investigating diesel market integration in france evidence from micro data abstract we use station level daily price observations collected over a period of eight years to study the extent of diesel market integration in france the empirical analysis starts off by examining the time series properties of diesel price ratios and then assesses how geographical separation and petrol station characteristics affect the speed of adjustment of prices to exogenous shocks our findings reveal that the great majority of diesel price ratios maintain stable long run relationships we also find that while price ratios take longer to adjust for pairs of petrol stations that are farther apart adjustment is quicker when pairs of petrol stations provide the same range of services and when they belong to the same owner

new tests of the life cycle and tax discounting hypotheses abstract we first test a version of the permanent income consumption function recently suggested by barro the results support the theory except that consumption expenditures show sensitivity to transitory income next we use the consumption model to test the tax discounting hypothesis which is strongly supported this support for tax discounting disagrees with results from some earlier studies using more traditional specifications of the consumption function however we show that when certain obviously inadequate estimation procedures are corrected the traditional models also support tax discounting this uniform support for tax discounting suggests that the sensitivity of consumption to transitory income is not due to liquidity constraints

consumption in developing countries tests for liquidity constraints and finite horizons adjustment programs in developing countries emphasize the importance of reducing fiscal deficits in order to improve aggregate saving and investment performance recent theoretical analyses associated with the ricardian equivalence proposition however suggest that changes in the level of public sector saving may be offset by a change in private saving the empirical relevance of this proposition depends among other things on the length of consumers horizons and on the extent to which households are liquidity constrained empirical tests of a consumption model for a sample of developing economies do not support the equivalence propositions owing to the prevalence of liquidity constraints copyright 1989 by mit press

effects of insurance incentives on road safety evidence from a natural experiment in china we investigate the incentive effects of insurance experience rating on road safety by evaluating the claim frequency following a regulatory reform introduced in a pilot city of china our contribution to the growing literature on moral hazard is to offer a neat identification of a causal effect of experience rating on road safety by employing the differences in differences methodology in the framework of a natural experiment the pre treatment placebo test corroborates the assumption that the pilot city and the control city share the same pre reform time trends in claims we find that basing insurance pricing on traffic violations reduces claim frequency significantly these results are robust to the inclusion of vehicle controls alternative definitions of claim frequency two placebo experiment tests and several robustness checks the effects of basing pricing on past claims are not significant

legal principles in antitrust enforcement we study antitrust enforcement to channel price fixing incentives of cartels through setting fine schedules and detection levels fines obey legal principles punishments fit the crime proportionality bankruptcy considerations and minimum fines bankruptcy considerations limit maximum fines ensure abnormal cartel profits and impose a challenge for optimal antitrust enforcement we derive the fine schedule and detection level that are constrained optimal under legal principles and sustainability of cartel prices this fine schedule lies below the maximum fine makes collusion on lower prices more attractive than on higher prices and hence relates to marginal deterrence literature this article is protected by copyright all rights reserved

on the substitutability between private consumer expenditure and government spending in canada the purpose of this paper is twofold first to examine whether there is any substitutability between private consumer expendit ure and government spending in canada second to test the ricardian equivalence principle both hypotheses are nested within the life cyc le rational expectations model the results indicate that the joint h ypothesis of rational expectations and ricardian equivalence can not be rejected by the data moreover they suggest that government spend ing substitutes poorly for private consumer expenditure these result s imply that temporary increases in government spending will result i n an expansion of real output

the ricardian equivalence hypothesis evidence from bangladesh this article examines the ricardian equivalence hypothesis reh and its sources of failure in the case of bangladesh using various theoretical specifications annual data from 1974 2001 and linear and nonlinear time series techniques the general findings tend to invalidate the reh a finite time horizon and the presence of liquidity constrained individuals are the sources of deviation from the reh empirical results reveal that real per capita private consumption c under various specifications is cointegrated generally at the 5 level with real per capita income y government expenditure before and after interest rate repayments g and g2 taxes t and the interest rate r results reveal that an increase in g g2 t and r reduces c and that an increase in budget deficits raises trade deficits these results highlight the importance of fiscal policies in boosting private consumption and controlling trade deficits which are the prime goals of stabilization policies being followed by bangladesh

ricardian equivalence and crowding out in asia rising budget deficits in both developed and developing countries have drawn considerable attention recently two aspects of these deficits have drawn particular attention first whether the effect of a given rate of government expenditure has a crowding out effect on private expenditure second whether this effect in any way depends on how the expenditures are financed that is whether by taxes or by government debt this latter issue is discussed under the rubric of what is called the ricardian equivalence proposition briefly it maintains that under certain assumptions the effect of a given rate of government expenditure on aggregate demand is independent of whether these expenditures are financed by taxes or by debt issue hence the proposition equivalence given the serious policy implications of this proposition there has been considerable empirical work on this issue but most of the work has been concentrated on the us and very little on the developing countries which is rather surprising

