estimating the tax advantage of corporate debt this paper presents estimates of the effective tax value of incremental interest deductions for corporations taking into account that they may not be able to utilize all their interest deductions fully because of either insufficient taxable income or the availability of nondebt tax shields after describing particular features of the tax code which may drive a wedge between statutory and effective tax rates for debt finance we present estimates using the treasury corporate tax model of effective tax rates for a variety of industry groupings our estimates suggest that the after tax cost of debt varies widely across industries the magnitude of the effective tax advantage to debt finance has important implications for corporate financial behavior one issue which has been examined extensively in the corporate finance literature is whether the value of the firm is affected by the firm s leverage ratio in a recent contribution deangelo and masulis 3 have shown that financing decisions can affect the value of the firm if the effective tax advantage to debt finance varies among firms or is reduced by the presence of nondebt tax shields such as investment tax credits and depreciation deductions the effective tax advantage to debt is also an important determinant of leverage related costs gordon and malkiel 5 have recently used the statutory tax rate to estimate expected bankruptcy costs induced by the corporate tax when the firm is assumed to balance the marginal tax advantage to debt with marginal expected bankruptcy costs if however the effective tax rate for interest deductions falls short of the statutory rate the magnitude of these costs may be overstated this paper presents detailed estimates of the marginal effective tax advantage to debt finance our estimates based on data in the treasury 1978 corporate master statistical file and on simulations done with the treasury corporate tax model quantify the impact of increasing interest deductions without changing other items on the corporation s income statement 1 we simulate the impact of a change in a firm s capital structure holding its investment and production decisions constant this is an appropriate procedure for estimating the marginal

economic growth and poverty reduction measurement issues using income and non income indicators summary this paper first reviews the debate on the definition of pro poor growth and argues that a relative definition has merits when defining the state of pro poor growth while an absolute definition is most suitable when analyzing the rate of pro poor growth the second contribution is to extend the pro poor growth toolbox to non income indicators the analysis applied to bolivia shows that this extension greatly improves our understanding of the distribution of change in non income indicators of the linkages between progress in income and non income dimensions of poverty and on the incidence of progress in non income outcomes along the income distribution

economic development and income inequality further evidence on the u curve hypothesis abstract internationally comparable data on inequality and income are utilized to reassess the empirical status of kusnets u curve hypothesis the hypothesis seems well supported when both developed countries dcs and less developed countries lcds are included in the sample however the position changes rather dramatically if the sample is restricted to lcds and very small support for the hypothesis is then observed also a simple comparison indicates that some of the support reported in earlier studies may have been due to the use of conventional gross domestic product per capita in general results based on gini coefficient seem less favorable to the hypothesis than those derived from household income shares

development and inequality revisited three decades after the seminal article of kuznets 1955 and one decade after the empirical investigation of ahluwalia 1976b the relationship between income inequality and economic developement is still controversial this paper examines the above relationship within a time series cross section framework in a sample of countries which are representative of the non centrally planned economies of the world we use gdp per capita in real un international comparison project dollors as an indicator of a country s level of economic development the results lend support to the kuznets inverse u hypothesis although other factors relfecting the institutional setting of a country are found to affect income inequality significantly during the development process as well similar results are obtained if we exclude developed countries from the sample

a human development index by income groups summary one of the most frequent critiques of the hdi is that it does not take into account inequality within countries we suggest a methodology which allows to compute the three components and the overall hdi for quintiles of the income distribution this allows comparisons of the level in human development of the poor and non poor within and across countries an empirical illustration shows large discrepancies in human development within the countries especially in africa these discrepancies are lower the higher the hdi is but only weakly so inequality in income is generally higher than inequality in education and life expectancy

should the kuznets effect be relied on to induce equalizing growth evidence from post 1950 development abstract the large body of cross sectional statistical research assessing 1 a kuznets inverted u for less developed countries ldcs 2 b a turning point is analyzed an alternative methodology is presented those countries which started in 1950 well below the turning point in rgdp and which reached an rgdp well above the turning point by 1980 are utilized as key cases income distribution data and assessments from individual country experts are combined with historical comparative microanalyses for each key case brazil costa rica greece japan malaysia south korea taiwan and turkey to construct patterns of income distribution during this crucial growth period it is demonstrated that the jury is still very much out on the kuznets inverted u for ldcs and the notion of a turning point should be rejected copyright 1997 elsevier science ltd

