an aggregate consumption function for canada a cointegration approach this study utilizes cointegration theory and error correction models ecms to specify a candidate dynamiac formulation of the aggregate consumption function using quarterly canadian date the variables entering the long run equlibrium relationship are tested for unit roots using a variety of techniques such as the dickey fuller the augemented dickey fuller and the phillips perron test profedures the engle and granger cointegration test and the fully modified consistent and efficient estimator of phillips and hansen are used to estimate the cointegration relationship johansen s maximum likelihood approach is also used to determine the rank of the cointegrating matrix the error correction model which appears to be a tentatively adequate conditional characterization of the date generating process revelas that disposable income wealth government expenditures relative prices and liquidity constraints proxied by the unemployment rate are important variables non nested tests are carried out against

integrated regressors and tests of the permanent income hypothesis abstract we use recent research on estimation and testing in the presence of unit roots to argue that hall s 1978 t and f tests of whether consumption is predicted by lagged income or by lags of consumption beyond the first are asymptotically valid a monte carlo experiment suggests that the asymptotic t and f distributions provide a good approximation to the actual finite sample distribution

a multicountry characterization of the nonstationarity of aggregate output the authors compute the scaled varlogram the variances of kth differences scaled by the variance of first differences of the log of annual per capita real aggregate output gdp or gnp as measured by 1 the long series for the united states and united kingdom 2 angus maddison s 1982 long series for twelve countries and 3 the postwar ifs data for thirty two countries simulations show that the scaled varlogram of real output is nearly always more consistent with the data being generated by parsimonious difference stationary than trend stationary univariate processes in fact the data reveal some excess nonstationarity relative to parsimonious arima models the power of the scaled varlogram to discriminate between trend stationary and difference stationary processes is somewhat greater than that of a dickey fuller type f test copyright 1990 by ohio state university press

unit root tests and the statistical pitfalls of seasonal adjustment the case of u s postwar real gross national product unit root tests applied to the postwar seasonally adjusted quarterly gross national product series strongly support the null hypothesis of the presence of a unit root in the data generating process evidence reported here with seasonally unadjusted data is far less conclusive it is explained why seasonal adjustment procedures may alter the outcome of conventional tests

special purpose entities and bank loan contracting abstract in this study we show that a firm s use of special purpose entities spes is associated with unfavorable loan contract terms including higher loan rates collateral requirements and restrictive covenants further analyses suggest that the association between the use of spes and unfavorable loan contract terms is primarily due to the increase in the information risk faced by lenders as firm managers can easily use spes to manipulate earnings and hide losses specifically we find that the use of spes has a more pronounced effect on increasing the cost of loans and causing more stringent non price loan terms when managers have a stronger incentive to manipulate earnings and when banks have less knowledge about the spe sponsor firms due to the lack of prior lending relationship in addition we find that the use of spes is associated with a greater likelihood of accounting restatements and greater information asymmetry between inside managers and outside capital suppliers

environmental federalism and environmental liability abstract environmental federalism considers what level of government should optimally regulate pollution this paper addresses this question for accidental pollution which government regulates through the ex post liability regimes of either negligence or strict liability we find that decentralizing the choice between these regimes does not in general induce the socially optimal outcome when firms can pay all damages all regions may choose negligence and impose an overly strict standard of due care when firms may be bankrupted by damages all regions may choose strict liability which induces too little care in addition asymmetric equilibria are possible in which some regions choose negligence others strict liability combining negligence with a pigovian tax or strict liability with a bonding requirement can align regional authorities incentives with those of a central government

nash equilibria in models of fiscal competition abstract this paper analyzes nash equilibria in a simple model of an economy with jurisdictions engaging in fiscal competition small number nash equilibria in which tax rates are the strategic variables are shown not to coincide with nash equilibria in which public expenditure levels are the strategic variables