does three strikes deter a nonparametric estimation we take advantage of the fortuitous randomization of trial outcome to provide a novel strategy to identify the deterrent effect exclusive of incapacitation we compare the post sentencing criminal activity of criminals who were convicted of a strikeable offense with those who were tried for a strikeable offense but convicted of a nonstrikeable offense as a robustness check we also make this comparison in states without three strikes laws the identification strategy lets us estimate the deterrent effect nonparametrically using data solely from the three strikes era we find that california s three strike legislation significantly reduces felony arrest rates among the class of criminals with two strikes by 17 20 percent

ricardian equivalence expansionary fiscal contraction and the stock market a vecm approach the effect of government taxation on future consumption has been explained in three ways the keynesian approach the ricardian equivalence proposition and the german view of expansionary fiscal contraction efc this paper reports empirical evidence on the validity of these explanations by examining the impact of a shock in government taxation upon private consumption once the effect of the stock market is removed a vector error correction model is estimated for the usa japan germany france the uk italy and canada for 1950 1997 and the impulse response functions of a shock in taxation and in expenditure are examined the responses to an increase in government taxation appear to lend support to the efc while the responses to an increase in government expenditure upon consumption suggest that the reaction of private consumption is more in line with the traditional keynesian approach

assessing ricardian equivalence this paper reviews the literature on ricardian equivalence this hypothesis may be interpreted as a generalisation to the short and the long run of the theories which put no weight on the real effects of public policies on aggregate demand we argue that ricardian equivalence relies on both permanent income hypothesis and the fulfilment of the intertemporal government budget constraint the theoretical literature emphasises several reasons for departures from this hypothesis however the empirical literature is inconclusive when ricardian equivalence is tested in a life cycle framework the hypothesis is usually rejected while when the empirical analysis is based on optimising models it is usually accepted

the optimal use of fines and imprisonment when wealth is unobservable abstract this article studies the optimal use of fines and imprisonment when an offender s level of wealth cannot be observed by the enforcement authority i employ a model in which there are two types of offenders a low wealth type and a high wealth type the consequence of the unobservability of wealth depends on whether the enforcement authority would employ fines alone or would also impose imprisonment sentences if wealth were observable in the former case the inability to observe wealth lowers social welfare but in the latter case the unobservability of wealth does not lower social welfare in both cases offering offenders a choice of sanctions can induce high wealth offenders to pay higher fines even though their wealth is unobservable specifically a relatively high imprisonment sentence must accompany the payment of a low fine so that high wealth offenders will prefer to pay a higher fine and bear a lower possibly no imprisonment sentence

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

excess sensitivity of consumption to current income liquidity constraints or myopia this paper asks whether the empirical rejection of the rational expectations permanent income hypothesis occurs because agents are myopic in the sense that the marginal propensity to consume out of transitory income is non zero or because some agents face liquidity constraints the finding that the estimate of the mpc out of transitory income is dramatically affected in both magnitude and statistical significance by the inclusion of a proxy for liquidity constraints suggests that liquidity constraints are an important part of the explanation of the observed excess sensitivity of consumption to current income la sensibilite excessive de la consommation au revenu courant contraintes sur la liquidite ou myopie ce memoire examine la question a savoir pourquoi l hypothese du revenu permanent avec anticipations rationnelles n est pas v6rifiee empiriquement est ce parce que les agents economiques sont myopes i e que leur propension marginale a consommer a partir de leur revenu transitoire n est pas nulle ou bien est ce que certains agents economiques font face a des contraintes sur leur liquidite le fait que l estimation de la propension marginale a consommer le revenue transitoire est affectee par l inclusion d une variable qui tente de capturer l importance des contraintes sur la liquidit6 tant dans l 6valuation de sa taille que dans sa signification statistique suggere que ces contraintes jouent un role important dans l explication de cette sensibilite excessive qu on observe de la consommation aux changements dans le niveau de revenu courant almost all the recent empirical tests of the rational expectations permanent income hypothesis re pih have rejected the hypothesis using a rich variety of data sets and estimation methods the empirical work indicates that the failure of the re pih is significant both statistically and quantitatively the null hypothesis in this empirical literature typically consists of the joint hypothesis that 1 agents expectations are formed rationally 2 desired consumption is determined by permanent income and 3 capital markets are perfect in the sense that agents can lend or borrow against 1 studies rejecting the re pih include blinder 1981 flavin 1981 hall and mishkin 1982 hayashi 1982 and sargent 1978 in his original paper hall 1978 did not reject the re pih decisively however flavin 1981 showed that with a minor alteration in the specification of the alternative hypothesis the re pih could be rejected using hall s test and data set bernanke 1981 studying panel data on automobile expenditures did not find evidence against the hypothesis for an extensive survey of the empirical literature on the rational expectations permanent income hypothesis see king 1983 canadian journal of economics revue canadienne d economique xviii no 1 february fevrier 1985 printed in canada imprime au canada 0008 4085 85 117 36 1 50 canadian economics association this content downloaded from 157 55 39 17 on wed 31 aug 2016 05 08 58 utc all use subject to http about jstor org terms

