aid dispersion measurement in principle and practice summary excessive dispersion of development assistance has been high on the paris agenda on aid effectiveness however there is no agreement in the existing literature on how aid dispersion should be measured and few studies of the extent of the problem we argue for using the theil index for both recipients and donors this relative inequality measure has a major advantage it allows for a perfect decomposition into variation between and within entities exploiting this property we can rank official donors and recipients not only in terms of the total spread but also assess the contributions of geographic and sectoral dispersion we provide a detailed picture of developments along various dimensions globally as well as for countries income groups and regions over 1998 13 we further distinguish between bilateral and multilateral donors consistent with other studies using more limited samples we find little effect of the paris agenda overall aid is more fragmented in sub saharan africa and in the poorest countries globally as well as for most donor and recipient countries between variation is the main driver of the spread lending support to the geographic concentration policies many donor countries have adopted bilateral aid has been somewhat more dispersed than multilateral aid and in both cases the large number of donors controlling similar shares of total funds is a major driver of the total spread the latter suggests that concentration could also be achieved through a reduction of the number of actors on the donor side of the aid industry a perspective that previous studies using other measures have been unable to capture

interpreting economic time series this paper explores some of the implications for econometric practice of the principle that people s observed behavior will change when their constraints change in dynamic contexts a proper definition of people s constraints includes among them laws of motion that describe the evolution of the taxes they must pay and the prices of the goods that they buy and sell changes in agents perceptions of these laws of motion or constraints will in general produce changes in the schedules that describe the choices they make as a function of the information that they possess until very recently received dynamic econometric practice ignored this principle the practice of dynamic econometrics should be changed so that it is consistent with the principle that people s rules of choice are influenced by their constraints this is a substantial undertaking and involves major adjustments in the ways that we formulate estimate and simulate econometric models

the effective tax rate and the pretax rate of return abstract this paper presents new estimates of the taxes paid on nonfinancial corporate capital on the pretax rate of return to capital and on the effective tax rate the basic time series show that both the pretax rate of return and the effective tax rate have varied substantially in the past quarter century an explicit analysis indicates that after adjusting for different aspects of the business cycle pretax profitability was between one and 1 5 percentage points lower in the 1970s than in the 1960s the rate of profitability in the 1960s was also about one half of a percentage point greater than the profitability in the 7 years of the 1950s after the korean war changes in productivity growth in inflation in relative unit labor costs and in other variables are all associated with changes in profitability none of these variables however can explain the differences in profitability between the 1950s 1960s and 1970s looking at broad decade averages the effective tax rate and the pretax rate of return move in opposite directions lower pretax profits occuring when the tax rate is high there thus appears to have been no tendency for pretax profits to vary in a way that offsets differences in effective tax rates

capital allocation how the us compares with other major industrialized nations data for the seven major industrialized nations spanning two decades provide evidence that capital formation as a percentage of gross domestic product differs significantly among the major industrialized nations comparatively the us ranks among the leaders in residential structures and among the lowest in commercial structures however us private sector allocation of capital to machinery and equipment appears to be in line with other major trading nations the rate of capital cost recovery appears to affect the amount of capital allocated to commercial structures but not to residential structures or machinery and equipment likewise changes in the capital cost recovery provisions under the economic recovery tax act of 1981 seem to have led to an increase in capital allocated to commercial structures and to a marginal increase in capital allocated to machinery and equipment

do tax allowances stimulate investment considerable empirical work on investment behavior makes use of a capital cost variable to capture the effects of various corporate tax allowances the assumption behind most of this work is that all available tax allowances may be claimed by the firms however there are several reasons why this may not be true one purpose of this paper is to explore the effect on capital cost of assuming that firms have unused tax allowances and that the investment funds system if system is not used to finance marginal investments during periods of if releases another purpose is to construct econometric investment functions in order to compare the performance of alternative definitions of capital cost in fact the hypothesis that tax allowances do not have the effect on capital cost implied by a mechanical interpretation of statutory tax rules cannot be rejected in particular if releases may raise the return on intramarginal investment rather than create investment incentives