money inflation and output in romania 1992 2000 abstract money inflation and output are tested for stationarity and found to be integrated of order one we apply the johansen procedure for cointegration to test for the rank of the matrix of cointegration relations one to test for the weak exogeneity of output accepted inflation rejected and money rejected we interpret the unique cointegrating relationship as an extended cagan money demand function we then estimate error correction mechanisms which explain the short run movements of real money and inflation the evidence suggests that in the period considered including the sub sample between the liberalization shocks inflation was largely a monetary phenomenon

seasonality and habit persistence in a life cycle model of consumption summary the allocation of non durable consumers expenditure over the four quarters of the year reflects choices made by consumers implying a utility function exhibiting seasonality incorporating such a function the life cycle model fails to explain fully the observed dynamics in uk seasonally unadjusted data seasonal habit persistence effects are introduced and found to be significant although this generalized model stands up well to testing in a univariate context it fails to exclude a predictive role for lagged income changes seasonality is inherent in many economic time series but it is rarely considered to be an issue of interest in econometric model building rather than explicitly investigating the economics underlying seasonal variation modellers typically try to remove its effects either by using seasonally adjusted data or by including seasonal intercept dummies in their equations the former practice is criticized by wallis 1974 who shows that it may distort the relationship between variab le the latter assumes that the function simply shifts up or down with the season however except for degrees of freedom considerations there seems to be no a priori reason why the same parameters or functional form should apply at different times of the year indeed gersovitz and mackinnon 1978 argue that realistic utility cost or production functions result in models in which seasonal influences cannot be separated out in a simple fashion in the present study seasonality is treated as one of the features to be explained within the economic model thus in the particular application to non durable consumers expenditure it is argued that the allocation of expenditure over the year reflects seasonal tastes and hence seasonality in the underlying utility function the implications of this are explicitly investigated the framework for our analysis is the influential paper by hall 1978 who derives a randomwalk model for real non durable consumers expenditure when rational expectations are combined with a life cycle theory of consumption hall does not investigate seasonality at all and employs seasonally adjusted values in his empirical analysis although subsequent us authors have examined many aspects of this theory the type of data used has rarely been

habit formation and exhaustible resource risk pricing abstract this paper studies the risk pricing implications of introducing habit formation in consumption in a model that encompasses growth with nonrenewable resources and capital markets it is shown that the expected return on nonrenewable resource stocks incorporates both short run and long run risk factors the short run risk factor is associated with shocks to current surplus consumption growth the long run risk factor reflects the investor s desire to hedge against long run shocks to future surplus consumption prospects long run habit risk premium the model is tested using energy commodities index and us aggregate real per capita consumption data and the results confirm that habit enters significantly in the pricing equation by entertaining a long run time varying risk coefficient compared to results obtained with a no habit formation model time separable preferences we found that long run future prospects of surplus consumption constitute a forward looking risk factor to be taken into account in explaining the dynamics of energy prices under uncertainty

corporate multistate tax planning benefits of multiple jurisdictions abstract we investigate how firms use differences in state income tax regimes to lower their state tax burdens we develop a model that predicts that firms state effective tax rates first decrease then increase as a function of the number of states in which they file returns using firm level data we find evidence consistent with the model s predictions and we estimate that such rates are minimized at 24 states consistent with predictions from prior literature our evidence also suggests that firms use sales factor apportionment to reduce state tax burdens

business cycle non linearities in uk consumption and production this paper develops non linear smooth transition autoregressive star models with two additive smooth transition components to capture the business cycle characteristics of uk real consumers expenditure and industrial production the results indicate consumption has essentially two business cycle regimes recession and expansion industrial production however is characterized by the three regimes of recession normal growth and high growth the transitions describing recovery from recession are very similar for the two variables stochastic simulations illustrate the dynamic responses of these models and emphasize that they are locally linear our results also indicate that the two transition star models have some forecast advantages over other specifications for periods of contraction copyright 2000 john wiley sons ltd

