent purchases the results for some other expectational hypotheses are found to be generally supportive of the theory

the predictability of aggregate consumption growth in oecd countries a panel data analysis we examine aggregate consumption growth predictability we derive a dynamic consumption equation which encompasses relevant predictability factors habit formation intertemporal substitution current income consumption and non separabilities between private consumption and both hours worked and government consumption we estimate this equation for a panel of 15 oecd countries over the period 1972 2007 taking into account parameter heterogeneity endogeneity and error cross sectional dependence using a gmm version of the common correlated effects mean group estimator small sample properties are demonstrated using monte carlo simulations the estimation results support income growth as the only variable with significant predictive power for aggregate consumption growth

performance federalism and local democracy theory and evidence from school tax referenda federal governments are increasingly employing empirical measures of lower level government performance to ensure that provincial and local jurisdictions pursue national policy goals we call this burgeoning phenomenon performance federalism and argue that it can distort democratic accountability in lower level elections we estimate the impact of a widely publicized federal indicator of local school district performance one that we show does not allow voters to draw valid inferences about the quality of local educational institutions on voter support for school tax levies in a u s state uniquely appropriate for this analysis the results indicate that a signal of poor district performance increases the probability of levy failure a substantively large and robust effect that disproportionately affects impoverished communities the analysis employs a number of identification strategies and tests for multiple behavioral mechanisms to support the causal interpretation of these findings

how income transfer programs affect work savings and the income distribution a critical review for helpful comments on earlier drafts we thank without implicating moses abramovitz yves balcer john bishop alan blinder richard burkhauser michael darby irwin garfinkel alan gustman daniel hamermesh martin holmer george jakubson robert lampman paul menchik robert moffitt michael murray joseph quinn timothy smeeding eugene smolensky barbara wolfe and two anonymous referees

the impact of state economic differentials on household welfare and labor force behavior abstract this paper calculates state specific income expectations for low income households using a simultaneous model of household labor force and welfare participation decisions a variety of simulations indicate the interlocking effects of existing state differences in welfare wages and taxes on work welfare choices and income significant differences among similar households in different states occur equalization of welfare benefits eliminates some but not all of these differences but generates potentially serious policy problems for the states

the permanent income hypothesis estimation and testing by instrumental variables the permanent income hypothesis with rational expectation is restated estimated and tested by an instrumental variables technique on the postwar u s aggregate time series data the hypothesis is accepted on a consumption series which includes service flows from consumer durables if the consumption series is the one in the national income and product accounts the hypothesis is decisively rejected an explanation is suggested to reconcile the conflicting test results

a politico economic theory of income redistribution this study integrates models of income redistribution developed by economists who suggest that citizens voluntarily redistribute because of interdependent preferences and rely on the state for implementation owing to the public good nature of redistribution and political scientists who focus on conditions that lead to demands that the state intervene to assist the poor and on the development of institutions that facilitate such demands we propose a testable theory of redistribution and apply it to data from the american states the empirical analysis addresses determinants of the aid to families with dependent children guarantee adjusted for medicaid and food stamps to which a family receiving the guarantee would be entitled we posit significant links between the guarantee and both observable explanatory variables such as per capita income and latent constructs such as liberal party control we specify observable indicators for the latent constructs and use the lisrel method to estimate parameters for the indicators and structural coefficients the findings show that both political and economic variables significantly affect the level of the guarantee

welfare generosity the importance of administrative efficiency community values and genuine benevolence using 1988 1991 state level data a public expenditure model is estimated for benefits paid through the aid to families with dependent children afdc programme the paper investigates whether differences in programme efficiency community attitudes perceptions of the effects of afdc on recipient behaviour and tastes for redistribution explain the variation in public support for welfare across states

the empirical evidence for citizen information and a local market for public goods in their 1993 article in this review paul teske mark schneider michael mintrom and samuel best sought to establish the microfoundations for a model of a competitive market for public 5 services between local governments in polycentric regions an important part of their model focused on subgroups of informed citizens especially recent movers theoretical analysis was supplemented by an empirical study of the factors shaping accuracy of long island homeowners information about relative expenditures and tax rates of their school districts david lowery w e lyons and ruth hoogland dehoog criticize the relevance of this empirical evidence suggesting the atypical nature of education as a service especially in this site and challenging the sufficiency of the demonstrated levels of information for generating a competitive market teske and his colleagues reply by pointing out the general importance of education throughout american local policymaking and by defending the relevance of their measures and conclusions for their market model

