country risk and capital flow reversals abstract a financial crisis with a capital flow reversal occurs when a country shifts abruptly from a good equilibrium with a low country specific risk premium to a bad equilibrium with a high country specific risk premium and no foreign credit

comparing tax and transfer systems poverty inequality and target efficiency this paper is concerned with comparisons between alternative tax and transfer systems using target efficiency measures where the objective is the alleviation of poverty means testing is preferred however the desire to reduce inequality usually leads to a preference for universal transfer systems such as the linear income tax the present paper provides comparisons of social welfare using an abbreviate welfare function for schemes which imply the same degree of poverty using several poverty measures it was found that means testing dominates if the headcount poverty measure is used otherwise the linear tax dominates copyright 1996 by the london school of economics and political science

going going gone the apparent demise of the accruals anomaly consistent with public statements made by sophisticated practitioners we document that the hedge returns to sloan s sloan r g 1996 do stock prices fully reflect information in accruals and cash flows about future earnings accounting rev 71 3 289 315 accruals anomaly appear to have decayed in u s stock markets to the point that they are on average no longer reliably positive we explore some potential reasons why this has happened our empirical analyses suggest that the anomaly s demise stems in part from an increase in the amount of capital invested by hedge funds into exploiting it as measured by hedge fund assets under management and trading volume in extreme accrual firms a decline in the size of the accrual mispricing signal as measured by the magnitude of extreme decile accruals and the relative persistence of cash flows and accruals may also play a weaker role this paper was accepted by stefan reichelstein accounting

needs and targeting this paper shows that when in the manner of the recent targeting literature the resources available for poverty relief are allocated across heterogeneous groups so as to minimize a well behaved index of aggregate poverty the optimal response to an increase in the needs of some group may be to reduce the resources allocated to it necessary and sufficient conditions for optimally targeted benefits to be inversely related to needs are established under two polar forms of poverty alleviation strategy pure contingency and strict means testing and the wider methodological implications of this possibility discussed copyright 1992 by royal economic society

means testing versus universal provision in poverty alleviation programs this paper contrasts the use of means tested and universal schemes in the alleviation of poverty using a class of poverty measures the authors illustrate the trade off from the fact that means testing is costly to both the government and the claimant while universal provision entails a leakage to the nonpoor the paper provides numerical as well as analytical results copyright 1990 by the london school of economics and political science

a contribution to the theory of optimal utilitarian income taxation abstract the paper provides a new formulation of the mirrlees seade theorem on the positivity of the optimal marginal income tax under weaker assumptions and in a more general model the formulation of the theorem is independent of whether the model involves finitely many types or a continuous type distribution the formal argument makes the underlying logic transparent relating the mathematics to the economics and showing precisely how each assumption enters the analysis

using elasticities to derive optimal income tax rates this paper derives optimal income tax formulas using compensated and uncompensated elasticities of earnings with respect to tax rates a simple formula for the high income optimal tax rate is obtained as a function of these elasticities and the thickness of the top tail of the income distribution in the general non linear income tax problem this method using elasticities shows precisely how the different economic effects come into play and which are the key relevant parameters in the optimal income tax formulas of mirrlees the optimal non linear tax rate formulas are expressed in terms of elasticities and the shape of the income distribution these formulas are implemented numerically using empirical earning distributions and a range of realistic elasticity parameters

incentive effects of the u s welfare system a review the author would like to acknowledge support for prior work on this topic from the u s department of health and human services and helpful comments from three anonymous referees rebecca blank howard chernick john fitzgerald irwin garfinkel peter gottschalk edward gramlich david greenberg judith gueron james heckman v joseph hotz robert hutchens michael keane frank levy larry mead michael murray robert plotnick anuradha rangarajan philip robins howard rolston jeffrey smith and daniel weinberg all opinions and errors are those of the author alone

redistribution and inequality in a heterogeneous society this paper analyses how income redistribution affects inequality in a society in which individuals differ in their earning abilities and their preferences for consumption and leisure after discussing the shortcomings of various standard approaches i measure inequality in such a heterogeneous society by the inequality in individuals so called equivalent wages this approach suggests that redistribution tends to reduce inequality by transferring income from high ability to low ability individuals but to increase inequality by transferring income from consumption loving to leisure loving individuals these countervailing effects lead in all my simulations to a u shaped relationship between redistribution and inequality