poverty comparisons over time and across countries in africa abstract we use demographic and health surveys dhs to compare poverty at two or more points in time within and between african countries our welfare measure is an index resulting from a factor analysis of various household characteristics durables and household heads education an advantage of this measure is that for intertemporal and intraregional comparisons we need not rely on suspect price deflators and currency conversion factors the wide availability and similarity of questionnaires of the dhs facilitate comparisons over both time and countries our results generally show declines in poverty during the previous decade largely due to improvements in rural areas

the effect of business risk on corporate capital structure theory and evidence under corporate and personal taxation we demonstrate that the relation between optimal debt level and business risk is roughly u shaped this result follows from the fact that the tax liability is an option portfolio that is long in the corporate tax option and short in the personal tax option therefore the net effect of a change in business risk on the optimal debt level depends upon the relative magnitudes of the resultant marginal changes in the values of these two options results of empirical tests offer support for the predicted u shaped relationship

measuring aggregate welfare in developing countries how well do national accounts and surveys agree in a data set for developing and transition economies the author finds that private consumption per capita based on national accounts deviates on average from mean household income or expenditure based on national sample surveys growth rates also differ systematically so that the ratio of the survey mean to the national accounts mean tends to fall over time but there are revealing exceptions to these general findings the aggregate difference in the levels is due more to income surveys than to expenditure surveys and there are strong regional effects for example the severe data problems in the transition economies of eastern europe and central asia means that there is negligible correlation in that region between growth rates from national accounts and those from household surveys

the structure and incentive effects of corporate tax liabilities this paper describes situations in which tax liabilities assume the form of a negative position in a call option this structure motivates an examination of the investment decisions of taxed corporations in the presence of risk it is shown that the structure of the tax liability creates an incentive to underinvest in more risky projects and an incentive for conglomerate merger these effects are then evaluated in the presence of conflicts of interest between stockholders and bondholders and under alternative assumptions about the tax code and about the timing of investment and financing decisions this paper makes an observation regarding the functional form assumed by the tax liabilities of corporations with potentially redundant deductions and evaluates its consequences for investment incentives interest and other deductions against taxable income can be taken for the most part only to the extent of that income in a single period model this gives the net tax liability a familiar structure it can be viewed as a call option where the exercise price on the call is the allowable deductions the tax paying entity holds a positive position in the assets which generate the taxable income and a negative position in a call option on those assets the analogy between options and the structure of tax liabilities calls attention to some interesting incentive effects concerning risk using their model of option valuation black and scholes 5 showed that the value of an option is increasing in the variance of the asset it is written on other authors have generalized this result and studied its implications for corporate financing see jagannathan 16 jensen and meckling 17 and green 15 the importance of the risk attributes of the underlying asset in option valuation suggests that taxation may have important incentive consequences for investment decisions involving risk it has been recognized in the public economics literature for some time that asymmetries in the tax schedule can affect risk taking behavior early papers by mossin 20 and stiglitz 25 studied individual portfolio decisions over a riskless and a risky asset our analysis differs from these in a number of respects the most important of these is our use of market valuation rather than expected utility in the decision maker s objective function this is surely a more appropri

foreign direct investment and income inequality further evidence abstract this paper examines the relationship between foreign direct investment fdi and income inequality special attention has been paid to data comparability and model specification by comparing models with and without geographical dummies this study shows that the statistically significant correlation between fdi and income inequality widely obtained in earlier studies might capture more of the geographical difference in inequality than the deleterious influence of fdi and to the extent that fdi does give rise to more unequal income distribution in the host less developed countries ldcs only east southeast asia ldcs appear to have been harmed by the inflow of fdi during the 1970s it should be noted however that the second result refers only to the marginal impact not the total impact apart from fdi our empirical evidence suggests that the level of economic development the direct role of government and to a smaller degree the significance of the agriculture sector in an ldc are crucial determinants of income inequality

measuring poverty in a growing world or measuring growth in a poor world the extent to which growth reduces global poverty has been disputed for 30 years although there are better data than ever before controversies are not resolved a major problem is that consumption measured from household surveys which is used to measure poverty grows less rapidly than consumption measured in national accounts in the world as a whole and in large countries particularly india china and the united states in consequence measured poverty has fallen less rapidly than appears warranted by measured growth in poor countries one plausible cause is that richer households are less likely to participate in surveys but growth in the national accounts is also upward biased and consumption in the national accounts contains large and rapidly growing items that are not consumed by the poor and not included in surveys so it is possible for consumption of the poor to grow less rapidly than national consumption without any increase in measured inequality current statistical procedures in poor

