the channel of monetary transmission to demand evidence from the market for automobile credit in response to tight money both consumer loans and consumption fall the author asks whether there is any causality running from loans to consumption by focusing on how the composition of automobile finance between bank and nonbank sources of credit changes in response to unanticipated innovations in monetary policy the results indicate that contractionary monetary policy produces a statistically significant reduction in the relative supply of bank consumer loans which in turn produces a decline in real consumption the evidence therefore supports the existence of a credit channel of monetary transmission to aggregate consumption moreover the nature of automobile finance is uniquely suited to identifying which of two possible sub channels of the broader credit channel is relatively more important and suggests the results are more likely consistent with a bank lending channel than with a pure balance sheet channel however the findings also indicate that the quantitative effects of the lending channel on the aggregate economy though precisely estimated may be quite small

women s fertility market work and marital status a test of the new household economics with international data since its emergence from the pioneering efforts of becker 1960 and mincer 1962 the new household economics has inspired a wide range of theoretical and empirical models of demographic behaviour with particular emphasis on fertility female labour force participation and marriage a central principle of these models has been to assign critical roles to the values of men s and women s time in the decision making process in the present paper i adhere to that principle while seeking to contribute to the empirical literature in two important respects 1 the econometric model developed in this paper incorporates several improvements over prior models although women s fertility market work and marital status are closely interconnected their endogeneity has not been fully reflected in previous econometric work 2 in the present model all these demographic variables are endogenous and are subject to a common set of incomes and prices another distinctive feature represents an extension of the approach developed by butz and ward 1979 they used interaction termsmen s and women s earnings weighted by female labour force participation to explain variation in us birth rates here earnings are interacted with the endogenous demographic variables in all equations simulation experiments are used to gauge the total impacts of changes in men s and women s pay under alternative sets of initial conditions 2 for the first time so far as known cross national data are used in a direct test of the new household economics although the literature contains

bank loan portfolios and the monetary transmission mechanism abstract we study the portfolio behavior of bank loans following a monetary tightening and find that real estate and consumer loans sharply decrease while commercial and industrial c i loans increase these responses are compared with responses following non monetary shocks which also reduce output but keep interest rates roughly unchanged during such a non monetary downturn c i loans sharply decrease while real estate and consumer loans show no substantial response these responses together with the responses of relevant lending rates are hard to reconcile with a decline in the supply of c i bank loans during a monetary downturn as stressed by the bank lending channel several arguments are presented explaining why the supply of c i loans may actually increase after a monetary contraction

policy watch the marriage penalty many government programs have implicit penalties or subsidies for marriage for example many couples pay higher income taxes when married than their combined tax liabilities as single filers while many other couples receive a marriage subsidy because their joint taxes fall with marriage likewise most low income couples are eligible for higher welfare benefits if they are separated rather than married this article discusses the marriage penalty with a particular focus on tax and transfer programs why does it exist who faces it to what extent does it affect marriage and labor market behavior what tradeoffs are involved in reducing it

love and taxes and matching institutions we study a setting with search frictions in the marriage market and with incomplete contracting inside the family everyone prefers a partner that has high income and is a perfect emotional match but compromises must often be struck a high income earner may abstain from marrying a low income earner even though they would be a perfect match emotionally because the highincome earner may dislike the implicit income redistribution implied by the marriage redistributive income taxation may ease this problem income matching institutions that secure that people largely from the same income groups meet each other can substitute for redistribution so that optimal redistribution is reduced we also introduce a divorce option redistributive taxation is shown both to further and stabilize marriage

uncertain dynamics correlation effects and robust investment decisions abstract we analyze a firm s investment problem when the dynamics of project value and investment cost are uncertain we provide an explicit solution using a robust method for an ambiguity averse firm taking this into account ambiguity aversion regarding a common risk factor impacts differently than ambiguity aversion regarding investment cost residual risk correlation between project value and investment cost matters ambiguity aversion regarding common risk can decrease the investment probability only if correlation is positive ambiguity aversion regarding residual risk always increases the investment probability when only project value is risky volatility can monotonically decrease the investment threshold this does not hold with the multiple prior method