following the leader a study of individual analysts earnings forecasts abstract this paper develops and tests procedures for ranking the performance of security analysts based on the timeliness of their earnings forecasts the abnormal trading volume associated with these forecasts and forecast accuracy our framework provides an objective assessment of analyst quality that differs from the standard approach which uses survey evidence to rate analysts we find that lead analysts identified by our measure of forecast timeliness have a greater impact on stock prices than follower analysts further we find that performance rankings based on forecast timeliness are more informative than rankings based on abnormal trading volume and forecast accuracy we also present evidence that analyst s forecast revisions are correlated with recent stock price performance suggesting that security analysts use publicly available information to revise their earnings forecasts

optimal demogrants with imperfect tagging abstract this paper considers optimal taxation of income when some individuals are imperfectly tagged as disabled it proves that under very general conditions these individuals should receive a larger demogrant if leisure is a normal good

optimal redistribution when different workers are indistinguishable using the standard non linear income and commodity taxation framework this paper examines the optimal policy to be adopted when the same labor disutility can receive two opposite interpretations taste for leisure and activity limitation in the absence of complete information about individual characteristics an income tax does not allow to distinguish lazy from handicapped individuals one may however rely on a combination of commodity and income taxes to redistribute from the former to the latter when they differ in their preferences for commodities

optimal incentives for labor force participation abstract optimal taxation is analyzed under a rawlsian criterion in an economy where the only decision of the agents is to participate or not to the labor force the model allows for heterogeneity both in the agent s productivities and aversions to work at a first best optimal schedule the marginal agent who decides to work pockets all of her productivity while being just compensated for her work aversion when the planner does not observe work aversion financial compensation for work is lower than productivity theory puts little restrictions on the shape of the optimal tax schedules the usual first order conditions involving the elasticities of participation only apply for sufficiently regular economies we qualitatively show how the optimal incentive schemes depend on the underlying structure of the preferences 100 marginal tax rates or subsidies to work are related to specific features of the economies

the efficiency case for universality we compare universal social programs with targeted social benefits we define universality as separability of the tax transfer system in income and other non monetary attributes and introduce the concept of parallel equity a requirement that like differences in needs should be treated alike we develop a model based on optimal tax theory that shows that under specified assumptions universality is efficient as well as equitable departures from universality result in an inefficient structure of net marginal tax rates our key assumptions are that individual specific needs necessitate a fixed exogenous monetary expenditure and that needs are exogenous observable and uncorrelated with other relevant variables we then relax these assumptions and describe the limited circumstances under which departures from universality may be desirable

approaches to inequality of opportunity principles measures and evidence we put together the dierent conceptual issues involved in measuring inequality of opportunity discuss how these concepts have been translated into computable measures and point out the problems and choices researchers face when implementing these measures our analysis identies and suggests several new possibilities to measure inequality of opportunity the relevance of the conceptual issues and modelling choices are illustrated with ndings from the empirical literature on income inequality of opportunity

what has been learned about labor supply in the past twenty years the main advance in the study of labor supply in the past 20 years has come in recognizing and interpreting the variety of different labor supply functions that coexist in the empirical literature a crucial theoretical distinction with important empirical payoff is that between labor supply choices at the extensive margin i e labor force participation and employment choices and choices at the intensive margin i e choices about hours of work or weeks of work for workers another important distinction is the one between a descriptive labor supply function and a structural supply function that can be the basis for out of sample policy investigations concerning responses to tax and welfare programs and evaluations of welfare losses a full understanding of the participation hours dichotomy leads to an appreciation of the importance of the problem of selection bias what is the wage to impute to a nonworking person these distinctions are a legacy of the research conducted on labor supply over the past 20 years many important empirical questions have been addressed i how strong are the effects of taxes welfare and transfer programs on labor supply ii how important is intertemporal substitution can life cycle labor supply models explain business cycle labor supply behavior iii has the consensus view of the 1960 s of high labor supply elasticities for married women and low labor supply elasticities for married men held up all of the empirical evidence assembled on labor supply must be called into question in the light of important research on the basic quality of the data conducted by analysts at the university of michigan i discuss this evidence in a concluding section except for my discussion of measurement issues i focus only on the major discoveries about which a general consensus has emerged