the determinants of mortality mortality rates have fallen dramatically over time starting in a few countries in the 18th century and continuing to fall today in just the past century life expectancy has increased by over 30 years at the same time mortality rates remain much higher in poor countries with a difference in life expectancy between rich and poor countries of also about 30 years this difference persists despite the remarkable progress in health improvement in the last half century at least until the hiv aids pandemic in both the time series and the cross section data there is a strong correlation between income per capita and mortality rates a correlation that also exists within countries where richer better educated people live longer we review the determinants of these patterns over history over countries and across groups within countries while there is no consensus about the causal mechanisms we tentatively identify the application of scientific advance and technical progress some of which is induced by income and facilitated by education as the ultimate determinant of health such an explanation allows a consistent interpretation of the historical cross country and within country evidence we downplay direct causal mechanisms running from income to health

improving human development a long run view abstract the pessimistic flavour of the human development reports appears to be in contradiction with their own numbers as developing countries fare comparatively better in human development than in per capita gdp terms this paper attempts to bridge this gap by providing a new improved human development index ihdi informed by welfare economics the ihdi is presented here alongside the united nations development programme s undp hdi for the world and its main regions since the late 19th century social dimensions in the ihdi are derived following kakwani journal of development economics 41 1993 pp 307 336 with a convex achievement function whereas a geometric average is employed to combine its dimensions longevity knowledge and income thus the ihdi does not conceal the gap between rich and poor countries and casts a much less optimistic view than the conventional undp index while it fits with the undp concern for international differences the paper s findings highlight main weaknesses in human development dimensions of present day developing countries

the human development index a critical review since 1990 the united nations development programme undp has published a series of annual human development reports hdrs in which the human development index hdi is computed for each country this index has become an important alternative to the traditional unidimensional measure of development i e the gross domestic product although the index still fails to include any ecological considerations it has broadened the discussion surrounding the evaluation of development unfortunately over the years the hdrs seem to have become stagnant repeating the same rhetoric without necessarily increasing the hdi s utility this paper evaluates how well these reports have lived up to their own conceptual mandate and assesses the ability of the hdi to further the development debate we find that the reports have lost touch with their original vision and the index fails to capture the essence of the world it seeks to portray in addition the index focuses almost exclusively on national performance and ranking but does not pay much attention to development from a global perspective we propose the incorporation of three simple modifications for the index as a first step to overcome these shortcomings 1998 elsevier science b v all rights reserved

an alternative source of measurement error as an explanation for the inverted u hypothesis in the rapidly growing literature on the relationship between income distribution and economic development two of the most frequently investigated issues are the so called inverted u hypothesis otherwise known as the kuznets curve and short run trends in income distribution the inverted u hypothesis alleges that the relationship between income inequality and per capita income resembles an inverted u wherein at low levels of development there is little inequality but as income per capita rises inequality rises also but only up to a point after which it gradually decreases irrespective of the u shape of the relationship there is also very considerable interest in the direction size and explanation for trends in income distribution in developing countries

modeling energy and development an evaluation of models and concepts most global energy models are developed by institutes from developed countries focusing primarily on issues that are important in industrialized countries evaluation of the results for asia of the ipcc sres models shows that broad concepts of energy and development the energy ladder and the environmental kuznets curve can be observed in the results of the models however improvements can be made in modeling the issues that underlie these concepts like traditional fuels electrification economic structural change income distribution and informal economies given the rapidly growing importance of energy trajectories of developing countries for global sustainability the challenge for the future is to develop energy models that include all these aspects of energy and development

policy evaluation via composite indexes qualitative lessons from international transparency policy indexes summary international transparency policy indexes itpis help determine billions in investment and aid influence authoritative scholarship and shape policy choices are itpis valid yardsticks of transparency or do they encourage dissimulation most scholarship on index based evaluations focuses on concept indexes e g governance from quantitative approaches this paper presents qualitative insights about itpis in specific and policy indexes in general analyzing three measurement related pitfalls and proposing countermeasures most significantly it shows how indexes presuppose substitutability while policies contain nonsubstitutable necessary policy provisions this dilemma of ontological compatibility means that policies can rank favorably on indexes notwithstanding the absence of lynchpin policy provisions