inflation depreciation and the neutrality of the corporate income tax the treatment of depreciation allowances interest deductions and capital gains in the corporate income tax base may have a strong impact on the user cost of capital and hence on the firm s investment decisions particularly when inflation and interest rates are high and fluctuating a few general conditions for neutrality confined to exponential depreciation schedules are given in the literature in this paper these conditions are reconsidered in a broader perspective by a specifying general depreciation functions b employing the concept neutrality locus to represent the class of tax systems which ensure neutrality in a given situation and c stating some results on equivalent tax systems numerical results based on norwegian data are reported

the rising instability of u s earnings the inequality of earnings and of family incomes in the united states has increased since the late 1970s autor katz and kearney 2008 this increase in cross sectional inequality has largely been interpreted as a growing disparity in permanent incomes between those with high incomes and those with low incomes however growing inequality could equally well be a result of growing income instability if workers experience increasingly large fluctuations in earnings from year to year this would also increase the measured inequality of earnings from year to year for example if everyone maintained the same level of permanent income but some experienced a 500 increase in their income in the first year and then a reversal to 500 below their permanent incomes in the following year while an equal number experienced the opposite a drop in income followed by an offsetting rise measured inequality would rise though nothing would have happened to the dispersion of permanent incomes while this example is an extreme one it points to the fact that the large rise in earnings inequality between the 1970s and the 1990s could reflect either a rise in disparity of permanent incomes a rise in earnings instability or some portion of both without longitudinal data it is impossible to distinguish between these two very different explanations for increased cross sectional measures of inequality in this paper we provide longitudinal measures that separate changes in income inequality into changes that permanently change income to new levels and those that only reflect transitory change we refer to the latter as changes in income instability and discuss how the instability of individual earnings and family income in the united states has evolved over the last quarter century

tax policy and business fixed investment revisited abstract this paper examines the effect of tax incentives on business capital expenditures in both a single equation and general system framework using equations that extend the neoclassical approach to incorporate more fully expectations and balance sheet variables in the single equation case the average gain in real business fixed investment per dollar of ex ante or static corporate tax loss calculated over a five year period is 0 52 for the investment tax credit with a peak of 0 62 in the third year the corresponding figure for accelerated depreciation is 0 49 with a peak of 0 57 in the second year in the case of reductions in corporate profits taxes the bang for a buck in partial equilibrium is only 0 05 in the complete system simulations the tax incentives show greater impacts due to feedback effects of higher output sales and profits on capital outlays and to some offset for the static revenue losses as corporate profits are increased the ranking for the three tax programs favors accelerated depreciation the investment tax credit then reductions in corporate profits taxes the ratios of the real gain in business fixed investment per dollar of corporate tax loss are 0 81 0 76 and 0 19 increase of 50 to 100 over the single equation results the total elasticities of response average 0 40 for the investment tax credit 0 44 for accelerated depreciation and 0 11 for reductions in corporate profits taxes

taxes inflation and the durability of capital the choice of capital durability is affected by the rate of inflation because nominal depreciation deductions are based on historical cost rather than replacement cost this paper analyzes a model with competitive firms and demonstrates that an increase in the rate of inflation will lead to an increase in the durability of capital if the ratio of the nominal discount rate to the rate of depreciation exceeds a critical value however if this ratio is less than the crucial value this effect is reversed the effect of costs of adjustments on the crucial value is analyzed

comparing income mobility in germany and the united states using generalized entropy mobility measures based on a derivation of the asymptotic sampling distribution of the generalized entropy mobility measures this paper provides a statistically rigorous analysis of income mobility in germany and the united states using the panel data set psid soep equivalent data file several alternative measures of income aggregation inequality measures and groupings are considered to establish robustness we find that to a high degree of statistical confidence post government income mobility is much higher in germany possible reasons for these findings are revealed through disaggregation of the samples by population subgroups

