are future taxes discounted in this paper i examine empirically the question of whether or not the public recognizes the future taxes implied by current deficitfinanced expenditures as discussed by barro 1 it seems that such recognition does not occur but that by a new hypothesis presented here the aggregate economy behaves much as if it did this alternative hypothesis relies on the widely accepted efficient markets and permanent income hypotheses and it requires considerably less sophistication and information on the part of the average economic agent than does barro s hypothesis

theoretical approaches to monetary disinflation abstract during the 1980s many countries adopted tight monetary policies to reduce high inflation rates which were the legacy of the 1970s as inflation threatens to rise at the beginning of this decade this paper provides a survey of the 1980s literature which sought to provide theoretical understandings of how monetary disinflation is achieved four models are presented monetarist neo keynesian new classical and post keynesian each model s explanation of the recession which accompanies the monetary disinflation is outlined as well as possible policy measures to reduce the extent of the recession and to hasten the return to full employment

the market value of u s government debt monthly 1942 1980 abstract the market value of outstanding united states treasury debt is calculated on a monthly basis using price and par value data from the treasury bulletin separate series for treasury bills bonds certificates of indebtedness notes and total treasury debt are presented along with estimates of privately held treasury debt and gross federal debt the calculated market value series is compared to par value and an existing annual market value series

is ricardian equivalence a good approximation ricardian equivalence may be a good approximation even if all households have finite horizons many households have short horizons and an appreciable fraction of wage income is received by liquidity constrained households the approximation is likely to be better the more imperfect annuity markets are

the determinants of earnings a behavioral approach we survey the determinants of earnings and propose a framework for understanding labor market success we suggest that the advantages of the children of successful parents go considerably beyond the benefits of superior education the inheritance of wealth or the genetic inheritance of cognitive ability we suggest that noncognitive personality variables such as attitudes towards risk ability to adapt to new economic conditions hard work and the rate of time preference affect both earning and the transmission of economic status across generations

international differences in saving rates and the life cycle hypothesis this paper demonstrates that life cycle and demographic variables explain about two thirds of the observed variation in the saving rates of oecd nations during the 1970s they explain more of the variation in the household than the national saving rate and much more when the sample is weighted by population than when it is not finally the study demonstrates that the labor force participation rate of the working age population is an important determinant of the aggregate saving rate

locus of control and savings abstract this paper analyzes the relationship between individuals locus of control and their savings behavior i e wealth accumulation savings rates and portfolio choices locus of control is a psychological concept that captures individuals beliefs about the causal relationship between their own behavior and life events we find that households with an internal reference person a main respondent who believes that he she can generally control relevant aspects of life save more in terms of levels and in some cases as a percentage of their permanent incomes although the locus of control gap in savings rates is largest among rich households the gap in wealth accumulation is particularly large for poor households finally our findings indicate that households with an internal reference person are in a better position to save in forms that are harder to access such as pension wealth than otherwise similar households with an external reference person

the long term effects of unemployment insurance evidence from new brunswick and maine 1940 1991 using data spanning half a century for adjacent jurisdictions in the united states and canada the authors study the long term effects of a generous unemployment insurance ui program on the distribution of weeks worked they find substantial effects for example in 1990 about 12 6 of working age men in maine s northernmost counties worked between 1 and 39 weeks just across the border in new brunswick the figure was 25 6 according to the estimates new brunswick s much more generous ui system accounts for more than three fourths of this differential in part because part year workers are drawn from both ends of the distribution of annual weeks worked 0 weeks and 40 52 weeks the generosity of new brunswick s program had only modest estimated effects on total labor supply even as it substantially increased ui program participation and expenditures

rational expectations and the effects of government debt abstract this paper incorporates the effects of government debt into a standard rational expectations macroeconomic model due to limited current information even when the most extreme propositions about fiscal neutrality are true there are output and interest rate effects of unanticipated changes in government debt therefore the observation of a positive correlation between government deficits and output or interest rates does not imply that government bonds are net wealth