can the kuznets effect be relied on to induce equalizing growth abstract the use of internationally comparable income data to test kuznet s inverted u hypothesis introduces several econometric problems this study a explains and corrects for these econometric problems b assesses the sensitivity of estimated results to alternative functional specifications and sample variations c provides a more rigorous test for structural change between more and less developed countries in the phasing of the inequality trend and d estimates the time likely to elapse before various of the developing countries reach the turning point the study s findings offer broad support for kuznets s hypothesis but do not support the advocacy of development policies focused exclusively on growth for low income countries growth s equalizing phase cannot be anticipated to set in for half a century

development and distribution a critique of the cross country u hypothesis abstract this paper questions the validity of a modern paradigm viz the u hypothesis it argues that notwithstanding contrary claims the recent cross country econometric studies by ahluwalia and others have little in common from a methodological point of view with kuznets earlier intertemporal national studies ahluwalia s cross country u curve is found to be based on defective statistics and questionable methodological premises in specific the estimation of one u curve from observations on both ldcs and dcs is criticised a sample restricted to the ldc group considerably weakens support for the u hypothesis further even marginal variations in the data set lead to the virtual disappearance of ahluwalia s empirical relationship the paper concludes that the cross country u hypothesis is more of a hindrance than an aid to our comprehension of the relationship between economic growth and income distribution

good and bad growth the human development reports abstract the 1996 human development report undp 1996 is about economic growth and human development in keeping with past reports in the series it emphasizes the diversity of country performance in improving human development indicators at given rates of growth this article reviews what the human development reports have said on this topic looking at how well the main messages have been supported by data and analysis and how compelling they are as a basis for public action

miller s equilibrium shareholder leverage clienteles and optimal capital structure the purpose of this paper is twofold first we examine the individual portfolio decisions when income from stocks and bonds is taxed at different rates second a rationale for the existence of risky debt in the presence of leverage related costs and differential personal income taxation is provided previous studies on capital structure with differential personal income taxation have ignored either the portfolio risk consideration and or the possibility of losing personal and corporate interest tax shields due to insufficient taxable earnings e g 8 2 3 14 13 6 7 1 9 19 20 21 23 in section i of this paper both the portfolio risk consideration and the possibility of losing personal and corporate interest tax shields are explicitly introduced this enables us to provide a rationale for the shareholder leverage clientele phenomenon within a mean variance framework we also demonstrate a non corner solution for the optimal corporate capital structure in a tax environment similar to that of miller s debt and taxes 14 in sections ii and iii of this paper miller s world is further modified to include risky debt and the attendant costs we re examine and synthesize recent studies on the theory of optimal capital structure which have appeared since the publication of debt and taxes e g 4 6 7 13 19 20

mickey mouse numbers and inequality research in developing countries the usage of unreliable statistics is common in development economics particularly in research on income distributional issues it is widely believed for example that the distribution of income in taiwan equalised dramatically between the early 1950s and about 1980 under close examination it is clear much of the evidence advanced is flawed the treatment of data by a number of analysts is puzzling and links between export orientation and inequality trends are flimsy it is argued that economists should be far more concerned about data problems in their research

the value of the tax subsidy on risky debt the effect of corporate taxes on the market value of a levered firm continues to be a central issue in recent contributions in finance theory e g miller 1977 deangelo and masulis 1980 kim 1982 modigliani 1982 in these and other studies e g krause and litzenberger 1973 scott 1976 brennan and schwartz 1978 kim 1978 the relationship between market value and capital structure is established by formulating a tax subsidy function that specifies the partial effect of debt on the expected tax savings at the corporate level under the existing u s tax code a working assumption in most of these studies is that both principal and interest are tax deductible this assumption is made in the spirit of the original modigliani and miller 1963 formulation in which debt is taken to be perpetual and riskless indeed it is well known that the tax shield provided by the deduction of principal in a singleperiod framework has the same value as the tax shield from interest deductions in the case of perpetual and riskless debt under this assumption it is shown that in the absence of non debtthis paper examines the relationship between leverage and the value of the firm when non debt related tax shields are available and the corporate tax is levied as an income tax in a previous paper de angelo and masulis argue that in the presence of nondebt related tax shields the relationship between debt and firm value is concave resulting in an interior optimal capital structure when there is a tax induced differential in the cost of corporate debt their result derives from the fact that they assume the payment of debt principal and non debt related depreciation charges are deductible however the former deduction is consistent with a wealth tax while the latter is consistent only with an income tax we show that if the interest alone is deductible the debt firm value function is convex resulting in corner solutions to the capital structure problem the authors wish to thank richard castanias richard green lemma senbet and especially an anonymous referee for helpful comments and richard green and robert dammon for computational assistance