global organizations and taxes an analysis of the dividend interest royalty and management fee payments between u s multinationals foreign affiliates abstract we examine the effects of taxes on cross border dividend interest royalty and management fee payments between foreign affiliates of u s multinationals using 1990 tax return information on transfers totaling 22 8 billion and spanning 71 countries we find dividend royalty and sometimes interest payments between foreign affiliates are negatively correlated with the net tax levied on cross border transfers we find no evidence management fees are structured to mitigate non u s taxes thus taxes affect the location of the supplier and the terms of the contracts for the provision of equity and intangible capital within the worldwide organization

seasonal fluctuations and the life cycle permanent income model of consumption this paper examines a new possible explanation for the recent rejections of the life cycle permanent income model of consumption the treatment of seasonal fluctuations the paper shows that when the seasonal fluctuations in consumption purchases are included in an analysis of the life cycle permanent income model there is no evidence in the aggregate data against the model the estimates of the parameters of agents utility functions obtained with seasonally unadjusted data are plausible and the unadjusted data do not reject the overidentifying restrictions on the model

optimal emissions tax rates under habit formation and social comparisons abstract the existing climate models ignore the behavioral anomalies of households and conclude that the optimal environmental tax rate should comove with business cycles however this assumption has received extensive criticism recently to this end this paper studies the optimal emissions tax rate when households are bounded rational in particular we calculate the optimal climate policy in a dynamic stochastic general equilibrium dsge model that features households with habit formation internal habits and social comparisons external habits compared to the benchmark model without consumption externality the social comparisons model amplifies consumption volatility but produces a similar response of pollutant emissions in the presence of the three types of economic shocks considered in contrast the habit formation model decreases the volatility of both consumption and pollutant emissions in contrast to the previous result that the optimal emissions tax rate should be procyclical we find that the social comparisons model largely mitigates the procyclicality of optimal emissions tax rates and the optimal emissions tax rates under the habit formation model remain constant in response to all the economic shocks considered

an asymmetric error correction model of uk consumer spending this paper augments the granger and lee journal of applied econometrics 4 1989 non symmetric error equilibrium correction model to assess the possibility that in the aggregate consumers respond differently to different types of disequilibrium error this idea is illustrated using an engle granger implementation of the davidson hendry srba and yeo dhsy economic journal 80 1978 model the disequilibrium error is endogenously determined by the long run empirical model and a binary dummy variable captures two alternative states above and below equilibrium spending interaction of the dummy variable with key variables in a short run dynamic model of uk consumer spending augments the dynamics of the dhsy model income elasticities inflation elasticities and speeds of adjustment are all seen to change significantly depending on whether the disequilibrium error is positive or negative and is suggestive of asymmetric behaviour on the part of consumers moreover the asymmetrically augmented mode

the dynamic effects of aggregate demand and supply disturbances we interpret fluctuations in gnp and unemployment as due to two types of disturbances disturbances that have a permanent effect on output and disturbances that do not we interpret the first as supply disturbances the second as demand disturbances demand disturbances have a hump shaped mirror image effect on output and unemployment the effect of supply disturbances on output increases steadily over time peaking after two years and reaching a plateau after five years

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

optimality free mobility and the regional authority in a federation abstract this paper examines the efficiency properties of a federation characterized by strategically competing regions and freely mobile homogeneous individuals analyses of this economy have concluded that achieving a pareto optimal will require intervention by a national authority this paper makes one basic point the nash equilibrium of regional authority behavior is pareto optimal the implication is that there is no role for a national authority in either providing interregional transfers or correcting for decentralized provision of public goods the nash equilibrium involves samuelson public goods provision and regions purchasing preferred population distributions with optimal interregional transfers

data revisions and periodic properties of macroeconomic data many macroeconomic time series variables show signs of periodicity that is seasonal heteroskedasticity and seasonally varying autocorrelation structures this paper argues that these periodic properties could in part be due to data revisions in case such revisions follow a particular format periodicity is shown to appear when quarterly data are revised by allocating updated annual information across the quarters in previous years an illustration for four waves of seventeen dutch macroeconomic data emphasizes this result