new evidence on the ricardian equivalence theorem a multicointegration approach this paper derives major theoretical constructs which underlie richardian equivalence and using multicointegration methodology empirically tests whether they bear out results indicate that government spending and revenues are cointegrated however the cointegrating scalar is less than one therefore in order for government to obey its intertemporal budget constraint debt and government revenue must be multicointegrated they are not additional evidence indicates that saving and debt may be weakly cointegrated the findings suggest that failure of richardian equivalence may be due to public rather than private sector failure

personality and economic choices abstract there is substantial variation in individual preferences for public goods yet much of that variation remains poorly understood however simple measures of personality can help to explain economic values and choices in a systematic way in this paper we examine the effects of personality on individual economic choices over public environmental goods based on three datasets from three separate stated preference studies we use a hybrid choice econometric framework to examine the effects of personality on preferences for the status quo changes in environmental quality and costs of investing in environmental improvements we find effects that are consistent across all datasets personality a stable feature of an individual s character that is simple to measure enriches explanations of why the demand for environmental goods varies across people provides an indication of how different people are likely to react to the introduction of environmental policies and explains substantial differences in willingness to pay

immigration and the welfare state immigrant participation in means tested entitlement programs this paper documents the extent to which immigrants in the united states over the past 30 years participate in the many programs that make up the welfare state the immigrant native difference in the probability of receiving cash benefits is small but the gap widens once other programs are included in the analysis 21 percent of immigrant households receive some type of assistance as compared with only 14 percent of native households the types of benefits received by earlier immigrants influence the types of benefits received by newly arrived immigrants hence there might be ethnic networks that transmit information about the availability of particular benefits to new immigrants excerpt

supply side hysteresis the case of the canadian unemployment insurance system abstract this paper presents results from a 1971 natural experiment carried out by the canadian government on the unemployment insurance system at that time the generosity of the ui system was increased dramatically we find some evidence that the propensity to collect ui increases with a first time exposure to the new ui system hence as more individuals experience unemployment their lifetime use of the system increases this supply side hysteresis effect may explain why unemployment has steadily increased over the 1972 1992 period even though the generosity of unemployment insurance did not

measuring self control problems we develop a survey instrument to measure self control problems in a sample of highly educated adults this measure relates in the manner that theory predicts to liquid wealth accumulation and personality measures yet while self control problems are typically seen as resulting in overconsumption and low wealth we identify a significant group who underconsume and thereby accumulate high levels of wealth in addition self control problems are smaller in scale for older than for younger respondents those who put money aside in retirement accounts may be delaying access to a point at which self control problems are no longer important jel d12 d14

employment spells and unemployment insurance eligibility requirements in this paper we examine whether the requirements that workers must satisfy to qualify for unemployment insurance ui benefits in any succeeding period of joblessness affect the duration of employment spells this behavioral consequence of a ui system has been neglected in empirical research which has instead focused on the effects of ui parameters on the actions of the unemployed the effect is identified by a unique change in the eligibility requirements of the canadian ui system in 1990 which increased the weeks of employment required to establish ui eligibility we provide a variety of estimates of this behavioral effect in our preferred set of results we find a significant increase in the employment hazard in the week that an individual satisfies the eligibility requirement in many regions of the country in the spirit of feldstein s 1976 study of temporary layoffs the results provide new evidence of the impact of ui system parameters on the actions of employers and workers

unemployment insurance and job durations seasonal and non seasonal jobs the authors use regional and individual variation in unemployment insurance ui parameters to estimate the impact of ui incentives on job durations in doing so they distinguish between seasonal and nonseasonal jobs the authors find evidence of substantial tailoring of job durations to ui incentives in seasonal but not in nonseasonal jobs even for seasonal jobs adjusting ui parameters has small impacts on average job duration except in high unemployment regions increasing the ui entrance requirement leads to some job lengthening but also to the creation of more very short jobs