assistance to the poor in a federal system abstract this paper explores the roles of different levels of government in assisting the poor using a model incorporating utility interdependence the paper first presents some theoretical results indicating how levels of poor relief vary with the extent of mobility of the poor under both centralized and decentralized systems of support it then provides a survey of the empirical work on migration of the poor along with a brief historical discussion of the experience under the english poor laws the concluding section turns to normative issues and contends that mobility of the poor is a basic source of inefficiency in wholly decentralized systems of support this inefficiency along with certain other equity considerations establishes a role for the central government in assistance to the poor

liquidity constraints and the substitutability between private and government consumption the role of military and non military spending i introduction using data for a number of economies we investigate i the relationship between private consumption and two types of government spending military and non military and ii the severity of liquidity constraints because of their importance for macroeconomic modeling in theory and practice 1 both issues have been the subjects of considerable theoretical and empirical investigation on the issue of liquidity constraints the most influential research has relied on hall s 1978 euler equation approach to the permanent income hypothesis in an attempt to reconcile hall s and flavin s 1981 methodologies hayashi 1982 modified hall s martingale result to allow for the possibility that a subset of consumers are liquidity constrained and showed that liquidity constraints can result in consumption s excess sensitivity to current income campbell and mankiw 1989 1990 1991 and jappelli and pagano 1989 have applied hayashi s methodology using data from the u s and several other oecd countries on the substitutability issue aschauer 1985 has modified hall s euler equation to allow for substitutability between government spending and private consumption and found that the two are substitutes for the u s karras 1994 however using a similar approach and data for 30 countries concludes that private and government consumption are better described as complementary or unrelated liquidity constraints and substitutability have been combined in studies by graham and himarios 1991 cushing 1992 and graham 1993 using u s data and by evans and karras 1996 for a number of countries a crucial limitation of most of these studies is the use of aggregate government consumption data which counterintuitively imposes a common substitutability parameter on all components of government spending 2 using recently available time series data for a large number of countries the present paper relaxes this restriction by decomposing government consumption into military and non military components enabling us to separately identify their relationship to private consumption the allocation of government consumption between military and non military functions has varied greatly across countries the appendix reports the average size of military and non military government shares in gdp as well as the military non military ratio by country over the 1970 1989 period average military expenditure as a fraction of gdp for example has ranged in our sample from 0 11 in mexico to 12 30 in jordan similarly the fraction of government consumption absorbed by military expenditure has ranged from 1 09 in mauritius to 66 82 in poland this sizable variability is promising in terms of cross sectional identification power but it also suggests that the estimated parameters must not be assumed to be common across countries the estimated model is derived in section ii which combines liquidity constraints and substitutability by nesting the approaches of hayashi 1982 and aschauer 1985 in the same section we discuss data sources and the estimation strategy which permits the estimated parameters to vary by country in a way that helps determine how they are influenced by country specific factors section iii estimates the model for a panel of the 66 countries for which annual data on all series are available for the 1970 1989 period the paper s main conclusions are given in section iv ii methodology and data we assume that consumers in economy i at time t derive utility from effective consumption c sup which we define as 1 mathematical expression omitted where c is private consumption g sup m and g sup nm are the military and non military components of government consumption the parameters theta sup m and theta sup nm measure the degree of substitutability between c and g sup m and c and g sup nm respectively

private and government consumption with liquidity constraints abstract economic theory predicts that liquidity constraints and substitutability or complementarity between private and government consumption result in excess sensitivity of private consumption to income and government consumption respectively using annual data we estimate these excess sensitivity parameters for each of 54 countries and show that they not only have sensible values but are also correlated with several variables in ways consistent with economic theory our findings imply that the degree of substitutability between government services and private consumption depends negatively on the fraction of government spending that goes to national defense we also find that liquidity constraints typically exist and they are affected positively by output variability and negatively by the saving rate