political economy at any speed what determines traffic citations can speeding tickets be explained solely by a driver s excessive speed or could they be seen as serving as supplemental local revenue or reflecting officer preferences theory suggests that the levels of enforcement and punishment for traffic violations are based on the degree of infringe ment by the offending party and the marginal returns to local safety gary s becker 1968 isaac ehrlich 1996 a mitchell polinsky and steven shavell 1992 this view neglects other potential objectives for the police police officers are agents of the local or state government these prin cipals may be concerned about total revenues raised and about voter satisfaction furthermore officers may have personal preferences with regards to characteristics such as race or gender which may motivate differential issuance of traffic tickets the imposition of traffic fines to increase revenues is reminiscent of william a niskanen s 1971 long standing hypothesis that bureaucrats maximize their agency s budget evidence has been scarce however and the hypothesis has been called into question because bureaucrats may not receive any direct benefit when their agency s budget size is enlarged ronald n johnson and gary d libecap 1994 the budget maximizing hypothesis however has not been applied to the behavior of police officers engaged in the enforcement of traffic laws although anecdotal evidence abounds1 more frequent and larger fines may lead to favorable employee evaluations and contribute to a larger budget for the police department higher officer salaries and improved amenities as police officers monitoring superiors are elected officials those officials may also encourage police officers to disproportionately raise revenues from nonvoters as opposed to local voting citizens

optimal imprisonment and fines with non discriminatory sentences abstract when considering the optimal combination of monetary sanctions costless and imprisonment costly as deterrents the traditional result is that imprisonment should not be imposed until monetary sanctions are completely exhausted therefore imprisonment acts as a mere supplement to maximal fines we show that when wealth varies across individuals it could be efficient to use imprisonment in combination with fines that do not exhaust the wealth of all individuals the rationale is that generally it is impractical to tailor criminal sanctions as a continuous function of individuals wealth

forecasting the oil gasoline price relationship do asymmetries help abstract according to the rockets and feathers hypothesis rfh the transmission mechanism of positive and negative changes in the price of crude oil to the price of gasoline is asymmetric although there have been many contributions documenting that downstream prices are more reactive to increases than to decreases in upstream prices little is known about the forecasting performance of econometric models incorporating asymmetric price transmission from crude oil to gasoline in this paper we fill this gap by comparing point sign and probability forecasts from a variety of asymmetric ecm a ecm and threshold autoregressive ecm tar ecm specifications against a standard ecm forecasts from a ecm and tar ecm subsume the rfh while the ecm implies symmetric price transmission from crude oil to gasoline we quantify the forecast accuracy gains due to incorporating the rfh in predictive models for the prices of gasoline and diesel we show that as far as point forecasts are involved the rfh does not lead to significant improvements while it can be exploited to produce more accurate sign and probability forecasts finally we highlight that the forecasting performance of the estimated models is time varying

government deficits and aggregate demand abstract the evidence presented in this paper indicates that changes in government spending transfers and taxes can have substantial effects on aggregate demand the estimates also indicate that the promise of future social security benefits significantly reduces private saving each the basic implications of the so called ricardian equivalence theorem is contradicted by the data the results are consistent with the more general view of the effects of fiscal actions and fiscal expectations that is described in the paper

why are the 2000s so different from the 1970s a structural interpretation of changes in the macroeconomic effects of oil prices in the 1970s large increases in the price of oil were associated with sharp decreases in output and large increases in inflation in the 2000s even larger increases in the price of oil were associated with much milder movements in output and inflation using a structural var approach blanchard and gali in j gali and m gertler eds 2009 international dimensions of monetary policy university of chicago press pp 373 428 argued that this reflected a change in the causal relation from the price of oil to output and inflation they then argued that this change could be due to a combination of three factors a smaller share of oil in production and consumption lower real wage rigidity and better monetary policy their argument based on simulations of a simple new keynesian model was informal our purpose in this paper is to take the next step and to estimate the explanatory power and contribution of each of these factors to do so we use a minimum distance estimator that minimizes over the set of structural parameters and for each of two samples pre and post 1984 the distance between the empirical svar based impulse response functions and those implied by a new keynesian model our empirical results point to an important role for all three factors