qualifying for unemployment insurance an empirical analysis little is known about the effect of unemployment insurance on employment durations in this paper the authors take advantage of a unique accidental experiment in the canadian unemployment insurance system which created an exogenous increase in the entrance requirement the number of weeks an individual must work to qualify for benefits of up to four weeks in some regions the authors identify the effects of this increase primarily by comparing the hazard rate out of employment for the experimental year 1990 with that for the preceding year in regions where other parameters of the unemployment insurance system do not change copyright 1997 by royal economic society

does the sophistication of use of unemployment insurance evolve with experience the subject of this paper is the repeat use of ui ei benefits in canada the first objective is to investigate empirically the pattern of adjustment that ui users exhibit over a multiple claim horizon our secondary objective is to investigate a behavioural channel that might potentially underlie observed adjustment effects namely individual learning effects we estimate an econometric model of how certain features of their claims change as they file subsequent claims we find strong empirical patterns suggesting that there does appear to be some sort of an adjustment process beneficiaries tend to approach a desired value for these particular facets of their ui claims there appears to be some process of growing sophistication of ui use which some might label gaming the system reflecting the adjustment of claims and the concomitant employment patterns to the provisions and rules of the regime we also uncover evidence in favour of the existence of individual learning effects ce texte examine l usage a repetition des prestations d assurance chomage au canada le premier objectif est d etudier empiriquement le pattern d ajustement des recipiendaires de prestations au fil de multiples reclamations le second objectif est d etudier un canal d ajustement des comportements qui pourrait sous tendre les ajustements observes les effets d apprentissage individuel on calibre un modele econometrique qui expose certains aspects des reclamations qui changent au fil des reclamations qui se repetent des resultats empiriques robustes suggerent qu il semble y avoir un processus d ajustement les beneficiaires tendent a s approcher de valeurs desirees pour certaines facettes de leurs reclamations d assurance chomage il semble y avoir un processus de sophistication dans l usage de l assurance chomage ce que certains pourraient appeler bien jouer avec le systeme reflechissant l ajustement des reclamations et des patterns concomitants d emploi aux dispositions et reglements du regime on decouvre aussi l existence d effets d apprentissage individuel

when information dominates comparison abstract we propose a micro econometric evaluation of the relation between life satisfaction and income distribution using a balanced panel survey of the russian population russian longitudinal monitoring survey rlms running from 1994 to 2000 covering 4685 individuals we show that in the context of the very volatile russian environment hirschman s q j econ 87 1973 544 tunnel effect conjecture seems to be confirmed variables reflecting income distribution do not influence satisfaction through social comparisons individuals rather seem to use their informational content in order to form their expectations the reference group s income thereby exerts a positive influence on individual satisfaction which contrasts with other studies on the subject inequality indices do not affect individual welfare

unemployment insurance takeup rates and the after tax value of benefits the recent decline in the unemployment insurance ui takeup rate has puzzled researchers using administrative data with accurate information on the potential level and duration of benefits we examine whether a separating employee receives ui we find a strong positive effect of the benefit level on takeup and smaller effects of the potential duration and the tax treatment of benefits simulations indicate that the recent inclusion of ui in the income tax base can account for most of the previously unexplained decline in ui receipt