fertility and the personal exemption implicit pronatalist policy in the united states the personal exemption in the us provides households with an income tax subsidy for each child this paper uses aggregate time series data for the us from 1913 to 1984 to estimate the impact of the tax value of the personal exemption on the aggregate birth rate the empirical results indicate that the personal exemption has a positive and significant impact on fertility and this result is robust to a variety of specifications the us therefore pursues an implicit pronatalist policy through the income tax and the empirical results indicate that the recent tax reform act of 1986 will on average increase this subsidy for fertility authors

female first marriage in east and southeast asia a kiefer neumann model abstract many studies have shown that schooling levels of husband and wife are important determinants of household behavior in developing countries in this article we ask how the schooling levels of husband and wife come to be associated with each other through the marriage market the kiefer neumann model of labor market search is adapted to marital search the aim being to explain both the positive sorting on education levels for spouses and the positive relationship between female schooling and age at first marriage world fertility survey data for indonesia korea and malaysia are employed in the analyses

for love or money the impact of income taxes on marriage higher sometimes lower than their combined single income tax obligations in this paper we explore the impact of the federal individual income tax as well as other economic and demograplhic variables on the marriage decisionis of individuals using longitudinal data from the panel study on income dynamics for the period 1968 92 we estimate a discrete time hazard model of the time to first marriage we find that the probability of marriage is significantly affected by a range of economic and demographic variables importantly we find that an increase in total income taxes paid by married versus single women has a negative effect on the likelihood of marriage and that the change in the marginal tax rate is also a significant determinant of marriage in some cases in contrast the tax effects are rarely significant in determining marriage probabilities among men although there are some differential responses by race in general the impacts of the income tax variables even when statistically significant are small

money in a theory of banking we introduce money in a model of banking in order to examine how open market operations can affect aggregate bank lending and output we see two important ways changes in money supply affect the banking system first by changing prices and interest rates it affects the wealth of demanders of real liquidity and thus the equilibrium production of liquid assets aggregate output and the health of the banking system second it changes the value of money as a means of payment and thus the attractiveness of moving from deposits to currency the demand for financial liquidity again this impacts the health of the banking system and thus bank lending and aggregate output we use this understanding to see how changes in money supply can create alleviate or be ineffective in banking crises

german income taxation and the timing of marriage i investigate how the german income tax code affects the timing of marriages the german income tax code allows married couples to benefit from full income splitting relative to unmarried couples

taxes and marriage a two sided search analysis this article analyzes the effects of differential tax treatment of married and single individuals in the united states on marriage formation and composition divorce and labor supply we develop a marriage market model with search frictions and heterogeneous agents that is sufficiently rich to capture key elements of the problem under consideration we then calibrate the model and use it to evaluate the quantitative effects of several tax reforms aimed at making the tax law neutral with respect to marital status we find that these reforms i systematically increase the labor supply of married females with changes ranging from 0 3 to 10 1 percent ii have substantial effects on the correlation of spouses incomes which changes from 0 2 to values between 0 185 and 0 334 iii can lead to either an increase or decrease in the fraction of people married with changes that range from 0 6 to 2 4 percent

the effect of uncertainty on investment timing in a real options model abstract this paper examines the effect of uncertainty on investment timing in a canonical real options model we show that the critical value of a project that triggers the exercise of the investment option exhibits a u shaped pattern against the volatility of the project this is due to the two countervailing risk and return factors in effect we further show that such a u shaped pattern is inherited by the expected time to exercise the investment option thus for relatively safe projects greater uncertainty shortens the expected exercise time and thus enhances investment this is in sharp contrast to the negative investment uncertainty relationship commonly found in the extant literature finally we show that the positive investment uncertainty relationship is more likely for high growth projects than for low growth projects