earnings inequality and mobility in the united states evidence from social security data since 1937 this paper uses social security administration longitudinal earnings micro data since 1937 to analyze the evolution of inequality and mobility in the united states annual earnings inequality is u shaped decreasing sharply up to 1953 and increasing steadily afterward short term earnings mobility measures are stable over the full period except for a temporary surge during world war ii virtually all of the increase in the variance in annual log earnings since 1970 is due to increase in the variance of permanent earnings as opposed to transitory earnings mobility at the top of the earnings distribution is stable and has not mitigated the dramatic increase in annual earnings concentration since the 1970s long term mobility among all workers has increased since the 1950s but has slightly declined among men the decrease in the gender earnings gap and the resulting substantial increase in upward mobility over a lifetime for women are the driving force behind the increase in long term mobility among all workers

portfolio choice of government incentives the case of commercialization of a new coal based technology economic and financial incentives have become accepted tools for the implementation of government policies such as encouraging the widespread use of new technologies that offer significant economic and political benefits at the macroeconomic level but are not well perceived by managers at the micro level due to significant retrofitting costs this study using portfolio and real investment theories develops a quantitative methodology for selecting the optimal mix of incentives based on financial and operating factor sensitivities of the targeted firms in an uncertain environment the proposed methodology overcomes several shortcomings of previous studies the study applies the suggested method to a recent dod doe 1995 g project data that estimates the net benefits of a new coal based technology the results show that government policies based on a combination of incentives are more effective than individual incentive based policies the empirical analysis of firms which account for the 163 boiler sites in the sample reveals that the optimal incentive package is weighted about 2 1 in favor of tax incentives versus research and development subsidies

aid and donor trust in recipient country systems abstract the 2005 paris declaration on aid effectiveness sets targets for increased use by donors of recipient country systems for managing aid the target is premised on a view that country systems are strengthened when donors trust recipients to manage aid funds but undermined when donors manage aid through their own separate parallel systems this study provides an analytical framework for understanding donors decisions to trust or bypass country systems empirical tests are conducted using data from three oecd dac surveys designed to monitor progress toward paris declaration goals tests show that use of recipient country systems is positively related to 1 the donor s reputational stake in the country s development as proxied by the donor s share of aid provided to the recipient 2 the trustworthiness or quality of those systems as measured by cross country corruption indicators and 3 donors risk tolerance as proxied by public support for aid provision in donor countries findings are robust to corrections for potential sample selection omitted variables or endogeneity bias

proliferation and fragmentation transactions costs and the value of aid abstract the problem of the proliferation of the number of aid donors and aid channels continues to worsen it is widely and plausibly believed that this significantly reduces the value of aid by increasing direct and indirect transactions costs we contribute to the existing literature by a categorising the apparent adverse effects of proliferation b producing a reliable and fair indicator of the relative degree to which the main bilateral donors proliferate or concentrate their aid c giving some explanation of why some donors proliferate more than others d constructing a reliable measure of the extent to which recipients suffer from the problem of fragmentation in the sources of their aid and e demonstrating that the worst proliferators among the aid donors are especially likely to be suppliers of aid to recipients suffering most from fragmentation there are significant implications for aid policy

discretionary monetary policy with costly inflation this paper considers how an output cost of inflation affects the discretionary inflation bias we show that conditions exist under which costly inflation actually increases this inflation bias

a cross national comparison of permanent inequality in the united states and germany traditional cross sectional measures find greater inequality in the united states than in industrialized western european countries but are unable to distinguish transitory from permanent inequality with longitudinal data we measure cross sectional inequality during the 1980s using the shorrocks measure of income stability to find the degree to which single period measures exaggerate permanent inequality surprisingly given the smaller social welfare system and the less restrictive labor markets in the united states we find that both single period inequality and the share of that inequality that persists over time are greater in the united states than in germany