fiscal policy and private consumption instrumental variables tests of the consolidated approach since barro s 1974 restatement of the debt neutrality proposition economists have directed considerable research toward determining whether fiscal policy can affect aggregate demand most of the debate both theoretical and empirical has focused on the net wealth content of privately held government debt although existing research has hardly provided a definitive resolution to this debate see for example blinder and deaton 1985 bernheim 1987 barro 1989 recent efforts feldstein 1982 kormendi 1983 aschauer 1985 leiderman and razin 1988 have followed bailey 1971 and broadened the scope of the investigation to include the possibility that government expenditures substitute for private consumption expenditures in doing so feldstein kormendi and aschauer have shown that fiscal neutrality implies certain restrictions on private consumption behavior the first of these restrictions is what feldstein 1982 calls ex ante crowding out for complete ex ante crowding out government spending on goods and services must substitute dollar for dollar for private spending consequently an increase in government expenditures on consumption goods should lead to an equivalent decrease in private consumption expenditures a second restriction is that government finance decisions should not affect private consumption barro 1974 has derived conditions under which this result will obtain essentially maximizing consumers are assumed to be rational and forward looking accurately foreseeing future taxes implied by

lower class mobilization and policy linkage in the u s states theory political participation by lower class voters should create pressures for government to respond with supportive policies hypotheses lower class voting is associated with more generous state welfare policies political forces and institutions structure this relationship methods a pooled time series analysis for the 50 u s states from 1978 to 1990 results we demonstrate an enduring relationship between the degree of mobilization of lower class voters and the generosity of welfare benefits provided by state governments this relationship can be vitiated by remarkable political and economic events such as the new federalism and the economic recession in the early 1980s finally the importance of lower class mobilization for redistributive policy is enhanced by the liberalism and competitiveness of state democratic parties

mobility and redistribution the ability of individuals to move freely from one jurisdiction to another is generally seen as a constraint on the amount of redistribution that each jurisdiction within a system of governments can undertake in this paper we look at this proposition by developing a positive analysis of income redistribution by local governments in a federal system we ask how much redistribution occurs when only local governments can have tax transfer instruments individuals can move freely among jurisdictions and voters in each jurisdiction are fully aware of the migration effects of redistributive policies local redistribution is shown to induce sorting of the population with the poorest households located in the communities that provide the most redistribution while the threat of out migration affects the potential for redistribution our results suggest that significant local redistribution is nonetheless feasible numerical computations indicate that the proportion of residents who are renters is a major factor affecting the local choice of level of redistribution

the consumption function under exponential utility abstract a recent article by cantor derived a closed form solution for the consumer optimization problem with exponential utility and normal income shocks this paper derives solutions without imposing the normality assumption and investigates the effect of risk in this more general setting

bayesian inference methods for univariate and multivariate garch models a survey this survey reviews the existing literature on the most relevant bayesian inference methods for univariate and multivariate garch models the advantages and drawbacks of each procedure are outlined as well as the advantages of the bayesian approach versus classical procedures the paper makes emphasis on recent bayesian non parametric approaches for garch models that avoid imposing arbitrary parametric distributional assumptions these novel approaches implicitly assume infinite mixture of gaussian distributions on the standardized returns which have been shown to be more flexible and describe better the uncertainty about future volatilities finally the survey presents an illustration using real data to show the flexibility and usefulness of the non parametric approach

government spending and private consumption some international evidence this paper investigates the relationship between private consumption and publicly provided goods and services for a number of countries the empirical results show that in the aggregate private and government consumption are best described as complementary in the sense that an increase in one raises the marginal utility of the other the strength of this relationship is shown to be negatively affected by the government size these findings are robust across all specifications tried copyright 1994 by ohio state university press

pathways of representation a causal analysis of public opinion policy linkages theory altemative theories of the linkage process between mass policy preferences and public policies are tested empirically hypotheses opinion policy linkage may arise because mass preferences drive the policy process elite preferences drive the process or because of a shared preferences reciprocal influence process policy linkage may also be facilitated by higher voter mobilization and party competition methods a multiple equation model of the opinion policy process in the united states is tested with two stage least squares regression results the state policy process is best explained by an opinion sharing reciprocal influence model shared partisanship party competition and voter mobilization enhance the linkage process in theoretically anticipated ways

welfare and the multifaceted decision to move are poor single mothers more likely to stay in or move to states with higher welfare benefits this question has important implications on at least two levels as a policy matter the answer will enlighten us about the effects of welfare on society and will assist efforts to understand whether states systematically lower benefits in order to avoid becoming welfare magnets peterson and rom 1989 rom peterson and scheve 1998 volden 2002 this answer will also help us anticipate how welfare policies may evolve in other areas of the world where it is or is becoming as easy to move across jurisdictional boundaries as in the united states as a theoretical matter understanding the relationship between welfare and migration can help us better understand how the increasing mobility of people firms and capital affects governmental capacities to provide welfare and other redistributive benefits if generous government benefits prompt people who receive them to flow in and the people who pay for them to flow out the benefits will become increasingly difficult to sustain this is true not only for a federal system such as the united states but also for the international system in which political social and economic barriers to migration have fallen dramatically in recent years finding that welfare induced migration occurs in the united states would enhance concern about governmental capacity for social services finding no such behavior on the other hand would make us less inclined to believe that migration constrains governments in other less likely contexts lately most scholars researching the question have found very little or no support for the idea that welfare affects migration in the united states allard and danziger 2000 levine and zimmerman 1999 schram nitz and krueger 1998 schram and soss 1999 they conclude that the evidence is at best mildly in favor of the idea that welfare affects migration brueckner