coveting thy neighbor s manufacturing the dilemma of state income apportionment abstract this paper investigates the economic impact of the apportionment formulae used to divide corporate income taxes among the states most apportionment formulae by including payroll turn the state corporate income tax at least partially into a payroll tax using panel data from 1978 1994 the results show that this distortion has an important effect on state level employment for the average state reducing the payroll weight from one third to one quarter increases manufacturing employment around 1 1 concentrated in durable goods manufacturing and with larger effects in the long run the results also suggest that apportionment changes have important negative externalities on other states on average the aggregate effects of apportionment formula changes are close to zero

geographic income shifting by multinational corporations in response to tax rate changes we investigate geographic income shifting by 191 u s multinational corporations in response to worldwide changes in tax rates during 1984 90 between 1984 and 1986 the united kingdom reduced corporate tax rates from a maximum of 45 to 35 and in 1985 france reduced rates from 50 to 45 following these reductions in european rates the united states reduced top corporate tax rates from 46 to 34 between 1986 and 1988 canadian rates increased between 1984 and 1986 and then decreased through 1989 beginning in 1988 numerous countries enacted tax cuts apparently in response to those that occurred earlier in other countries as discussed in section 3 differential changes in tax rates provide incentives for geographic income shifting by multinational firms we identify two subperiods during 1984 90 in which relative tax rate changes

a model of competing jurisdictions with locally polluting environments and mobile populations in this model we consider a federation consisting oftwo geographically separated regional states withlocal taxing authority the residents of thefederation are identical in preferences and haveexplicit tolerance to pollution pollution is local innature and is a by product of production implying amore highly populated region would generate morepollution local authorities in the regions can andwill in the interest of local residents engage ingame theoretical taxation strategies the model isused to illustrate that nash equilibrium can resultwherein the two regions have different levels ofenvironmental quality the resulting nash conditionsimply for instance that residents of the cleanregion will subsidize those in the other region tostay in the more polluted environment in order foreach to accomplish their preferred consumption andenvironmental quality pair

exploring the role delaware plays as a domestic tax haven abstract we examine whether delaware is a domestic tax haven we find that taxes play an economically important role in determining whether u s firms locate subsidiaries in delaware and that a delaware based state tax avoidance strategy lowers state effective tax rates by between 0 7 and 1 1 percentage points on average the tax savings represent a 15 24 decrease in the state income tax burden and translate to an increase in net income of 1 04 1 47 however we find that the tax benefits of delaware tax strategies are diminishing over time in response to initiatives by state governments to limit multistate tax avoidance

recent advances in modelling seasonality abstract in this paper we review recent developments in econometric modelling of economic time series with seasonality the prime focus is on econometric models which incorporate explicit descriptions of seasonal variation instead of removing this variation using a seasonal adjustment method this review centres around developments in seasonal unit root models and in periodic parameter models both in the univariate and multivariate context several empirical examples are used for illustration we also discuss several areas for further research

the seasonal unit root structure in new zealand macroeconomic variables adf unit root tests are generally applied to macroeconomic data prior to testing theoritical models to ensure that all relevant variables are integrated of the same order not only is it important to test that these variables are integrated of the same order but also that a cointegrating relationship exists failure to do so raise the specture of false inference associated with the spurious regression problem the seasonal nature of quarterly data adds a further proplem which has generally been overcome by seasonally adjusting the data using procedure such as the census x 11 rather than suppressing it have attempted to determine whether the seasonal component in each variable exhibits stochastic non stationary this paper analysisunit roots in a seasonal setting and compares the recently developed tests for seasonal unit roots as well as the standard augmented dickey fuller zerop frequency unit root tests of the variables tested relatively few paper to be integrated at the seasonal frequenciues and as