biofuel related price transmission using renewable identification number prices to signal mandate regime this paper improves on existing methods of testing price links between biofuels petroleum petroleum products and agricultural commodity feedstocks by incorporating information contained in the prices of renewable identification numbers rins that are used for biofuel mandate compliance theoretical equations are developed to show the role rin prices can play in the relationships among energy biofuel and agricultural commodity prices rin price data are used a to infer values of fuels where market data are unavailable and b to define binding and non binding mandate regimes a specific empirical exercise exploits the rin price data to conduct cointegration tests on high frequency data representing spot and futures prices relating to ethanol and biodiesel from february 2009 through march 2015 finding little evidence of short term biofuel and petroleum product substitution during this period

government debt government spending and private sector behavior a current period tax reduction financed by issuing government debt shifts the timing of tax collection from the current period to the future if the future taxes implied by government debt are not fully perceived and discounted by the private sector there will be a net wealth effect that increases private sector consumption thus reducing capital accumulation and growth if on the other hand the implied future taxes are perceived and discounted by the private sector the current period tax reduction will be used to increase private saving to pay for the future taxes and government debt will be absorbed without any real effects on the economy the effects of government spending financed by current period taxation also depend upon private sector perceptions 2 if the benefits of government spending are ignored private sector consumption will decrease in accordance with the reduction in permanent disposable income to the extent that government spending is on consumption type goods that are perceived as substitutes for privately provided consumption goods there will be a relatively greater reduction in private sector consumption to the extent that government spending is on investment type goods yielding future goods and services that are perceived as substitutes for future privately provided consumption goods there will be a relatively smaller reduction in private sector consumption the standard approach to modeling private sector consumption saving behavior involves a rather asymmetric set of assumptions as to how the private sector perceives the various elements of government fiscal policy 3 current period taxes are assumed to be fully perceived but current period government spending is implicitly assumed to be completely ignored by the private sector in considering permanent personal disposable income the private sector is assumed to be forward looking in its assessment of income and taxation the stock of government debt is nevertheless included as part of the stock of private wealth the implicit assumption associate professor of economics graduate school of business university of chicago 1101 east 58th street chicago il 60637 i thank eugene fama levis kochin michael mussa paul evans and an anonymous referee for helpful comments i am particularly grateful to daniel benjamin for contributing many hours of discussion and laura lahaye who was a research assistant and valuable adviser on earlier drafts the theoretical debate on the burden of the debt has been long standing gerald o driscoll 1977 documents ricardo s nineteenth century position robert barro 1974 reopened the debate by introducing the fundamental issue of intergenerational transfers also discussed in merton miller and charles upton 1974 the empirical side of the debate was initiated by levis kochin s 1974 attempt to test for the effects of deficits on consumption and by martin feldstein s 1974 attempt to test for the effects of social security wealth on consumption other empirical contributions include jess yawitz and laurence meyer 1976 myself 1978 and j earnest tanner 1978 1979 with respect to the effects of government deficits and debt and barro 1978 michael darby 1979 and dean leimer and selig lesnoy 1982 with respect to social security wealth see also interesting recent papers by john seater 1982 who generates detailed tests of the effects of deficits and debt on consumption charles plosser 1982 who explores the effects of government spending and debt shocks on interest rates and feldstein 1982 who attempts tests similar to some in this paper see fn 29 2martin bailey s 1962 1971 development of the effects of government spending on private consumption and aggregate economic activity is the seminal contribution paul david and john scadding 1974 extend bailey s ideas and provide some supporting empirical evidence more recently willem buiter 1977 and myself 1978 developed models based on bailey s earlier work barro 1981 has an interesting paper on related issues see also david aschauer 1982 3the standard approach incorporates fiscal policy through the concept of personal disposable income and by including the stock of government debt as part of personal wealth see for example the empirical specification of albert ando and franco modigliani 1963 which has been the basis of most empirical consumption studies since and feldstein 1974 for one of the more influential papers based on the ando modigliani specification

fiscal policy and national saving this paper uses structural vector autoregressions along with structural measures of fiscal policy to measure the dynamic impact of fiscal policy shocks on the output gap and national saving positive shocks to government purchases and negative shocks to real net taxes are found to increase the output gap positive shocks to the government s structural surplus increases national saving although the effects are small positive shocks to government purchases are found to substantially reduce national saving negative shocks to real net tax revenues as a share of potential gdp have a small negative impact on national saving

from oil to consumer energy prices how much asymmetry along the way abstract a longstanding question in macroeconomics is whether fuel prices react more to increases than to decreases of the price of oil this paper analyzes the response of weekly gasoline and gasoil prices to oil prices in the u s the euro area and the four largest euro area countries germany france italy and spain using nonlinear impulse response functions and forecast accuracy tests while for the u s both approaches point to the presence of asymmetries in the adjustment of retail prices for the euro area the evidence is mixed