inequality and development across and within countries summary this paper provides a cross country comparison of how income inequality has evolved within countries at different levels of development it uses overlapping nonparametric regression which allows visual comparisons of inequality both within and across countries as a result the methodology allows more specific conclusions than cross country regressions and yet is more general than within country case studies the approach highlights the problematic conclusions that can arise with parametric regressions in particular with tests of the kuznets curve while some previous results are confirmed some new results on inequality across countries are also discovered

testing the determinants of income distribution in major league baseball i introduction income of professional athletes is a frequent topic of discussion of fans sportscasters and the general public economists have also increasingly been attracted to this topic because the distribution of income of these players has both policy and business implications as a consequence the report of major league baseball s mlb blue ribbon panel formed in 1998 by mlb commissioner bud selig received quite a lot of attention this panel was charged with describing and explaining the economic condition of mlb comprised of such dignitaries as former federal reserve chairman paul volker senator george mitchell yale university president richard levin and columnist george will this panel reported that team payrolls have become increasingly disparate the gap between rich and poor teams is not only wide but is growing levin et al 2000 a case in point is the fact that the salary of the highest paid player in the 2000 season los angeles kevin brown at 15 7 million was 95 of the entire payroll of the poorest team the minnesota twins the effect according to the panel s report is a dramatic decline in parity and competitiveness of mlb since 1994 a team in the top payroll quartile has won every world series game in 1999 the teams with the five largest payrolls had an average winning percentage of 0 557 whereas the five poorest teams had a comparable figure of 0 444 the report discusses various recommendations that may narrow this gap leading to what one might call convergence in team payrolls this article examines the distribution of income in mlb for 1985 to 2000 we revive and extend a technique first suggested by thurow 1970 and show how it can be used to test for time trends versus cross sectional demographic and economic aspects influencing income distribution thurow 1970 discusses the impact of various measures on median income in the present case by calculating the gini coefficient we can discuss the impact that the explanatory variables have on income inequality in the context of mlb we attempt to shed light on the reasons why teams have greater or lesser payroll disparity we leave the question of the effect of between team payroll inequality on team wins and team revenues for future research the issue of whether to use an inequality measure that is based on a particular distribution or one that is distribution free has been widely discussed in the income distribution literature silber 1999 ryu and slottje 1999 in advocating the use of parametric distributions point to several benefits of estimating the lorenz curve in this manner these benefits include the ability to summarize thousands of observation points with a few parameters the ability to estimate the density function at any point an enhanced ability to construct inequality measures and the ability to formulate possible laws that would otherwise not be possible to detect however there are problems associated with the use of a parametric lorenz curve such as the choice of a suitable distribution the problem is compounded by the fact that income data are often grouped and have an open ended highest income category making it difficult to obtain accurate estimates one advantage of using professional sports data is the fact that the salary is available per individual and is not grouped consequently an actual number is available for the highest income this study analyzes payroll inequality in a professional sport by team that is for each year we calculate a measure of inequality for each mlb team and consider the characteristic differences in within team payroll distributions our study is not however the first to consider income inequality within professional team sports depken 2000 and jewell and molina 2004 find that mlb teams with greater wage disparity have fewer wins furthermore sommers 1998 finds a negative relationship between team success and within team payroll inequality using national hockey league data

growth and equity with endogenous human capital taiwan s economic miracle revisited this paper presents an endogenous growth model for a small open economy with a significant trade surplus and active government development strategies in order to reexamine the major determinants of economic growth and income distribution this analysis provides a better interpretation for the intertwined relationship between growth and equity an important economic issue that has not been fully addressed by the well known models 5 9 20 in traditional growth studies economists have emphasized the role of two major factor inputs physical capital and labor output growth is considered to depend merely on exogenous shifts in population and technology recently lucas points out that this conventional approach to studying economic growth may leave more than half of output growth unexplained 12 in order to improve the understanding of the underlying endogenous forces promoting economic development new growth theorists have proposed several alternatives to the conventional models such as the endogenous fertility choice 4 the endogenous technological evolution 16 and the endogenous human capital accumulation or learning process 12 13 to name but a few these contributions have generated additional interests in and rich implications for empirical studies of public policy 6 and cross country comparisons 3 15 lucas s endogenous human capital formation model is particularly suitable for studying the