cross country evidence on long run growth and inflation i introduction many believe inflation has important adverse effects on long run economic performance this conviction is based on the logic summarized by fischer and modigliani 1978 for example that firms and workers devote productive resources to dealing with inflation that inflation uncertainty reduces efficiency by discouraging long term contracting and increasing relative price variability and so on nonetheless many others believe that the magnitudes of such costs are small and insignificant at moderate rates of inflation cross country growth regressions would seem to offer a sensible means of empirically determining inflation s effects 1 such analysis would appear less sensible however in light of the levine and renelt 1992 finding that estimates of the growth inflation relationship vary sharply with the regression specification nonetheless analyses completed subsequent to levine and renelt 1992 for example fischer 1991 1993 cozier and selody 1992 and cukierman et al 1993 continue to use growth regressions to infer inflation s effects and typically conclude growth and inflation to be inversely related this paper shows that while inflation does generally appear to be inversely related to growth estimates of the relationship suffer two additional robustness problems problems which emerge across a variety of model specifications more specifically this analysis first demonstrates the sensitivity of growth inflation results to modifications to the sample of countries limited from the start to low and moderate inflation countries it next demonstrates the sensitivity of results to modifications in the time period for example among oecd countries abbreviating the covered time period from 1960 85 to 1968 85 reduces inflation s effect on growth to insignificance such fragility with respect to the country sample and time period may be viewed as even more fundamental than the regression specification sensitivity documented by levine and renelt 1992 this analysis then shows that the same robustness problems plague alternative specifications of the growth inflation relationship the baseline regression estimated here supposes a linear growth inflation relationship formally it follows from an augmented solow growth model 1956 in which inflation drives the level but not the growth rate of steady state income plausible alternatives include allowing inflation to have non linear effects on growth as in log and quadratic specifications and respecifying the model such that inflation formally drives steady state growth rather than just the steady state level of income such alternatives to the baseline specification yield results which suffer the same basic difficulties of sensitivity to country sample and time period ultimately these findings should further discourage that is lay to rest the practice of quantifying inflation s effects with cross country growth regressions while cross country growth regressions may be viewed as generally suggesting that inflation imposes costs the fragility of the estimates indicates researchers will need to use alternative approaches to better identify inflation s costs researchers might for example find it productive to build on the investment analyses of huizinga 1993 and pindyck and solimano 1993 which combine time series and cross section variation ii theory as detailed by mankiw romer and weil 1992 the solow growth model 1956 augmented to allow for human capital may be used to derive a simple relationship between growth and initial income population growth and the rates of physical and human capital investment 1 ln y sub i t y sub i 0 gamma sub 0 gamma sub 1 ln y sub i 0 gamma sub 2 ln n sub i g delta gamma sub 3 ln s sub i gamma sub 4 ln h sub i v sub i the variable y denotes income per capita n represents exogenous population growth g denotes the exogenous rate of growth of labor augmenting technology delta is the common rate of depreciation of physical and human capital and s and h denote respectively the rates of physical and human capital accumulation

credibility of trade policy reform and investment the mexican experience abstract this paper assesses whether the program of trade liberalization undertaken by mexico after 1985 was undermined by lack of credibility it provides an empirical counterpart to some of the credibility issues that have been discussed elsewhere in the literature and proposes a methodology based on the estimation of a probit model to measure the probability of trade policy reversal due to the likelihood of occurrence of a balance of payments crisis it is shown that the probability of trade policy reversal reduced indeed the rate of capital accumulation during the first years of the reform

inflation tax rules and investment some econometric evidence this paper presents econometric evidence on the effect of tax incentives on business investment in the united states in the period from 1953 through1978 the analysis emphasizes that the interaction of inflation and existing tax rules has contributed substantially to the decline of business investment since the late 1960 s because the investment process is far too complex for any simple econometric model to be convincing i have estimated three quite different models of investment behavior the strength of the empirical evidence rests on the fact that all three specifications support the same conclusion more generally the analysis and evidence show that theoretical models of macroeconomic equilibrium should specify explicitly the role of distortionary taxes especially taxes on capital income the failure to include such tax rules can have dramatic and misleading effects on the qualitative as well as the quantitative properties of macroeconomic theories this paper was presented as the fisher shultz lecture at the fourth world congress of the econometric society 29 august 1980 in aix en province this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this abstract was borrowed from another version of this item

how unification and immigration affected the german income distribution abstract the german economy is not only affected by unification of germany but by a significant influx of immigrants from abroad and huge migration from east to west germany around the date of unification data from the german socio economic panel study gsoep allows one to disentangle those effects by decomposition of the theil i 0 index of inequality in addition the paper offers insights into the transition from a socalist economy into a market oriented one