stochastic life cycle theory with varying interest rates and prices incorporating the assumption of rational expectations has produced some striking new predictions from many familiar economic theories one of the benefits of this development is that these new predictions provide additional means of testing well documented theories without necessarily requiring new data though it must be admitted that this is at the cost of an additional and for many a controversial assumption in his paper on life cycle and permanent income theory hall 1978 has given a very good example of such new predictions he demonstrated that if consumers are assumed to measure wealth using rational expectations of future income rather than a distributed lag of past income then a logical consequence of standard life cycle theory is that consumption will closely follow a first order autoregression subsequently bilson 1980 and flavin 1981 showed that the disturbance term in this autoregression will depend on the errors in predicting current and future income at first sight this remarkable result may seem to be inconsistent with the standard consumption function which relates consumption to income but an example will help explain why there is no necessary conflict consider the simple consumption function or absolute income hypothesis

demand for money in sri lanka during the post 1977 period a cointegration and error correction analysis this paper investigates the long run demand for money and short run dynamics of the long run money demand function for sri lanka during the post 1977 period while m1 is cointegrated with real income nominal interest rate short term foreign interest rate and real effective exchange rate m2 is not this suggests that monetary authorities should emphasize the narrow definition of money for monetary control the one year fixed deposits rate is cointegrated with m1 indicating the opportunity cost of holding money although the inflation rate is not cointegrated with m1 it seems to be an important determinant of the demand for m1 in the short run results also suggest that the short term foreign interest rate and the exchange rate can have important implications for the effectiveness of monetary policy monetary authorities must consider the response of domestic money demand to these external factors when formulating future monetary policies

interregional spillovers in the presence of perfect and imperfect household mobility abstract when households are immobile across regions the decentralized provision of public goods that generate interregional benefit spillovers is inefficiently low we analyze this problem in an environment of interregional household migration and obtain the following results if households are perfectly mobile across regions then the decentralized provision of public goods generating spillovers is socially efficient there is no need for central government intervention if households are attached to particular regions for cultural or nationalistic reasons however at least one of two regions undersupplies the public good central government intervention can enhance efficiency

the performance of periodic autoregressive models in forecasting seasonal u k consumption the parameters of a periodic model are allowed to vary according to the time at which observations are made periodic autoregressive models are fitted to the quarterly values of seasonally unadjusted real nondurable consumers expenditure for the united kingdom and its components the periodic model offers no improvement over conventional specifications if the aggregate is modeled directly on the other hand periodic models generally perform well for the components which contain additional seasonal information the choice between a periodic or nonperiodic specification is also shown to have an important influence on the resulting dynamic properties

the seasonal cycle and the business cycle almost all recent research on macroeconomic fluctuations has worked with seasonally adjusted or annual data this paper takes a different approach by treating seasonal fluctuations as worthy of study in their own right our results show that seasonal fluctuations are an important source of variation in all macroeconomic quantity variables but are small or entirely absent in both real and nominal price variables the timing of the seasonal fluctuations consists of increases in the second and fourth quarters a large decrease in the first quarter and a mild decrease in the third quarter the paper demonstrates that with respect to each of several major stylized facts about business cycles the seasonal cycle displays the same characteristics as the business cycle in some cases even more dramatically than the business cycle that is we find that at seasonal frequencies as well as at business cycle frequencies output movements across broadly defined sectors move together the timing of production and the

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

does social capital matter in corporate decisions evidence from corporate tax avoidance we investigate whether the levels of social capital in u s counties as captured by strength of civic norms and density of social networks in the counties are systematically related to tax avoidance activities of corporations with headquarters located in the counties we find strong negative associations between social capital and corporate tax avoidance as captured by effective tax rates and book tax differences these results are incremental to the effects of local religiosity and firm culture toward socially irresponsible activities they are robust to using organ donation as an alternative social capital proxy and fixed effect regressions they extend to aggressive tax avoidance practices additionally we provide corroborating evidence using firms with headquarters relocation that changes the exposure to social capital we conclude that social capital surrounding corporate headquarters provides environmental influences constraining corporate tax avoidance