consumers are not ricardian evidence from nineteen countries i introduction in conventional macroeconomic analysis government debt affects the economy because households view it as net wealth the larger the government debt is the wealthier households feel and the more they consume in principle however households need not view government debt as net wealth david ricardo pointed out that they might conceivably treat the future taxes servicing the government debt as exactly offsetting it 1 robert barro 1974 has shown that maximizing households will actually do so if they accurately anticipate future taxes if they face perfect capital markets and if they have effectively infinite horizons ricardian equivalence is said to hold if households do treat future servicing taxes as an exact offset to the government debt many empirical papers on consumption have investigated whether ricardian equivalence is consistent with observation kochin 1974 barro 1978 tanner 1979 seater 1982 kormendi 1983 aschauer 1985 seater and mariano 1985 kormendi and meguire 1986 1990 leiderman and razin 1988 evans 1988 and evans and hasan 1993 have reported evidence consistent with ricardian equivalence by contrast blinder and deaton 1985 feldstein 1978 1982 boskin and kotlikoff 1985 modigliani and sterling 1986 1990 and feldstein and elmendorf 1990 have reported evidence inconsistent with ricardian equivalence unfortunately most of these studies do not estimate regression equations that derive from well specified theoretical models nesting both ricardian equivalence and an alternative theory in which budget deficits and current taxes are not equivalent consequently their results are often hard to interpret moreover these studies consider the data for only one country typically the united states as a result the tests that are performed may not have much power to distinguish an economy for which ricardian equivalence would be a good approximation from one for which it would be a bad approximation olivier blanchard 1985 has provided one of the few models in the literature that tractably nests ricardian equivalence and an alternative in which households view government debt as net wealth depending upon whether a crucial parameter is zero or positive households have infinite horizons internalize all future generations and exhibit ricardian behavior or have finite horizons are at least somewhat disconnected from future generations and exhibit non ricardian behavior that strengthens as the parameter becomes larger the model has testable implications that this paper examines using annual data for nineteen countries when the data for the countries are pooled the tests have sufficient power not only to reject ricardian equivalence in favor of blanchard s alternative but also to yield a precise estimate of the deviation from ricardian equivalence this estimated deviation is approximately what one would expect if capital and insurance markets were perfect and households did not have altruistic bequest motives the deviation is however also economically unimportant for many purposes the rest of the paper is organized as follows section ii lays out blanchard s model and derives the testable implications of ricardian equivalence section iii tests these implications section iv summarizes the findings of the paper and interprets them ii empirical implications of ricardian equivalence in the stochastic variant of blanchard s model formulated in this section the economy is inhabited by a constant population of households that have finite horizons and face perfect capital and insurance markets 2 each household has a finite horizon because it has a probability p of dying each period and being replaced by another household from which it is entirely disconnected with the population normalized to unity the number of households born 0 1 2 periods earlier is always p p 1 p p 1 p sup

government debt national income and causality the concept of granger causality is applied to assess the validity of the ricardian equivalence hypothesis the analysis is conducted using a multivariate approach with a us data set consisting of annual observations for the 1919 1981 period the empirical evidence generated by this investigation does not support the strict debt neutrality position

network effects and welfare cultures we empirically examine the role of social networks in welfare participation using data on language spoken at home to better infer networks within an area our empirical strategy asks whether being surrounded by others who speak the same language increases welfare use more for those from high welfare using language groups this methodology allows us to include local area and language group fixed effects and to control for the direct effect of being surrounded by one s language group these controls eliminate many of the problems in previous studies the results strongly confirm the importance of networks in welfare participation

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

is public expenditure productive abstract this paper considers the relationship between aggregate productivity and stock and flow government spending variables the empirical results indicate that i the nonmilitary public capital stock is dramatically more important in determining productivity than is either the flow of nonmilitary or military spending ii military capital bears little relation to productivity and iii a core infrastructure of streets highways airports mass transit sewers water systems etc has most explanatory power for productivity the paper also suggests an important role for the net public capital stock in the productivity slowdown of the last fifteen years

wealth accumulation and the propensity to plan why do similar households end up with very different levels of wealth we show that differences in the attitudes and skills with which they approach e nancial planning are a signie cant factor we use new and unique survey data to assess these differences and to measure each household s propensity to plan we show that those with a higher such propensity spend more time developing e nancial plans and that this shift in planning is associated with increased wealth these e ndings are consistent with broad psychological evidence concerning the benee cial impacts of planning on goal pursuit those with a high propensity to plan may be better able to control their spending and thereby achieve their goal of wealth accumulation we e nd direct evidence supporting this effortful self control channel in the very strong relationship we uncover between the propensity to plan and budgeting behavior

the ricardian equivalence hypothesis abstract this paper analyzes the effects of government debt and provides a test of the ricardian equivalence hypothesis for the canadian economy the empirical evidence for the period 1964 ii 1984 iv indicates that the ricardian equivalence hypothesis cannot be rejected