donor competition for aid impact and aid fragmentation we show that donors that maximize relative aid impact spread their budgets across many recipient countries in a unique nash equilibrium this aid fragmentation result is robust to the introduction of fixed costs even if they are improbably large in equilibrium smaller donors have less fragmented aid and behave better from an efficiency viewpoint we present evidence that our theoretical results are in line with cross country correlations our analysis has important policy implications first short of ending donors maximization of relative aid impact agreements to better coordinate aid allocations are not implementable second since policies to increase donor competition in terms of aid effectiveness risk reinforcing relativeness they may well backfire as any such reinforcement increases aid fragmentation

do taxes matter lessons from the 1980 s the response of the economy to two major although in important respects offsetting tax reforms has been much smaller than ardent supply side revolutionaries expected thus suggesting that a reassessment of the grounds for revolt is in order this paper offers such a reassessment by first discussing how the evidence from the tax reforms of 1981 and 1986 reflects on our understanding of the response to taxation with particular reference to savings and capital gains realizations i then reconstruct a 1992 view about how taxes affect behavior a unifying theme is that the tax system does much more than alter the relative prices of real variables it also provides incentives to misreport income restructure financial claims time transactions change the legal form of organization and so on for this reason observed low tax elasticities of real variables may be due to either low elasticities of substitution or the fact that tax policy changes opportunity sets in complex ways disentangling these explanations requires an emphasis on the transaction based nature of the tax system and the administration and enforcement of tax laws this abstract was borrowed from another version of this item

on the evaluation of economic mobility this paper presents a framework for the evaluation and measurement of reversal and origin independence as separate aspects of economic mobility we show how that evaluation depends on aversion to multi period inequality aversion to inter temporal fluctuations and aversion to future risk we construct extended atkinson indices that allow us to quantify the relative impact of reversal and origin independence on welfare we apply our approach to the comparison of income mobility in germany and in the united states when aversion to inequality is the only consideration the us gains more from mobility than germany this reflects similar gains from reversal in the two countries but greater gains in the us from origin independence the introduction of aversion to intertemporal fluctuations and aversion to future risk makes the impact of mobility in the two countries more similar

the ineffectiveness of effective tax rates on business investment a critique of feldstein s fisher schultz lecture abstract in his fisher schultz lecture martin feldstein 1982 examined the effects of non neutral tax rules on business investment by estimating three econometric models and he concluded that the rising rate of inflation has because of the structure of existing u s tax rules substantially discouraged investment in the past 15 years in a detailed examination of feldstein s effective tax rate model and a less extensive review of his other formulations neoclassical and return over cost we advance a number of important and independent criticisms and find that these three models fail to support feldstein s conclusion that taxes have exerted a significantly depressing effect on net investment during the recent inflation episode

tax incentives for business investment a primer for policy makers in developing countries abstract the use of tax incentives is widespread even though the available empirical evidence on the cost effectiveness of such incentives in stimulating investment is highly inconclusive this paper is primarily intended as a primer on the use of tax incentives for policy makers especially those in developing countries it discusses the objectives cost effectiveness and transparency of implementing tax incentives assesses the comparative merits of alternative forms of such incentives and provides a review of the empirical literature its main conclusions are that the justification for the use of tax incentives should be limited to the rectification of market failures and that the preferred form of tax incentives are those that provide for faster recovery of investment costs

welfare based income insecurity in the us and germany evidence from harmonized panel data this paper develops normative approaches for measuring individual level income insecurity using concepts derived from expected utility theory and prospect theory we build a suite of measures designed to capture various facets of psychologically distressing income risk we present an application for the us and germany from 1993 2013 employing conditionally heteroskedastic fixed effects models to generate predictive densities for future incomes our results reveal much higher levels of income risk in the us relative to germany which can be mostly attributed to a higher level of autonomous time invariant volatility state by state variations in liberal conservative political administrations partially explain our results and we find some evidence that trade exposure is a contributing factor in the us