bond and stock market response to unexpected earnings announcements this study examines whether earnings changes convey information in bond markets and finds a significant positive negative reaction to unexpected earnings increases decreases the results are consistent whether earnings announcements precede or follow dividend announcements thus earnings surprises convey information to bond markets and changes in firm value are split among bondholders and stockholders this is in contrast to evidence from studies examining unexpected dividend announcements where bond price reaction is asymmetric cross sectional analysis reveals that bond excess returns are positively related to earnings surprises i introduction stock market reaction to earnings announcements has received significant attention in the finance and accounting literature ball and brown 1968 brown 1978 watts 1978 aharony and swary 1980 and fried and givoly 1982 are some ofthe studies that observe a revision of stock prices associated with the release of earnings information lev 1989 provides a survey of research in this area the explanation for the above empirical findings is that unexpected earnings provide new information about future cash flows furthermore the classical discounted cash flow model predicts a revision in firm value that is the present value of expected future cash flows whether this increased firm value accrues to stockholders and bondholders is an empirical issue past research on the information content of earnings has focused solely on stock price behavior and finds at least part of the benefits accrue to stockholders in this study we examine the bond market reaction to unexpected quarterly earnings announcements the study is unique for several reasons first dividends repurchases and earnings are eonsidered primary mechanisms used by manage ment to convey information about future cash flows to securityholders recent

fair production and allocation of an excludable nonrival good we study fairness in economies with one private good and one partially excludable nonrival good a social ordering function determines for each profile of preferences an ordering of all conceivable allocations we propose the following free lunch aversion condition if the private good contributions of two agents consuming the same quantity of the nonrival good have opposite signs reducing that gap improves social welfare this condition combined with the more standard requirements of unanimous indifference and responsiveness delivers a form of welfare egalitarianism in which an agent s welfare at an allocation is measured by the quantity of the nonrival good that consumed at no cost would leave her indifferent to the bundle she is assigned

a comparison of optimal tax policies when compensation or responsibility matter this paper examines optimal redistribution in a model with high and low skilled individuals with heterogeneous tastes for labor we compare the extent to which optimal policies based on different normative criteria obey the principles of compensation for differential skills and responsibility for preferences for labor when labor supply is along the extensive margin with heterogeneity in skills and preferences traditional welfarist criteria including utilitarianism present unappealing policy recommendations in some scenarios as they fail to take compensation and responsibility issues into account criteria from the social choice literature perform better in this regard in first and second best more importantly these equality of opportunity criteria push the second best policy away from an earned income tax credit and in the direction of a negative income tax

political risk in emerging and developed markets using analyst estimates of political risk we show that political risk represents a more important determinant of stock returns in emerging than developed markets average returns in emerging markets experiencing decreased political risk exceed those of emerging markets experiencing increased political risk by approximately 11 per quarter in contrast the difference is only 2 5 per quarter for developed markets further the difference between the impact of political risk in emerging and developed markets is statistically significant we also document a global convergence in political risk over the last 10 years political risk has decreased in emerging markets and increased in developed markets if this trend continues the differential impact of political risk in emerging vs developed markets may narrow

voting for redistribution under desert sensitive altruism we endow individuals that differ in skill levels and tastes for working with altruistic preferences for redistribution in a voting model where a unidimensional redistributive parameter is chosen by majority voting in a direct democracy when altruistic preferences are desert sensitive i e when there is a reluctance to redistribute from the hard working to the lazy we show that lower levels of redistribution emerge in political equilibrium we provide empirical evidence based on the issp 1992 dataset that preferences for redistribution are not purely selfish and that desert sensitive motivations play a significant role we estimate that preferences for redistribution are significantly more desert sensitive in the us than in europe we believe that differences in desert sensitive preferences for redistribution help explain the different social contracts that prevail in both continents