on the investment uncertainty relationship in a real options model abstract it appears to be widely accepted in the real options literature that an increase in uncertainty should have an inhibiting effect on investment our article demonstrates that the notion of a negative uncertainty investment relationship is not always correct we show that in certain situations an increase in uncertainty can actually increase the probability of investing and thereby have a positive impact on investment

consumer credit liquidity and the transmission mechanism of monetary policy i introduction despite calls for its obsolescence the lending channel of the monetary transmission mechanism continues to generate interest among monetary economists recently den haan sumner and yamashiro 2007 find the loan supply effect is evident for consumer lending and real estate loans in data up to 2004 the loan supply effect or lending channel arises in the transmission mechanism if tight monetary policy forces banks to contract the supply of loans independent of a direct interest rate effect i e the liquidity effect and such a contraction has real effects for bank dependent borrowers although some such as perez 1998 and ashcraft 2006 have emphasized the lending channel s lack of relevance for the monetary transmission mechanism den haan sumner and yamashiro s 2007 results support a number of recent papers that offer detailed and disaggregated reasons why the channel is alive and well for certain lenders and borrowers for recent examples see nilsen 2004 and peek rosengren and tootell 2003 den haan sumner and yamashiro s 2007 findings suggest that the role of the consumer in the lending channel may be deserving of more attention 1 this paper asks whether consumer lending is or has become a significant component of the lending channel even if it was not thought crucial in lending channel studies published in the 1990s specifically i take a closer look at the statistical and possible economic significance of the consumer loan supply effect with disaggregated monthly consumer credit data from both commercial bank and nonbank sources and for the nonrevolving and revolving components of consumer credit from each source with this array of data i test the assumptions of the channel by considering whether households are forced to use more expensive nonbank credit as bank credit declines or that a household might switch into more costly revolving credit as installment loans decline to examine the consumer lending channel i estimate impulse response functions for the disaggregated consumer loan components mentioned above with the monthly data spanning 1968 2006 the sources of which are discussed later this strategy follows the examples of numerous lending channel studies that analyze the responses of disaggregated data to a monetary policy shock to discern evidence of the loan supply effect den haan sumner and yamashiro 2007 e g compare the behavior of commercial and industrial loans with real estate and consumer loans i follow the methods of previous studies in order to compare as closely as possible the results of this paper with the rich body of lending channel literature for robustness this paper estimates the impulse response functions from both a typical vector autoregression var model and using jorda s 2005 linear projection technique the latter method provides impulse response functions less prone to misspecification than in a var along with conditional standard errors to aid in the statistical inference of the responses see also jorda 2009 and further discussion in section iii finally for additional robustness i employ den haan sumner and yamashiro s 2007 identification strategy for isolating the loan supply effect in preview of the results ultimately the consumer credit data analyzed in this paper suggest that both the statistical and by extension the economic significance of the consumer loan supply effect is weak in the least the effect has weakened over time although monthly consumer credit data from commercial banks from 1968 through 2006 substantiate previous research on consumer lending matching the decline documented by gertler and gilchrist 1993 and den haan sumner and yamashiro 2007 after 1984 the responses of both nonrevolving and revolving consumer bank credit are not consistent with the lending channel instead both series increase similar to the result found by den haan sumner and yamashiro 2007 for commercial lending in fact total nonrevolving and revolving consumer credit increase for 2 yr after the monetary shock

taxes and transfers their effects on the decision to end a marriage abstract the transfer system typically has large marriage disincentives while the income tax system is likely to subsidize marriage for many low income families in other words the tax system may offset an increase in transfer benefits associated with marital separation the interaction of the transfer system with the income tax system has largely been overlooked the income tax system has become more relevant for low income families with the recent expansion of the earned income tax credit which filers may be eligible for even if their tax liability is zero this paper uses family level measures of the change in transfer benefits and tax liability associated with a change in family structure to consider the effect of these financial incentives on separation decisions