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

how effective is fiscal policy in raising national saving while fiscal adjustment is commonly viewed as the cornerstone of macroeconomic stabilization the effectiveness of alternative fiscal instruments in raising national saving is still poorly understood this paper enters the debate by estimating a private consumption function that allows for two types of agents finite horizons and liquidity constraints and nests three different consumption hypotheses using a large panel data set that includes both industrial and developing countries we reject full ricardian equivalence we also find substantial differences between industrial and developing countries regarding both the extent of ricardian offsetting and the degree to which the government budget constraint is internalized

aggregate consumption and deficit financing an attempt to separate permanent from transitory effects many previous empirical studies of the ricardian equivalence hypothesis have found a relatively high degree of future tax liability discounting such that current deficits appear to have relatively little or no influence on current consumption demand however the validity of these empirical estimates can be questioned as they may not have adequately distinguished between permanent and transitory income flows this paper attempts to address this problem by using cycle averaging as a simple method of capturing the permanent path of income over time the empirical evidence generated in this paper rejects the strict debt neutrality proposition of the ricardian equivalence hypothesis

over incarceration and disenfranchisement this article presents a model wherein law enforcers propose sentences to maximize their likelihood of reelection and shows that elections typically generate over incarceration i e longer than optimal sentences it then studies the effects of disenfranchisement laws which prohibit convicted felons from voting the removal of ex convicts from the pool of eligible voters reduces the pressure politicians may otherwise face to protect the interests of this group and thereby causes the political process to push the sentences for criminal offenses upwards therefore disenfranchisement further widens the gap between the optimal sentence and the equilibrium sentence and thereby exacerbates the problem of over incarceration moreover this result is valid even when voter turnout is negatively correlated with people s criminal tendencies i e when criminals vote less frequently than non criminals

does the volatility of commodity prices reflect macroeconomic uncertainty abstract while there exists numerous studies on the macroeconomic effects of oil and commodity shocks the literature is quite silent on the impact of macroeconomic uncertainty on oil and commodity prices and especially on their volatility this paper tackles this issue through the estimation of a structural threshold vector autoregressive tvar model on a sample of 19 commodity markets we aim at i assessing whether the effect of macroeconomic uncertainty shocks on commodity price returns depends on the degree of uncertainty and ii investigating the transfer from macroeconomic uncertainty to price uncertainty using a newly developed measure of commodity price uncertainty our findings show that both agricultural and industrial markets are highly sensitive to the variability and the level of macroeconomic uncertainty while the impact on precious metals is more parsimonious given their well identified safe haven role in time of economic turmoil in addition we find evidence that the recent 2007 09 recession has generated an unprecedented episode of high uncertainty in numerous commodity prices interestingly our analysis further reveals that volatility and uncertainty in prices can be disconnected this is especially true for the oil market as most important shocks in the 1990s and the beginning of the 2000s that lead to price volatility do not generate price uncertainty highlighting the relevance of our uncertainty measure in linking uncertainty to predictability rather than to volatility

econometric models of asymmetric price transmission abstract in this paper we review the existing empirical literature on price asymmetries in commodities providing a way to classify and compare different studies that are highly heterogeneous in terms of econometric models type of asymmetries and empirical findings relative to the previous literature this paper is novel in several respects first it presents a detailed and updated survey of the existing empirical contributions on price asymmetries in the transmission mechanism linking input prices to output prices second this paper presents an extension of the traditional distinction between long run and short run asymmetries to new categories of asymmetries such as contemporaneous impact distributed lag effect cumulated impact reaction time equilibrium and momentum equilibrium adjustment path regime effect regime equilibrium adjustment path each empirical study is then critically discussed in the light of this new classification of asymmetries third this paper evaluates the relative merits of the most popular econometric models for price asymmetries namely autoregressive distributed lags partial adjustments error correction models regime switching and vector autoregressive models finally we use the meta regression analysis to investigate whether the results of asymmetry tests are not model invariant and find which additional factors systematically influence the rejection of the null hypothesis of symmetric price adjustment the main results of our survey can be summarized as follows i each econometric model is specialized to capture a subset of asymmetries ii each asymmetry is better investigated by a subset of econometric models iii the general significance of the f test for asymmetric price transmission depends mainly on characteristics of the data dynamic specification of the econometric model and market characteristics overall our empirical findings confirm that asymmetry in all its forms is very likely to occur in a wide range of markets and econometric models