surprises in the consumption function the life cycle hypothesis has been the dominant theoretical basis for empirical work on the aggregate consumption function for about a quarter of a century under it real consumption is proportional to real life cycle wealth where the factor of proportionality depends on real interest rate expectations and the demographic structure of the population life cycle wealth is the sum of financial and human wealth however because the latter is the present real value of the stream of labour and transfer income expected over the life cycle it is not directly observable this fact has led to a great variety of proxying devices in empirical applications and in consequence much looseness in the interpretation of very different models as being all consistent with life cycle theory indeed one can argue that this has protected the hypothesis from being seriously tested and perhaps rejected an insight associated with friedman 1957 is that the view taken by consumers of life cycle income does not alter by much from period to period since there is greater persistence in life cycle income than in current income this also explains the greater persistence of consumption than of current income intuitively this would suggest that lagged consumption being related to last period s perception of life cycle income which in turn is not much different from this period s perception should have a major role in predicting current consumption this intuition was formalised by hall 1978 using ideas familiar from the study of stock market prices and the term structure of interest rates hall showed that if the real rate of interest is constant and given a number of other assumptions including no transitory element in consumption then the life cycle hypothesis implies that

on the periodic structure of the business cycle this article tests whether an economic recovery is equally likely to occur in any month of the year i test this hypothesis with a homogeneous markov switching regime model and use the turning point dates for business cycles marked by the national bureau of economic research and romer i tend to find unequal probabilities to switch from recession to expansions in particular the spring and the month of december appear to have higher incidence of economic recovery my results also imply that recessions and expansions are on average longer or shorter depending on what time of the year they start this suggests the presence of a seasonal pattern in business cycle durations though such a notion of seasonality is quite different from the common one based on unobserved component linear time series models i investigate issues that go beyond linear dependence between seasonality and business cycles

periodic cointegration representation and inference textabstractthis paper considers a new approach to the analysis of stable relationships between nonstationary seasonal time series the basis of this approach is an error correction model in which both long run effects and adjustment parameters are allowed to vary per season first we discuss theoretical arguments for such a periodic error correction model we define periodic cointegration and compare this to the concept of seasonal cointegration next we analyze statistical inference in the periodic error correction model a sequential procedure is proposed consisting of a test for periodic cointegration an estimator of the cointegration parameters and adjustment coefficients and a class of tests for the hypothesis that some of the parameters are constant over the seasons the finite sample behavior of the proposed test statistics is analyzed in a limited monte carlo exercise we conclude the paper with an application to a model of aggregate swedish consumption

taxes and firm size abstract firm size has been used as a proxy for the firm s political costs and hence managers proclivity to choose income reducing accounting procedures this study provides additional evidence on this topic by examining the association between firm size and effective corporate tax rates the latter are one component of a firm s political costs the roughly fifty largest u s exchange listed firms in particular oil and gas companies and manufacturing firms have significantly higher worldwide tax rates than other firms these higher tax rates are observed primarily after the implementation of the u s 1969 tax reform act and after the opec countries raised their tax rates on u s oil producers the findings which are insensitive to alternative sources of data alternative measures of firm size and alternative measures of effective tax rates are consistent with the use in previous studies of firm size as a proxy for the firm s political costs

attachment to home and efficient purchases of population in a fiscal externality economy abstract this paper examines the efficiency properties of an economy characterized by strategically competing regions and individuals with varying degrees of attachment to home in an otherwise standard fiscal externality setting regional authorities may make interregional transfers in purchasing preferred populations however there is a range of distributions of resources over which neither region makes transfers nevertheless all equilibrium allocations resulting from the nash behavior of regional authorities including those that involve no transfers are efficient therefore in contrast to the standard conclusions of the fiscal externality literature there is no efficiency role for a central authority