non welfarist optimal taxation and behavioral public economics research in behavioral economics has uncovered the widespread phenomenon of people making decisions against their own good intentions in these situations the government might want to intervene indeed individuals might want the government to intervene to induce behavior that is closer to what individuals wish they were doing the analysis of such corrective interventions through taxes and subsidies might be called behavioral public economics however such analysis where the government has an objective function that is different from that of individuals is not new in public economics in these cases the government is said to be non welfarist in its objectives and there is a long tradition of nonwelfarist welfare economics especially the analysis of optimal taxation and subsidy policy where the outcomes of individual behavior are evaluated using a preference function different from the one that generated the outcomes the object of this paper is to first of all present a unified view of the non welfarist optimal taxation literature and secondly to present behavioral public economics as a natural special case of this general framework

fair income tax fairness is a key concept in redistribution issues in this paper we study how particular requirements of fairness can shed light on the design of the optimal income tax schedule we consider a population of heterogeneous individuals or households who differ in two respects first they have unequal skills and therefore unequal earning abilities second they differ in terms of their preferences about consumption and leisure and as a consequence typically make different labour time choices both kinds of differences generate income inequalities we study how to justify and compute a redistribution income tax in this context redistribution through an income tax usually entails distortions of incentives but the resulting efficiency loss has to be weighed against potential improvements in the fairness of the distribution of resources we address this efficiency equity trade off here by constructing social preferences which obey the standard pareto principle in addition to fairness conditions

what caused the early millennium slowdown evidence based on vector autoregressions this paper uses a simple var for the usa and euro area to analyse the underlying shocks of the early millennium slowdown i e supply demand monetary policy and oil price shocks the results of two identification strategies are compared one is based on traditional zero restrictions and as an alternative an identification scheme based on more recent sign restrictions is proposed the main conclusion is that the recent slowdown is caused by a combination of several shocks negative aggregate supply and aggregate spending shocks the increase of oil prices in 1999 and restrictive monetary policy in 2000 these shocks are more pronounced in the usa than the euro area the results are somewhat different depending on the identification strategy it is illustrated that traditional zero restrictions can have an influence on the estimated impact of certain shocks copyright 2005 john wiley sons ltd

firm specific information and the correlation between individual stocks and bonds abstract this paper examines the correlation between the returns on individual stocks and the yield changes of individual bonds issued by the same firm and finds that they are negatively and contemporaneously correlated this suggests that individual stocks and bonds are driven by firm specific information that is predominantly related to the mean rather than the variance of the firm s underlying assets furthermore i find that lagged stock returns have explanatory power for current bond yield changes while current stock returns are unrelated to lagged bond yield changes this shows that stocks lead bonds in reflecting firm specific information

sell side debt analysts and debt market efficiency we explore sell side debt analysts contributions to the efficiency of securities markets we document that debt returns lag equity returns less when debt research coverage exists which is consistent with debt analysts facilitating the process by which available information is impounded in debt prices the effect of debt research on the debt market s lag is incremental to but comparable in magnitude to hedge fund ownership s effect no such effect exists for credit rating agencies we also find that the dissemination of debt reports has an immediate effect on return volatility in both markets which is consistent with debt analysts providing new information to securities markets increased return covariation suggests that this information impacts the pricing of debt and equity in the same direction a large percentage of debt reports do not induce any immediate debt market return reaction but do induce an equity return reaction which is consistent with new information being provided despite the absence of a debt market reaction finally there is a systematic variation in the debt market s trading and return reactions to debt research timely reports and those by high reputation brokers induce a quicker trading response thus enhancing liquidity whereas only timely reports induce a greater return response this study illuminates the institutional underpinnings of debt market efficiency and it has important implications for information content tests in the debt market where trading is limited

markets transparency and the corporate bond market for decades corporate bonds primarily traded in an opaque environment quotations which indicate prices at which dealers are willing to transact were available only to market professionals most often by telephone prices at which bond transactions were completed were not made public the u s corporate bond market became much more transparent with the introduction of the transaction reporting and compliance engine trace in july 2002 beginning that date bond dealers were required to report all trades in publicly issued corporate bonds to the national association of security dealers which in turn made transaction data available to the public in this paper we describe trading protocols in the corporate bond market and assess the impact of the increase in transparency on the market we review how trace has affected the costs that corporate bond investors paid to bond dealers for their transactions we canvass the opinions of a variety of finance professionals and consider articles in the trade press to obtain a broader view of the impact of transparency on the corporate bond market