aid tying and donor fragmentation this study tests two opposing hypotheses about the impact of aid fragmentation on the practice of aid tying in one when a small number of donors dominate the aid market in a country they may exploit their monopoly power by tying more aid to purchases from contractors based in their own countries alternatively when donors have a larger share of the aid market they may have stronger incentives to maximize the development impact of their aid by tying less of it empirical tests strongly and consistently support the latter hypothesis the key finding that higher donor aid shares are associated with less aid tying is robust to recipient controls donor fixed effects and instrumental variables estimation when recipient countries are grouped by their scores on corruption perception indexes higher shares of aid are significantly related to lower aid tying only in the less corrupt sub sample this finding is consistent with the argument that aid tying can be an efficient response by donors when losses from corruption may rival or exceed losses from tying aid when aid tying is more costly as proxied by donor country size and income it is less prevalent aid tying is lower in the least developed countries consistent with the oecd development assistance committee s recommendation to its members

inflation investment and growth a money and banking approach output growth investment and the real interest rate in long run evidence tend to be negatively affected by inflation theoretically inflation acts as a human capital tax that decreases output growth and the real interest rate but increases the investment rate opposing evidence this paper resolves this puzzle by requiring exchange for investment as well as consumption inflation then decreases the investment rate and still decreases both output growth and real interest up to some moderately high rate of inflation above which increasingly low investment finally causes capital to fall relative to labour and the real interest rate to rise

hospital investment decisions and the cost of capital this study addresses two issues conceptually and empirically how does hospital ownership type affect hospital investment choices how do differences in the way hospitals are paid cost versus charge based reimbursement affect hospital investment the authors compute cost of capital measures for both for profit and not for profit hospitals whether or not hospital dependence on cost based payment stimulates investment depends on the generosity of such payment relative to the economic cost of capital empirically they find that for profit hospital exit entry decisions are guided by the generosity of payment to a greater extent than the not for profits copyright 1989 by the university of chicago

consolidating the evidence on income mobility in the western states of germany and the united states from 1984 to 2006 the cross national intragenerational literature has often analyzed income mobility within short time periods over which mobility might reasonably be thought of as invariant here we argue that a great social transformation german reunification abruptly and permanently altered mobility using standard measures with panel data for the western states of germany and the united states over the period 1984 2006 we find the conventional result that income mobility is greater in germany but when we cut the data into 5 year windows we find that income mobility declines significantly over the years immediately following reunification in germany but not in the united states using both measures jel j1 j6

aid fragmentation or aid pluralism the effect of multiple donors on child survival in developing countries 1990 2010 while most policy makers and researchers stress the negative impact of aid fragmentation on development outcomes in recipient countries we argue that the greater diversity of perspectives entailed by higher multiplicity of donors can help select better policies we hypothesize a u shaped relationship countries with a moderate number of donors fare better than countries with either few or many donors the hypothesis is supported by a generalized method of moments gmm analysis of the relationship between health aid donors and child survival in 110 low and middle income countries during 1990 2010

aid quality and donor rankings this paper offers new measures of aid quality covering 38 bilateral and multilateral donors as well as new insights about the robustness and usefulness of such measures the 2005 paris declaration on aid effectiveness and the follow up 2008 accra agenda for action have focused attention on common donor practices that reduce the development impact of aid using 18 underlying indicators that capture these practices derived from the oecd dac s survey for monitoring the paris declaration the new aiddata database and the dac aid tables the authors construct an overall aid quality index and four coherently defined sub indexes on aid selectivity alignment harmonization and specialization compared with earlier indicators used in donor rankings this indicator set is more comprehensive and representative of the range of donor practices addressed in the paris declaration improving the validity reliability and robustness of rankings one of the innovations is to increase the validity of the aid quality indicators by adjusting for recipient characteristics donor aid volumes and other factors despite these improvements in data and methodology the authors caution against overinterpretation on overall indexes such as these alternative plausible assumptions regarding weights or the inclusion of additional indicators can still produce marked shifts in the ranking of some donors so that small differences in overall rankings are not meaningful moreover because the performance of some donors varies considerably across the four sub indexes these sub indexes may be more useful than the overall index in identifying donors relative strengths and weaknesses