will you civil union me although the tax system is not marriage neutral in many countries it has been found to be only slightly significant in determining marriage decisions buffeteau and echevin 2003 alm and whittington 1995 this paper tests whether the tax system can alter the decision to contract a civil union which is less binding than a marital contract in 1999 france introduced civil union pacs as an alternative legal union to marriage i assess the impact of taxation on the decision to contract a pacs using a difference in differences evaluation of the 2005 income tax reform for newly pacsed couples as the control group is contaminated by the reform i propose an original estimation method based on a difference in differences in differences setting to estimate bounds to the impact of the reform my results find a positive and increasing impact of taxation on pacs rates but also a change in the timing of pacs unions suggesting that taxation alters the decision to contract a pacs in addition i find a slightly significant impact of taxation on the decision to terminate a pacs

the investment strategies for a dynamic supply chain under stochastic demands abstract a successful supply chain management scm should aim to maximize the net present value of joint profits along the supply chain however the volatile market conditions cause the future cash flows along the supply chain more difficult to anticipate to obtain higher supply chain value the supplier and the retailer should cooperatively determine the optimal entry time this paper proposes a two stage dynamic optimization model by using a real option approach and then performs the sensitivity analyses for the option value and the investment threshold the impacts of some critical factors including the growth rate and the volatility of demand shock sunk cost and relating operational costs cost rates fix costs holding costs of inventory and shipping costs are investigated

devaluating projects and the investment uncertainty relationship abstract sarkar 2000 on the investment uncertainty relationship in a real options model journal of economic dynamics and control 24 219 225 analyzes the investment uncertainty relationship in a real options model demonstrating that the widely accepted conclusion that uncertainty harms investment can be reversed wong 2006 the effect of uncertainty on investment timing in a real options model journal of economic dynamics and control forthcoming confirms this point showing that more uncertainty can reduce the expected time to exercise the investment option this paper deals with such an issue and attempts to integrate both sarkar s and wong s analysis for risk neutral investors we show that uncertainty can favor investment only if projects devaluate over time this conclusion does not hold in a capm framework where we demonstrate that the relationship uncertainty investment can be positive a even when the investment threshold increases with uncertainty and b in the case of projects negatively correlated with the market portfolio

anti poverty policy for families in the next century from welfare to work and worries this paper reveals that recent changes in social policy have included both sharp cutbacks in welfare for non working families and dramatic increases in supports for low income working families it explores the reasons for these changes and documents how they have radically changed work incentives for some persons notable single mothers the result has been a large increase in work by low wage single parents the paper concludes by examining several potential dangers of this new direction and explores the challenges that remain for the next century

optimal r d investment for a risk averse entrepreneur abstract entrepreneurs investing in r d projects face technical uncertainty associated with the cost to completion of the project which is idiosyncratic and inherently unhedgeable we extend existing real options models of r d investment to incorporate the cost of bearing this unhedgeable risk and find it decreases risk averse entrepreneurs valuations of r d projects and increases the minimum npvs required for continued investment in r d threshold npvs relative to unpriced risk values and threshold npvs as in the unpriced risk case for less risk averse entrepreneurs with small r d projects threshold npvs remain negative and decrease with technical uncertainty however for sufficiently risk averse entrepreneurs with sufficiently large r d projects threshold npvs can become positive and increase with technical uncertainty

dynamic investment and capital structure under manager shareholder conflict abstract this paper investigates the interactions between the investment and financing decisions of a firm under manager shareholder conflicts arising from asymmetric information in particular we extend the manager shareholder conflict problem in a real options model by incorporating debt financing we show that manager shareholder conflicts over investment policy increase not only the investment and default triggers but also coupon payments which lead to a decrease in the equity value moreover given the presence of manager shareholder conflicts debt financing increases investment and decreases total social welfare as a result there is a trade off between the efficiency of investment and total social welfare with debt financing these results fit well with the findings of previous empirical work in this area