welfare reform in european countries a microsimulation analysis this article compares the effects of increasing traditional welfare to introducing in work benefits in the 15 pre enlargement countries of the european union we use a labour supply model encompassing responses to taxes and transfers along both the intensive and extensive margins and the euromod microsimulation model to estimate current marginal and participation tax rates we quantify the equity efficiency trade off for a range of elasticity parameters in most countries because of large existing welfare programmes with high phase out rates increasing traditional welfare is undesirable unless the redistributive tastes of the government are extreme in contrast the in work benefit reform is desirable in a very wide set of cases

investment analysis and the adjustment of stock prices to common information in this article we are concerned with the effect of the number of investment analysts following a firm on the speed of adjustment of the firm s stock price to new information that has common effects across firms it is found that returns on portfolios of firms that are followed by many analysts tend to lead those of firms that are followed by fewer analysts even when the firms are of approximately the same size many analyst firms also tend to respond more rapidly to market returns than do few analyst firms adjusting for firm size this relation however is nonlinear and the marginal effect of the number of analysts on the speed of price adjustment increases with the number of analysts article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

the optimal income taxation of couples this paper analyzes the general nonlinear optimal income tax for couples a multidimensional screening problem each couple consists of a primary earner who always participates in the labor market but makes an hours of work choice and a secondary earner who chooses whether or not to work if second earner participation is a signal of the couple being better worse off we prove that optimal tax schemes display a positive tax subsidy on secondary earnings and that the tax subsidy on secondary earnings decreases with primary earnings and converges to zero asymptotically we present calibrated microsimulations for the united kingdom showing that decreasing tax rates on secondary earnings is quantitatively significant and consistent with actual income tax and transfer programs

differential interpretation of public signals and trade in speculative markets most models of trade in speculative markets assume that agents interpret public information identically we provide empirical evidence on the relation between the volume of trade and stock returns around public announcements and we argue that the evidence is inconsistent with this assumption we then develop a model of trade around public announcements that incorporates differential interpretations and is consistent with the observed volume return relation then we test the standard model of belief revision underlying most models of trade using stock brokerage research analysts earnings forecasts the hypthesis of identical interpretations seems inconsistent with the forecast revisions in these data

a reexamination of the optimal nonlinear income tax abstract this paper investigates mirrlees model of optimal income taxation it provides a concrete example of utility and density functions for which the solution to the usual first order model is not implementable i e and example where the first order approach does not work adding second order conditions leads to an extended model and to implementable solutions if these conditions are binding one gets a kink in the optimal net income schedule and bunching of individuals occurs the properties of an optimal nonlinear income tax are reexamined within the extended model

optimal income transfer programs intensive versus extensive labor supply responses this paper analyzes optimal income transfers for low incomes labor supply responses are modeled along the intensive margin intensity of work on the job and along the extensive margin participation into the labor force when behavioral responses are concentrated along the intensive margin the optimal transfer program is a classical negative income tax program with a substantial guaranteed income support and a large phasing out tax rate however when behavioral responses are concentrated along the extensive margin the optimal transfer program is similar to the earned income tax credit with negative marginal tax rates at low income levels and a small guaranteed income carefully calibrated numerical simulations are provided

the informational role of bond analysts this study uses a large sample of sell side bond analysts reports to examine the properties of recommendations provided by bond analysts and the impact of these recommendations on bond securities first we document that the distribution of bond analysts buy hold and sell recommendations is skewed positively but less so than the distribution of equity analysts recommendations the positive skewness in bond analysts recommendations is greater for

reputation and performance among security analysts members of the institutional investor all american research team supply more accurate earnings forecasts than other analysts when forecasts are matched by the corporation followed and by the date of brokerage house issuance this contemporaneous advantage is complemented by a timing advantage all americans supply forecasts more often than other analysts stocks returns immediately following large upward forecast revisions suggest that all americans impact prices more than other analysts however there is virtually no difference in returns following large downward revisions nevertheless the collective results suggest a positive relation between reputation and performance and assuming that all americans are better paid pay and performance