does political knowledge increase turnout evidence from the 1997 british general election a number of recent formal models predict a positive effect of political knowledge on turnout both information acquisition and turnout however are likely to be determined by a similar set of variables rendering hard the identification of a causal link in empirical investigations available empirical regularities should therefore be interpreted as mere correlations i address this problem by using an intrumental variables approach where the instruments are represented by various proxies of information supply on mass media using survey data from the 1997 british general election study i show that political knowledge has a sizeable influence on the probability of voting and that mass media play an important role in influencing political participation

does welfare policy affect residential choices an empirical investigation accounting for policy endogeneity abstract this paper studies how changes in welfare policy affect welfare recipients residential choices although several empirical studies have stressed that welfare policy may affect residential choices of welfare recipients few studies have simultaneously taken into account that residential choices of welfare recipients are also likely to affect welfare policy this paper utilizes a policy reform to address this policy endogeneity the results show that welfare policy exerts a substantial effect on residential choices of welfare recipients

american federalism welfare policy and residential choices the relationship between welfare benefit levels and the residential choices of the poor raises two issues for federalism in the united states do state benefit levels affect the residential choices of the poor do residential choices of the poor affect the level at which a state sets its benefit levels empirical studies have seldom studied the interconnection between these two issues this research estimates simultaneously the mutual effects of welfare benefits and poverty rates while controlling for other economic and political variables when benefit levels become high the size of the poverty population increases conversely when poverty rates become high benefit levels are cut the findings are consistent with the claim that state determined benefit levels distort policy and residential choices

a semiparametric bayesian approach to the analysis of financial time series with applications to value at risk estimation abstract garch models are commonly used for describing estimating and predicting the dynamics of financial returns here we relax the usual parametric distributional assumptions of garch models and develop a bayesian semiparametric approach based on modeling the innovations using the class of scale mixtures of gaussian distributions with a dirichlet process prior on the mixing distribution the proposed specification allows for greater flexibility in capturing the usual patterns observed in financial returns it is also shown how to undertake bayesian prediction of the value at risk var the performance of the proposed semiparametric method is illustrated using simulated and real data from the hang seng index hsi and bombay stock exchange index bse30

migration the life cycle and state benefits how low is the bottom i show that among women likely to use welfare movers move to higher benefit states i also find that the probability likely welfare users will move at all is lower in higher benefit states this effect is concentrated early in the life cycle as theory predicts i construct a theoretical framework to measure the impact of welfare migration on optimal state benefits simulation results suggest little impact in higher benefit states but possibly a more substantial impact in other states finally evidence suggests little reason for concern due to welfare migration in using cross state variation in welfare generosity to identify incentive effects of the welfare system on other outcome variables

establishing the micro foundations of a macro theory information movers and the competitive local market for public goods e tiebout model of competition in the local market for public goods is an important and controversial theory the current debate revolves around the apparent disparity between macro 5 x empirical studies that show greater efficiency in the supply of public goods in polycentric regions compared to consolidated ones and micro evidence of widespread citizen consumer ignorance which has been used to argue that individual actions cannot plausibly lead to efficiency enhancing competition between local governments we argue that competitive markets can be driven by a subset of informed consumers who shop around between alternate suppliers and produce pressure for competitive outcomes from which all consumers benefit using data from a survey of overfive hundred households we analyze the role of these marginal citizen consumers and incorporate the costs of information gathering and the strategic interests of local governments into the competitive market model

fiscal policy in general equilibrium this paper studies four classic fiscal policy experiments within a quantitatively restricted neoclassical model the authors main findings are as follows 1 permanent changes in government purchases can lead to short run and long run output multipliers that exceed one 2 permanent changes in government purchases induce larger effects than temporary changes 3 the financing decision is quantitatively more important than the resource cost of changes in government purchases and 4 public investment has dramatic effects on private output and investment these findings stem from important dynamic interactions of capital and labor absent in earlier equilibrium analyses of fiscal policy copyright 1993 by american economic association