testing for price response asymmetries in the spanish fuel market new evidence from daily data abstract in this work we use daily data to examine pattern asymmetries in the speed of transmission of international wholesale oil prices to spanish retail fuel prices results are robust to two alternative specifications of an asymmetric error correction model for which the presence of autoregressive conditional heteroskedasticity for disturbances is modeled by a garch 1 1 process evidence indicates that the short term transmission of wholesale prices to retail prices is quite symmetric for both gasoline and diesel fuel nevertheless in contrast to some of the results provided for an earlier period we did not find asymmetries in the speed of retail price responses toward long run equilibrium our evidence also suggests that the use of weekly or lower frequency data is one of the possible explanations for some of the seemingly contradictory results concerning this issue

using mandated speed limits to measure the value of a statistical life in 1987 the federal government permitted states to raise the speed limit on their rural interstate roads but not on their urban interstate roads from 55 mph to 65 mph since the states that adopted the higher speed limit must have valued the travel hours they saved more than the fatalities incurred this institutional change provides an opportunity to estimate an upper bound on the public s willingness to trade off wealth for a change in the probability of death our estimates indicate that the adoption of the 65 mph limit increased speeds by approximately 4 percent or 2 5 mph and fatality rates by roughly 35 percent together the estimates suggest that about 125 000 hours were saved per lost life when the time saved is valued at the average hourly wage the estimates imply that adopting states were willing to accept risks that resulted in a savings of 1 54 million 1997 dollars per fatality with a sampling error roughly one third this value we set out a simple model of states decisions to adop

is the ricardian equivalence proposition an aerie fairy theory for europe using a theoretical model based on dynamic optimizing agents we test empirically the ricardian equivalence proposition rep for the eu 15 countries the theoretical setting allows us to obtain estimates of the structural parameters of the model and to test directly the hypothesis implied by the rep using recently developed end of sample cointegration breakdown tests we find evidence of a change in the fiscal behaviour of individuals during the last decade after the introduction of a fiscal rule namely the maastricht criteria for most countries in the sample the results concerning the direction of change are mixed

ricardian equivalence empirical evidence from developing economies abstract the strong underlying assumptions of the barro ricardo equivalence proposition rep raise doubts on its validity especially for developing countries this paper attempts to analyze the validity of the rep and the sources of deviation from rep for a large sample of developing countries although the results are of a mixed nature they suggest that the presence of liquidity constrained individuals may be the source of deviation from the rep the analysis also indicates that public spending is a poor substitute for private consumption and hence implies that temporary increases in public spending may have some expansionary effect on aggregate demand

lags in the response of gasoline prices to changes in crude oil prices the role of short term and long term shocks abstract using weekly data for the period march 1991 to august 2002 we estimate the response of retail gasoline prices to changes in crude oil and spot gasoline prices in the us allowing for a possibility of two types of cost shocks to the gasoline market long term and short term shocks our conclusion is that theoretical models should be developed that allow more than one type of input price changes and the different effect of input price changes on output prices the empirical results support the conjecture of two types of cost shocks as such we find that lags in the response of retail gasoline prices to changes in crude oil prices may be due to the fact that approximately 97 of changes in crude oil prices are viewed as short term by the market participants when two types of shocks are considered there is large difference between the cumulative response function of gasoline prices to long term and short term shocks to crude oil prices as such this paper adds to our understanding of the price stickiness of gasoline prices

misaligned incentives and the scale of incarceration in the united states abstract the incarceration rate has increased substantially in the united states between the 1980s and the 2000s in this paper i explore an institutional explanation for this growth the fact that costs of incarceration are not fully internalized typically prison is paid for at the state level but county employees such as judges prosecutors or probation officers determine time spent in custody i exploit a natural experiment that shifted the cost burden of juvenile incarceration from state to counties keeping overall costs and responsibilities unchanged this resulted in a stark drop in incarceration and no increase in arrests suggesting an over use of prison when costs are not internalized the large magnitude of the change suggests that misaligned incentives in criminal justice may be a significant contributor to the current levels of incarceration in the united states

bargaining in environmental regulation revisited abstract we explore the possibility that firms and regulators achieve cooperative agreements in environmental regulation we show that it is possible that firms choose cleaner technologies in exchange for reductions of the fines for non compliance with environmental standards interestingly the likelihood of achieving these agreements depends negatively on the monitoring costs positively on the external damages and non monotonically on the differences among the eligible technologies and the maximum sanctions for violating the standards

how effective are non monetary instruments for safe driving panel data evidence on the effect of the demerit point system in denmark using unusually rich longitudinal traffic offense data this paper exploits a reform that introduced a point recording scheme in denmark to estimate the behavioral responses of drivers to a non monetary penalty based on demerit points we find that drivers exhibit substantial behavioral responses to each demerit point assigned to their driving license we also find that drivers effort and hence response increases with the number of demerit points accumulated depending on the number of demerit points accumulated drivers with one or more demerit points reduced their frequency of traffic offenses by 9 34 percent this article is protected by copyright all rights reserved