factor mobility trade and welfare abstract the paper develops a north south model which is driven by scale economies in the modern sector the model predicts that skilled and unskilled labor migrate from south to north and capital migrates from north to south migration of skilled labor and capital exhibits complementarity with trade while migration of labor may exhibit complementarity or substitutability if the terms of trade effects are ignored small movements of all factors affect the welfare of the population in south negatively and of that in north positively the effects of migration on the terms of trade are ambiguous in general

political conditionality and foreign aid this article argues that a new generation of political conditionalities has emerged during the last decade this requires an expansion of the original definition and research agenda beyond the traditional questions of use and effectiveness however there is also a need to dig deeper into the dynamics surrounding political conditionalities particularly the bargaining processes and outcomes along the aid chain from domestic donor politics donor harmonization fora policy dialog spaces to the political economy of recipient institutional reform and donor coping strategies because they influence the set up use follow up purpose and effectiveness of pcs

sinning in the basement what are the rules the ten commandments of applied econometrics unpleasant realities of real world data force applied econometricians to violate the prescriptions of econometric theory as taught by our textbooks leamer 1978 vividly describes this behavior as wanton sinning in the basement with sinners metamorphizing into high priests as they ascend to the third floor to teach econometric theory but this sinning is not completely wanton applied econometricians do or should follow some unwritten rules of behavior in effect bounding the sinning and promoting a brand of honor among sinners this paper exposits these rules and culls from them an unauthorized list of the ten commandments of applied econometrics

tax policy and business fixed investment in the united states abstract this paper derives and estimates models of nonresidential investment behavior in which current and future tax conditions directly affect the incentive to invest the estimates suggest that taxes have played an independent role in affecting postwar u s investment behavior particularly for investment in machinery and equipment in addition the paper develops a method for assessing the impact of tax policy on the volatility of investment when such policy is endogenous illustrative calculations using this technique based on the paper s empirical estimates suggest that tax policy has not served to stabilize investment in equipment or nonresidential structures during the sample period

tax policy and investment in major u s macroeconomic econometric models abstract in an analysis of six major u s quarterly models the predicted results of tax incentives for investment are found to vary widely differences are traced to critical specifications in investment equations when appropriately revised investment equations are reestimated the role of tax parameters is much reduced particularly among the high outliers and the variance among the models is narrowed decidedly full model simulations of revised equations suggest that current and proposed incentives such as the investment tax credit and accelerated depreciation are not cost effective increases in investment approximate only half of static tax losses and budget deficits widen

aid trade and migration how do bilateral flows interact this paper takes as its point of departure the european commission s position set out in 2005 which laid clear emphasis on aid and trade as tools for controlling immigration we attempt to subject this position to empirical investigation we exploit data on bilateral aid trade and migration flows between developed and developing countries for the period 2000 10 adopting an instrumental variable approach to address the endogeneity issue due to potential simultaneity bias our results establish that increasing aid and trade with developing countries is likely to fail to contain immigration at least in the short run the pattern of results is consistent with the hypothesis that promoting development in migrant sending countries or cooperating with such countries to control migration outflows is not sufficient to lessen immigration increasing visa restrictions and controls at borders is generally controversial still the results imply that policymakers cannot attain their short term immigration goals with the so called smart solutions of aid and trade

unemployment benefit duration and incentives in britain how robust is the evidence abstract recent years have seen considerable advances in the econometric treatment of micro data in models of unemployment duration this paper examines the evidence from such models concerning the effects of unemployment benefits on incentives to work in britain widely accepted results of a small but significant benefit effect are reproduced using a sample of 1 231 unemployed men however these results are only found when benefit receipt is assumed to follow a hypothetical pattern which is shown to be unrealistic and over generous when more realistic calculations of benefits are used no benefit effect is found the paper also argues that search theory is of little help in determining the choice between competing functional forms and explanatory variables results concerning benefits are shown to be sensitive to the latter