multiproduct nonlinear pricing typically work on mechanism design has assumed that all private information can be captured in a single scalar variable this paper explores one way in which this assumption can be relaxed in the context of the multiproduct nonlinear pricing problem it is shown that the firm will choose to exclude some low value consumers from all markets a class of cases that allow explicit solution is derived by making use of a multivariate form of integration by parts in such cases the optimal tariff is cost based

determinants of the informativeness of analyst research abstract we examine cross sectional determinants of the informativeness of analyst research i e their effect on security prices controlling for endogeneity among the factors affecting informativeness analyst reports are more informative when the potential brokerage profits are higher e g high trading volume high volatility and high institutional ownership and lower when information processing costs e g more business segments are high we also find that the informativeness of analyst research and informativeness of financial statements are complements

economic aspects of optimal disability benefits this paper analyzes optimal disability and retirement or welfare benefits with imperfect disability evaluation with some able workers judged disabled and some disabled workers judged able thus the levels of both disability and retirement benefits affect labor supply with anyone not working eligible for retirement benefits we analyze the optimal structure of benefits for a given disability screening mechanism and briefly consider the problem of optimal evaluations of disability evidence in the united states there is an overlap in eligibility for disability and retirement portions of social security more generally welfare is sometimes available to people denied disability benefits

consumption puzzles and precautionary savings abstract when marginal utility is convex agents accumulate savings as a precautionary measure against labor income eventualities this paper shows that precautionary savings can go a long way in making the excess growth excess smoothness and excess sensitivity features of consumption consistent with the stochastic processes of labor income observed in the u s at the microeconomic level

monetary policy and country risk this article develops an econometric model in order to study country risk behaviour for six emerging economies argentina mexico russia thailand korea and indonesia by expanding the country beta risk model of harvey and zhou 1993 erb et al 1996a b and gangemi et al 2000 towards this end we have analysed the impact of macroeconomic variables especially monetary policy upon country risk by way of a time varying parameter approach the results indicate an unstable effect of monetary policy upon country risk in periods of crisis however this effect is stable in other periods and the favero giavazzi effect is not verified for all economies with an opposite effect being observed in many cases

inherent inequality and the optimal graduation of marginal tax rates in most countries marginal tax rates increase with income this is at variance with the results of the optimal income taxation literature whose numerical calculations have established the presumption that optimal marginal tax rates should decline with income have the existing results of optimal income tax literature therefore established a presumption that the observed pattern is suboptimal the object of this paper is to attempt to answer this question the numerical calculations that followed mirrlees s 1971 pioneering contribution tried many variations on his basic parametrisation including different preference structures and different functional forms however so far as we are aware most of the reported results maintain his basic assumption of a log normal distribution of abilities or wages with a standard deviation of logs of 0 39 mirrlees 1971 himself appealed the work of lydall 1969 for this figure but it has become the industry standard we show in this paper that departures from this assumption in particular increases in inherent inequality can alter the qualitative pattern of optimal marginal tax rates dramatically contrary to the currently available calculations we show that the optimal graduation can indeed be such that marginal tax rates increase for the majority of the population which is consistent with the observed pattern but that there continues to exist a significant income range at the top where marginal tax rates decline which of course is counter to the observed pattern

the design of income maintenance programmes this paper provides a comprehensive treatment of a basic income maintenance problem for a group of individuals who differ in their income generating abilities it stresses the impact that imperfect information about such abilities has on programme design the analysis serves two purposes first we are able to unify the theoretical literature on the income maintenance problem second we examine the impact of allowing the government to impose workfare on recipients of income support in addition to being of policy interest this is a theoretically challenging problem since it requires solving a multi dimensional screening problem the solution that we find is strikingly simple it separates the poor into two categories with the lower income groups subject to workfare while facing a 100 marginal tax rate on earnings the second group does no public work and is offered a benefit schedule which taxes earnings at a lower rate