seasonal cointegration in macroeconomic systems case studies for small and large european countries abstract six variable vector autoregressive systems consisting of macroeconomic series are investigated parallel data series for four european countries are used austria germany federal republic finland and the united kingdom all data series are not seasonally adjusted the aim of the paper is to show that most of the series are better modeled using stochastic seasonality and seasonal unit roots models than simple deterministic models of seasonal structures as a second step seasonal cointegration in the systems is studied it is shown that all four economies display seasonal cointegration as well as usual cointegration

asset prices and real exchange rates with deep habits i introduce an external habit for each consumption good known as deep habits into an otherwise standard international equilibrium model with multiple consumption goods and multiple countries i show that deep habits coupled with consumption home bias account for a wide range of asset pricing and exchange rate moments calibrated to a set of ten countries the model reproduces the cross sectional evidence on currency risk premiums when sorting on interest rates interest rate volatility innovations to global exchange rate volatility and value hence the model provides an equilibrium interpretation of these empirical regularities

international pollution problems unilateral initiatives by environmental groups in one country abstract international pollution involving two groups of countries is modelled as a two player game each country is characterized by specific preferences for consumption goods and the environment both countries produce a single consumption good with a given technology that determines pollution per unit output each country is economically isolated except for the presence of a global pollutant within a static framework m hoel j environ econom management 20 55 70 1991 shows that unilateral actions to reduce harmful emissions advocated by environmental groups in one country may result in higher total emissions i characterize cooperative and noncooperative emission strategies for the two countries using welfare functions that within a static framework yield total emissions without cooperation always higher than those with cooperation when both governments choose linear closed loop strategies and one country is not sensitive to the environmental condition the unique equilibrium exhibits less pollution than the cooperative equilibrium only if the other country cares a great deal about the well being of future generations and has relatively low bargaining power in the negotiations equilibria that result from nonlinear closed loop strategies are also characterized

structural breaks and seasonal integration abstract we examine the effects of exogenous changes in the level or seasonal pattern of a series on the hegy test these changes bias both unit root and seasonal root tests new critical values for the hegy tests are presented

unit roots and seasonal unit roots in macroeconomic time series canadian evidence abstract unit root tests are conducted to determine whether the unit root found in seasonal adjusted data may be due to seasonal adjustment filters typically applied by government agencies i e arima x 11 we find that a unit root exists in both the raw and adjusted data except for the unemployment rate second we also find that the commonly used seasonal adjustment filter introduced by box and jenkins 1970 is generally inappropriate

consumption externalities production externalities and efficient capital accumulation under time non separable preferences the effects of consumption and production externalities on economic performance under time non separable preferences are examined both theoretically and numerically we show that a consumption externality alone has long run distortionary effects if and only if labor is supplied elastically with fixed labor supply it has only transitional distortionary effects production externalities always generate long run distortions irrespective of labor supply the optimal tax structure to correct for the distortions is characterized we compare the implications of this model with those obtained when the consumption externality is contemporaneous while some of the long run effects are robust there are also important qualitative and quantitative differences particularly along transitional paths

unemployment insurance and quits in canada in two recent policy changes the canadian government acted to limit the eligibility of job quitters and those dismissed for cause for unemployment insurance ui we study the effects of these policy changes on separation behaviour we find no evidence that these policy changes induced a relabelling of separations towards ui eligible reasons but we do find quite different responses across demographic groups women and young men are inhibited from quitting their jobs by the new quit penalties but prime age males seem unaffected by the large increase in the cost of quitting imposed by the changes

a seasonal model of consumption in this paper the authors present strong empirical evidence that the long run income elasticity of u k nondurable consumers expenditure and its short run rate of adjustment both vary across seasons such variability in the behavior of consumers is consistent with the hypotheses that consumers have seasonal preferences and that they exhibit seasonally varying degrees of habit persistence the tests are based on a modified form of the error correction methodology that allows for seasonally varying slope coefficients simulations for the dynamic responses of the authors model illustrate the important policy implications of these results coauthors are r c bladen hovell a p l chui denise r osborn and j p smith copyright 1989 by royal economic society