positive time preference the case for positive time preference is absolutely compelling unless there is an infinite time horizon with the expectation of unending technological advance combined with what we call drastically diminishing marginal utility this finding holds both in the positive and normative senses a corollary is that savings are interest elastic

a bayesian markov switching correlation model for contagion analysis on exchange rate markets this article develops a new markov switching vector autoregressive var model with stochastic correlation for contagion analysis on financial markets the correlation and the log volatility dynamics are driven by two independent markov chains thus allowing for different effects such as volatility spill overs and correlation shifts with various degrees of intensity we outline a suitable bayesian inference procedure based on markov chain monte carlo algorithms we then apply the model to some major and asian pacific cross rates against the u s dollar and find strong evidence supporting the existence of contagion effects and correlation drops during crises closely in line with the stylized facts outlined in the contagion literature a comparison of this model with its closest competitors such as a time varying parameter var reveals that our model has a better predictive ability supplementary materials for this article are available online

the gaussian mixture dynamic conditional correlation model parameter estimation value at risk calculation and portfolio selection a multivariate generalized autoregressive conditional heteroscedasticity model with dynamic conditional correlations is proposed in which the individual conditional volatilities follow exponential generalized autoregressive conditional heteroscedasticity models and the standardized innovations follow a mixture of gaussian distributions inference on the model parameters and prediction of future volatilities are addressed by both maximum likelihood and bayesian estimation methods estimation of the value at risk of a given portfolio and selection of optimal portfolios under the proposed specification are addressed the good performance of the proposed methodology is illustrated via monte carlo experiments and the analysis of the daily closing prices of the dow jones and nasdaq indexes

games the states don t play welfare benefits and the theory of fiscal federalism fiscal federalism theory predicts that states will behave strategically in welfare programs because voter demand for welfare is sensitive to tax price while the tax price itself changes because of welfare induced migration this paper tests these propositions on afdc in the united states for a panel from 1982 88 using new models for the determination of the recipiency ratio the tax price and composite neighbors the data do not support any substantial tax price elasticity of demand for welfare estimates of migration effects on tax price are found to be sensitive to specification copyright 1995 by mit press

chronicle of a war foretold the macroeconomic effects of anticipated defence spending shocks we identify us defense news shocks as shocks that best explain future movements in defense spending over a ve year horizon and are orthogonal to current defense spending our identied shocks are strongly correlated with the ramey 2011 news shocks but explain a larger share of macroeconomic uctuations and have signicant demand eects fiscal news induces signicant and persistent increases in output consumption investment hours and the interest rate standard dsge models fail to produce such a pattern we propose a sticky price model with distortionary taxation variable capital utilization capital adjustment costs and rule of thumb consumers that replicates the empirical ndings

consumption and capital market imperfections an international comparison the excess sensitivity of consumption to current income fluctuations is higher in countries where consumers borrow less low levels of consumer debt can result either from capital market imperfections or from a low demand for loans the evidence suggests that the former view is more appropriate than the latter and thus supports the hypothesis that excess sensitivity may be attributed to liquidity constraints rather than to other factors copyright 1989 by american economic association

modeling asymmetric comovements of asset returns existing time varying covariance models usually impose strong restrictions on how past shocks affect the forecasted covariance matrix in this article we compare the restrictions imposed by the four most popular multivariate garch models and introduce a set of robust conditional moment tests to detect misspecification we demonstrate that the choice of a multivariate volatility model can lead to substantially different conclusions in any application that involves forecasting dynamic covariance matrices like estimating the optimal hedge ratio or deriving the risk minimizing portfolio we therefore introduce a general model which nests these four models and their natural asymmetric extensions the new model is applied to study the dynamic relation between large and small firm returns article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

employment status and the decision to migrate the purpose of this paper is to examine the demographic and socioeconomic determinants of migration for both the employed and unemployed hypotheses concerning the effects of age education and public services are developed and tested using data on interstate migration of the u s labor force from 1965 to 1970 for individuals at risk to either primary or repeat migration the age and education selectivity of migration were in general confirmed however for unemployed potential primary migrants education selectivity was not observed it was also found that the provision of welfare services have little or no impact on the migration decision of the unemployed however unemployment was shown to significantly affect the role played by educational quality and training accessibility within the migration decision excerpt