til death or taxes do us part the effect of income taxation on divorce there is now much empirical evidence that economic incentives affect the divorce decision via their impact on the flow of benefits of divorced vs married individuals however the effect of the individual income tax on divorce has been neglected in this work the income tax in the us is structured so that tax liability often changes with marriage some couples incur a marriage penalty in the form of higher taxes when they marry while others receive a marriage subsidy because their tax burden falls with marriage in this paper the authors examine the impact of the individual income tax on the likelihood of divorce in the us using data from the panel study on income dynamics they estimate a discrete time hazard model of the probability of divorce from the first marriage to test the hypothesis that the probability of divorce rises with the marriage penalty they also examine the role of other economic factors in the divorce decision the authors find that individuals respond to tax incentives in their decision to divorce although these responses are typically small and differ for men and women authors

income taxes and the timing of marital decisions abstract in this paper we estimate the impact of the federal individual income tax on the timing of marital decisions anecdotal evidence suggests that the tax penalty often associated with marriage contributes to the decision of when to marry using household data from the panel study on income dynamics we estimate various models of the probability of delaying marriage as a function of the change in tax burden caused by marriage as well as several other variables we find that there is a significant positive relationship between the marriage penalty in a year and the probability of delaying marriage until the following year the magnitude of the effect however is small

saying i don t the effect of the affordable care act young adult provision on marriage this paper investigates the effect of the affordable care act young adult provision on the propensity to marry the young adult provision expanded options for obtaining insurance coverage outside of marriage young adults affected by the provision might have less incentive to marry since one avenue for obtaining health insurance coverage is through marriage this paper examines this question by applying difference in differences type methods using the 2008 2013 american community survey results suggest that the provision is associated with decreases in the likelihood of marrying cohabitation and spousal health insurance coverage and an increase in the probability of divorce

interest rates and the market for new light vehicles we study the impact of interest rates changes on both the demand for and supply of new light vehicles in an environment where consumers and manufacturers face their own interest rates an increase in the consumers interest rate raises their cost of financing and thus lowers the demand for new vehicles an increase in the manufacturers interest rate raises their cost of holding inventories both channels have equilibrium effects that are amplified and propagated over time through inventories which serve as a way to both smooth production and facilitate greater sales at a given price through the estimation of a dynamic stochastic market equilibrium model we find evidence of both channels at work and of the important role played by inventories a temporary 100 basis point increase in both interest rates causes vehicle production to fall 12 percent and sales to fall 3 25 percent at an annual rate in the short run

investment timing asymmetric information and audit structure a real options framework abstract this paper examines investment timing by the manager in a decentralized firm in the presence of asymmetric information in particular we incorporate an audit technology in the agency model developed by grenadier and wang 2005 investment timing agency and information journal of financial economics 75 493 533 the implied investment trigger in the agency problem with auditing is larger than in the full information problem and smaller than in the agency problem without auditing nevertheless the audit technology does not necessarily reduce inefficiency in the total social welfare

marriage divorce and social safety net policy i study the effects of the earned income tax credit eitc and welfare reforms of the 1990s on flows into and out of marriage i use test scores to predict who is most likely to be affected by the policy changes and employ a flexible functional form to estimate heterogeneous effects i find that lower earning married women are more likely to divorce as the eitc expands but i find no effect of eitc generosity on marriage i find little effect of welfare generosity on marriage or divorce flows for any group my results suggest that there are nonsymmetric responses to policy on flows into and out of marriages

income taxes and the marriage decision economic incentives have been found to play an important role in the marriage decision in developed and developing countries however the way in which the income tax treatment of the family affects these incentives has been routinely ignored this paper uses time series data for the united states from 1947 to 1988 to estimate the impact of economic factors including for the first time the tax consequences of marriage on the aggregate marriage rate the estimation results indicate that economic factors like income female wages and education play an important and statistically significant role in the marriage decision in particular the tax consequences of marriage clearly affect the marriage decision when income taxes increase with marriage the aggregate marriage rate declines however the magnitude of this impact is quite small this result suggests that some individuals respond to tax incentives in their marriage choices but that for many individuals taxes do not affect these decisions