the pass through of oil prices into euro area consumer liquid fuel prices in an environment of high and volatile oil prices abstract crude and refined oil prices have been relatively high and volatile on a sustained basis since 1999 this paper considers the pass through of oil prices into consumer liquid i e petrol diesel and heating fuel prices in such an environment the pass through of oil prices into consumer liquid fuel prices has already been addressed extensively in the literature nonetheless much of this literature has either focused on the united states or on a time period when oil prices were relatively stable or has used monthly data the main contribution of this paper is a comprehensive combination of many features that have been considered before but rarely jointly these features include 1 the analysis of the euro area as an aggregate and a large number of countries the initial 12 member states 2 the consideration of different time periods 3 the modelling of the data in raw levels rather than in log levels this turns out to have important implications for our findings 4 the use of high frequency weekly data which as results will suggest are the lowest frequency one should consider 5 the investigation of the different stages of the production chain from crude oil prices to retail distribution refining costs and margins distribution and retailing costs and margins 6 the examination of prices including and excluding taxes excise and value added 7 the modelling of prices for three fuel types passenger car petrol and diesel separately and home heating fuel oil 8 lastly we also address the issue of possible asymmetries allowing for the pass through to vary according to a whether price are increasing or decreasing and b whether price levels are above or below their equilibrium level the main findings are as follows first as distribution and retailing costs and margins have been broadly stable on average the modelling of the relationship between consumer prices excluding taxes and upstream prices in raw levels rather than in logarithms has important implications for the stability of estimates of pass through when oil price levels rise significantly second considering spot prices for refined prices improves significantly the fit of the estimated models relative to using crude oil prices it also results in more economically meaningful results concerning the extent of pass through third oil price pass through occurs quickly with 90 occurring within three to five weeks fourth using a relatively broad specification allowing for asymmetry in the pass through from upstream to downstream prices there is little evidence of statistically significant asymmetries furthermore even where asymmetry is found to be statistically significant it is generally not economically significant lastly these results generally hold across most euro area countries with few exceptions

testing ricardian neutrality with an intertemporal stochastic model this paper s purpose is to develop and estimate a stochastic intertemporal model of consumption be havior and to use it for testing a version of the ricardian equivalen ce proposition with time series data two channels that may give rise to deviations from this proposition are specified finite horizons a nd liquidity constraints in addition the model incorporates explici tly the roles of taxes substitution between public and private consu mption and different degrees of consumer goods durability the evid ence based on data for israel in the first half of the 1980s suppor ts the ricardian neutrality specification yielding plausible estimat es for the behavioral parameters of the aggregate consumption functio n copyright 1988 by ohio state university press

optimising criminal behaviour and the disutility of prison we use rich microdata on bank robberies to estimate individual level disutilitiesities of imprisonment the identification rests on the money versus apprehension trade off that robbers face inside the bank when deciding whether to leave or collect money for an additional minute the distribution of the disutility of prison is not degenerate generating heterogeneity in behaviour our results show that unobserved heterogeneity in robber ability is important for explaining outcomes in terms of haul and arrest furthermore higher ability robbers are found to have larger disutilities suggesting that increased sentence lengths might effectively target these more harmful criminals

more sneezing less crime health shocks and the market for offenses abstract a large literature points out that exposure to criminal victimization has far reaching effects on public health what remains surprisingly unexplored is that role that health shocks play in explaining aggregate fluctuations in offending this research finds novel evidence that crime is sensitive to health shocks we consider the responsiveness of crime to a pervasive and common health shock which we argue shifts costs and benefits for offenders and victims seasonal allergies leveraging daily variation in city specific pollen counts we present evidence that violent crime declines in u s cities on days in which the local pollen count is unusually high and that these effects are driven by residential violence while past literature suggests that property crimes have more instrumental motives require planning and hence are particularly sensitive to permanent changes in the cost and benefits of crime we find that violence may be especially sensitive to health shocks

to comply or not to comply pollution standard setting under costly monitoring and sanctioning in this paper we characterize optimal regulatory policies composed of a pollution standard a probability of inspection and a fine for non compliance in a context where both monitoring and sanctioning are socially costly and the penalty may include gravity and non gravity components at the regulator s discretion under given penalties the optimal policy entails compliance with the standard as long as a quite intuitive condition is met non compliant policies may include standards even below the pollution levels that minimize the sum of abatement costs and external damages interestingly the appropriate structure of the penalty under non compliance is highly progressive while the best possible shape of the fine under compliance is linear if the regulator is entitled to choose the structure of the fine linear penalties are socially preferred and the optimal policy induces compliance