is unemployment insurance addictive evidence from the benefit durations of repeat users the author finds evidence that the past occurrence of a spell of insured unemployment lengthens the duration of future spells descriptive statistics from canadian administrative data covering mid 1971 to early 1990 suggest that unemployment insurance ui claimants tend to spend a longer and longer time collecting benefits with each additional claim they make this finding contradicts the implication of static neoclassical models that successive ui spells should be of the same length the author hypothesizes that the stigma attached to receiving unemployment benefits erodes with each new ui claim an individual files

ricardian equivalence and the public and private saving nexus in india abstractthis study tests the ricardian equivalence theorem ret and examines the responsiveness of private saving to public saving in india most estimators do not provide support for the empirical validity of ret and long run cointegration between public and private saving the increases in household saving hhs seem to have been engendered by the provision of saving incentives institution of saving schemes self driven motivation to save and the precautionary accumulations induced by uncovered uncertainties in incomes rather than by ricardian behaviour of households the self imposed aversion to debt and debt bequest borrowing and liquidity constraints and the intertemporal smoothing of consumption have been the added catalysts that contributed to the increases in hhs the households with binding borrowing constraints inadequate or no insurance and uncovered uncertainties in incomes seem to have been saving more to pay for higher inflation tax the fiscal consolidation and generation of public s

the market value and maturity structure of government of canada debt 1967 83 the market value and maturity structure of outstanding government of canada debt are calculated at monthly frequency for the 1967 to 1983 period the data are disaggregated into general public chartered bank and government holdings the time series behaviour of market value and par value measures are examined to determine whether par value is a reasonable approximation for market value market value data are also used to construct an alternative measure of the deficit flow which is compared with conventional measures of the deficit la valeur au marche et la structure d echeances de la dette du gouvernement du canada 1967 83 la valeur au marche et la structure d echeances de la dette du gouvernement du canada sont calculees par les auteurs pour chaque mois au cours de la periode de 1967 a 1983 on a ventile les resultats en portions detenues par le grand public par les banques a charte et par le gouvernement les auteurs examinent ensuite la chronique des mesures de valeurs au march6 et de valeurs au pair afin de determiner si la valeur au pair est une bonne approximation de la valeur au marche on se sert alors des donnees precisant la valeur au marche pour construire un indicateur de rechange du d6ficit qu on peut alors comparer aux mesures conventionnelles du deficit

are consumers ricardian evidence for the united states this paper derives three empirical implications of a well specified model of consumer behavior a model that nests both ricardian equivalence and an alternative non ricardian theory ricardian equivalence is then tested against this alternative the tests reveal that ricardian equivalence cannot be rejected

personality and the marginal utility of income personality interacts with increases in household income to determine life satisfaction abstract economics implicitly assumes that the marginal utility of income is independent of an individual s personality we show that this is wrong this is the first demonstration that there are strong personality income interactions in an analysis of 13 615 individuals over 4 years we show that individuals who have high levels of conscientiousness obtain more satisfaction to their lives from increases to their household income there are strong gender differences and women that are open to experiences introverted or neurotic get lower satisfaction from household income increases our findings have important implications for the use of financial incentives to influence behavior in the future public policy may benefit from being personality specific

incentive enhancing preferences personality behavior and earnings suppose there is a principal agent relationship between employer and employee in which effort is not contractible but is elicited through employer incentive mechanisms we term preferences that allow the employer to elicit effort at lower cost incentive enhancing we analyze how such preferences affect earnings nd then provide evidence that one of the relevant behavioral traits efficacy as well as other psychological aspects of individuals are significant influences on earnings we conclude that measures of cognitive performance are not sufficient indicators of the effectiveness of schools in promoting student labor market success incentive enhancing preferences are irreducibly heterogeneous incentive enhancing preferences help explain the persistence of poverty over generations within families and unlike cognitive skills incentive enhancing traits need not be welfare increasing for their bearers