taxes capital structure and bondholder clienteles despite much recent progress financial theory has yet to explain the connection if any between the u s tax code and many observed characteristics of corporate bonds empirically why is there no single tax rate equating yields on corporate bonds with yields on tax exempt municipal bonds of apparently identical risks and maturities 2 specifically why does the spread in yields between corporate and municipal bonds divided by the yield on corporates a conventional measure of the marginal tax rate on corporates decrease with increasing risk and maturity more generally why are different types of bonds evidently held by clienteles of investors in tax clienteles for corporate bonds are identified in a competitive financial equilibrium under an asymmetric corporate income tax with interest preceding principal state contingent bonds with higher coupon yields are issued by firms with higher pretax cash inflows per dollar of nondebt tax shield purchased by investors in lower tax brackets and implicitly priced at lower marginal tax rates on these bonds all investors earn tax induced surpluses by contrast all other bonds have implicit tax rates typically equal to the corporate rate and yield for many investors no tax induced surpluses we gratefully acknowledge the helpful comments of george constantinides kose john merton miller jim scott marti subrahmanyam and participants in seminars at baruch chicago columbia houston michigan nyu rutgers usc washington wharton the american finance association the western finance association and the johnson symposium on taxes and finance at wisconsin george constantinides was especially helpful 1 the most notable contribution is miller 1977 other recent papers include chen and kim 1979 kim lewellen and mcconnell 1979 deangelo and masulis 1980a 1980b taggart 1980 kim 1982 auerbach and king 1983 and talmor haugen and bornea 1985 black 1971 anticipates an equilibrium with clienteles 2 schaefer 1982a identifies tax induced clienteles of bondholders in the british gilt market van horne 1982 reports that implicit tax rates vary over time as the supply of discount bonds changes additional evidence is cited in trczinka 1982

the inequality adjusted human development index a constructive proposal abstract this paper proposes a method to incorporate a concern for distributional inequalities of income education and longevity into the framework of the human development index hdi as it is presently designed by the united nations development programme the paper constructs gini coefficients for a set of 20 developing countries measuring inequalities in annual income educational attainment and life span attainment these calculations are combined with data from the hdi to produce an inequality adjusted human development index iahdi the implications of this proposed index for evaluating and promoting development are considered

explaining differences in corporate capital structure theory and new evidence abstract this paper tests a theory of optimal capital structure based on three simple imperfections i personal and corporate taxes ii bankruptcy related costs and iii transfer of wealth from unprotected creditors in contrast to other empirical tests most of which rely on comparative statics to devise a linear regression we derive a testable equation explicitly from the firm s value maximizing first order condition our cross sectional tests confirm earlier findings by warner 1977 and ang et al 1982 that the fixed explicit costs of bankruptcy are not statistically significant however we find strong explanatory power in the marginal implicit costs of bankruptcy these costs have two components first the data suggest that firms with high fixed asset intensity carry heavier debt loads because of the floor that these assets create for potential bankruptcy costs to be borne by security holders this result explains inter industry differences in debt ratios found by schwartz and aronson 1967 and scott 1972 it also explains some anomalies in recent tests by bradley et al 1984 who find a positive relationship between debt ratios and depreciation when their model predicted a negative relation in our view depreciation acts more asa proxy for fixed asset and less as a proxy for non debt tax shield which bradley et al were analyzing secondly our tests suggest that an unprotected creditor or wealth transfereffect provides additional stimulus to issuance of debt and that this stimulus is stronger than the net tax effect schwartz 1981 finds such distributional explanations to be both economically meaningful and worthy of further empirical research because of its potential for initiating legal reform we modestly claim that our finding in this regard is an important first step in this research and is similar to the wealth transfer effect from bondholders to stockholders studied by masulis 1980 1983

income distribution development and foreign trade a cross sectional analysis abstract this paper analyses cross sectional evidence on income inequality in developing countries within a consistent theoretical framework where the major explanatory variables are factor endowments their ownership structure and foreign trade distortions the resulting explanation of cross country differences in income distribution is considerably better than what is found in the existing literature endowments in mineral resources land concentration in agricultural exports trade protection and secondary schooling are shown to be major determinants of differences in income inequality across developing countries

the interaction of corporate and government financing in general equilibrium this article develops a general equilibrium model for analyzing the in teraction of corporate financial and production decisions consumers behavior and government financing the authors use the model to inv estigate how changes in income tax rates and government debt policy a ffect production interest rates and consumer welfare they also sho w how changes in the different tax rates affect other tax rates in ge neral equilibrium copyright 1988 by the university of chicago