retail price asymmetries in local gasoline markets the experience of the salt lake city retail gasoline market during the 1989 to 1993 period suggests that there was asymmetric adjustment wholesale and retail price data unique to the salt lake market are used to test for the existence of three types of price asymmetry during this period with respect to the magnitude of the pass through of wholesale price changes evidence of price asymmetry during periods of average weekly wholesale price changes is found however during market shocks the evidence points in the direction of retail price symmetry evidence of asymmetry with respect to the timing and pattern of the retail price response is found for periods of both average and market shock changes since gasoline is purchased by the consumer in local markets conclusions reached by studies of market pricing behaviour that rely on national data may not be relevant for local policy decisions this appears to be the case for the salt lake city market

do oil price increases cause higher food prices us retail food price increases in recent years may seem large in nominal terms but after adjusting for inflation have been quite modest even after the change in us biofuel policies in 2006 in contrast increases in the real prices of corn soybeans wheat and rice received by us farmers have been more substantial and can be linked in part to increases in the real price of oil that link however appears largely driven by common macroeconomic determinants of the prices of oil and of agricultural commodities rather than the pass through from higher oil prices we show that there is no evidence that corn ethanol mandates have created a tight link between oil and agricultural markets moreover increases in agricultural commodity prices have contributed little to us retail food price increases because of the small cost share of agricultural products in food prices in short there is no evidence that oil price shocks have been associated with more than a negligible increase in us retail food prices in recent years nor is there evidence for the prevailing wisdom that oil price driven increases in the cost of food processing packaging transportation and distribution have been responsible for higher retail food prices similar results hold for other industrialized countries there is reason however to expect food commodity prices to be more tightly linked to retail food prices in developing countries christiane baumeister and lutz kilian

a note on optimal fines when wealth varies among individuals an important result in the economic theory of enforcement is that under certain circumstances it is optimal for a fine to be as high as possible to equal the entire wealth of individuals such a fine allows the probability of detection to be as low as possible thereby saving enforcement costs this note shows that when the level of wealth varies among individuals the optimal fine generally is less than the wealth of the highest wealth individuals and may well be less than the wealth of most individuals this abstract was borrowed from another version of this item

asymmetric pass through of oil prices to gasoline prices with interval time series modelling abstract modelling and analyzing the pass through of crude oil prices to retail gasoline prices has received an increasing attention in existing literature however most of the ongoing efforts focus on point valued data which may suffer from the informational loss this paper first employs the threshold autoregressive interval valued tari models developed recently by sun et al 2018a to investigate this transmission and proposes a novel consistent interval based test to detect threshold effects and derives its asymptotic properties these interval based tari model and test superior to traditional point based methods can produce more efficient parameter estimation and more powerful inference due to the informational gain of interval data that is interval data simultaneously contain more information e g trend and volatility than point valued data during the same period empirical results suggest that retail gasoline prices are adjusted upwards faster than downwards and this short run asymmetry is statistically significant during the whole sample our findings reveal that both the level and volatility of oil prices have a positive impact on the price of gasoline which contributes to the asymmetries in the transmission of oil price shocks these results are robust before and after financial crisis furthermore it is interesting to find that after financial crisis both the error correction adjustment speeds and the asymmetries decrease

do gasoline prices respond asymmetrically to crude oil price changes the authors test and confirm that retail gasoline prices respond more quickly to increases than to decreases in crude oil prices among the possible sources of this asymmetry are production inventory adjustment lags and market power of some sellers by analyzing price transmission at different points in the distribution chain the authors attempt to shed light on these theories spot prices for generic gasoline show asymmetry in responding to crude oil price changes which may reflect inventory adjustment effects asymmetry also appears in the response of retail prices to wholesale price changes possibly indicating short run market power among retailers

dynamic effects of rising oil prices on consumer energy prices in canada and the united states evidence from the last half a century abstract this paper examines the dynamic relationship between the price of crude oil and the cpi energy price sub index in canada and the u s using a markov regime switching model and the bai perron sequential method since these two series are cointegrated during the sample period january 1961 june 2013 a short run dynamic model is thus estimated for each country in which all coefficients and the error variance terms can freely switch over time between two values prevailing in regimes 0 and 1 previous studies indicate that the price of crude oil does not currently affect the aggregate cpi as much as it did in the 1970s this finding is not disputed in this paper however the sequentially determined break date as well as the time varying regime switching probabilities point to two new findings first the marginal effects of changes in oil price on consumer energy prices not the aggregate cpi have consistently increased and become more instantaneous for both countries after the western u s energy crisis of 2000 second the speed of adjustment proxied by different error correction coefficients has also risen particularly for the u s therefore oil prices exert far more positive and immediate impacts on energy costs in the post rather than pre 1999 periods