earnings announcements and competing information abstract we investigate whether competing information primarily analyst reports reduces the usefulness of earnings announcements inconsistent with the view that information in analyst reports substitutes for earnings announcements we find a positive relation between absolute abnormal returns to the two types of disclosures this positive relation also characterizes subsequent period analyst reports relative to current period earnings announcements we also find that aggregate absolute reactions to both types of disclosures increased over 1986 1995 as a whole these results provide little support for the view that the informativeness of earnings announcements is eroded by competing information in the form of analyst reports

to what extent do fiscal regimes equalize opportunities for income acquisition among citizens to what extent do fiscal regimes equalize opportunities for income aquisition among citizens journal of public economics

an empirical model of the brazilian country risk an extension of the beta country risk model this paper develops a statistical model to study the brazilian country risk using a country beta model in the spirit of harvey and zhou 1993 erb et al 1996a b and gangemi et al 2000 specifically the impact of macroeconomic variables is analysed using a time varying parameter approach an extension of the original model is applied in order to verify the parameters stability over time it is found that monetary policy had a significant and stable impact on brazil s country risk and international reserves presented a significant impact only during the fixed exchange rate period

initial evidence on the role of accounting earnings in the bond market we document that 1 the incidence of bond trade increases during the days surrounding earnings announcements 2 there is a bond price reaction to the announcement of earnings and 3 there is a positive association between annual bond returns and both annual changes in earnings and annual analysts forecast errors all of these effects are larger when earnings convey bad news or when the underlying bond is more risky taken together our results suggest that the nonlinear payoff structure of bond securities affects the role of accounting earnings in the bond market

implications of rational inattention abstract a constraint that actions can depend on observations only through a communication channel with finite shannon capacity is shown to be able to play a role very similar to that of a signal extraction problem or an adjustment cost in standard control problems the resulting theory looks enough like familiar dynamic rational expectations theories to suggest that it might be useful and practical while the implications for policy are different enough to be interesting

is it fair to make work pay the design of the income transfer program for the lower incomes is a hot issue in current public policy debate should we stick to a generous welfare state with a sizeable basic income but high marginal tax rates for the lower incomes and thus little incentives to work or should we make work pay by subsidizing the work of low earners but possibly at the cost of a smaller safety net we think it is difficult to answer this question without making clear what individuals are held responsible for and what not first we present a new fair allocation coined a pareto efficient and shared resources equivalent pese allocation which compensates for different productive skills but not for different tastes for working we also characterize a fair social ordering which rationalizes the pese allocation second we illustrate the optimal second best allocation in a discrete stiglitz 1982 1987 economy the question whether we should have subsidies for the low earners or not crucially depends on whether the low skilled have a strictly positive or zero skill third we simulate fair taxes for a sample of belgian singles our simulation results suggest that making work pay policies can be optimal according to our fairness criterion but only in the unreasonable case in which none of the unemployed are ever willing to work

fair allocation of indivisible goods and criteria of justice a set of n objects and an amount m of money is to be distributed among m people example the objects are tasks and the money is compensation from a fixed budget an elementary argument via constrained optimization shows that for m sufficiently large the set of efficient envy free allocations is nonempty and has a nice structure in particular various criteria of justice lead to unique best fair allocations that are well behaved with respect to changes of m this is in sharp contrast to the usual fair division theory with divisible goods

self selection and pareto efficient taxation abstract this paper analyses the set of pareto efficient tax structures the formulation of the problem as one of self selection not only shows more clearly the similarity between this problem and a number of other problems such as the optimal pricing of a monopolist which have recently been the subject of extensive research but also allows the derivation of a number of new results we establish i under fairly weak conditions randomization of tax structures is desirable ii if different individuals are not perfect substitutes for one another in production then the general equilibrium effects until now largely ignored in the literature of changes in the tax structure may be dominant in determining the optimal tax structure in particular if the relative wage of high ability and low ability individuals depends on the relative supplies of labor the optimal tax structure entails a negative marginal tax rate on the high ability individuals and a positive marginal tax rate on the low ability individuals the marnitude of which depends on the elasticity of substitution iii if individuals differ in their preferences pareto efficient taxation may entail negative marginal tax rates for high incomes while iv if wage income is stochastic the marginal tax rate at the upper end may be 100 our analysis thus makes clear that the main qualitative properties of the optimal tax structure to which earlier studies called attention are not robust to these attempts to make the theory more realistic