Information frictions between firms and regulators are typically seen as a means by which firms evade enforcement. In contrast, we argue that information frictions between firms and regulators can ...reduce the efficiency of firms’ compliance efforts when the interpretation of regulatory standards is uncertain. We exploit plausibly exogenous variation in distance between firms and their regulators to demonstrate this for a panel of community banks in the US. We find that banks located at greater distance from regulatory field offices face significantly higher administrative costs, at a rate of 20% of administrative costs per hour of travel time. These differences do not come with reduced compliance, are not driven by endogenous regulator choice, and are stable over time. Further, the costs borne by distant firms are negatively related to the scale of the jurisdiction in which they operate, suggesting that information spillovers between firms limit uncertainty about regulatory expectations.
Since the World Trade Organization (WTO) Doha Development Agenda (DDA) negotiations started in 2001, the importance of aid for trade (AfT) has been well recognised as a useful tool for facilitating ...trade, economic growth and social development in developing countries. At the WTO Hong Kong Ministerial Conference in December 2005, the ‘AfT initiative’ was launched and many high‐income member countries pledged to increase their AfT contributions, particularly for the least developed member countries (LDC). This paper aims to assess whether and to what extent the WTO's developing member countries have received more AfT. For this purpose, a system generalised method of moments is applied to a sample of 118 recipient countries for the period 2001–10. We find evidence that while LDC WTO members on average receive relatively more AfT than other developing countries, the difference has not increased since launch of the AfT initiative. Among the three categories of AfT, the positive WTO membership effect for LDC members increased for building productive capacity and for trade policy and regulation, but declined for infrastructure.
We document a positive relation between stock liquidity and firm value. We examine the mechanism through which stock market liquidity enhances firm value by dividing firm value, as measured by ...Tobin's Q, into three components, namely, operating income to price, leverage, and operating income to assets. Using the switch to broker anonymity as an exogenous shock to market liquidity, we show that the increase in liquidity around the shock leads to an increase in firm value. Our results suggest that higher firm value for more liquid stocks seems to stem from enhanced stock prices rather than from better operating performance.
This paper presents individual‐level evidence from Australia to examine the factors associated with binge drinking and several alcohol‐related antisocial and unlawful behaviours. We study in ...particular the role of binge drinking in increasing the likelihood of engaging in these negative behaviours. We use individual‐level data from a national representative survey and a system econometric model that allows unobservable factors for all negative behaviours to be correlated. Potential misclassification of individuals' drinking pattern is accounted for. We find evidence of under‐reporting for bingeing and significant effects of binge drinking on drink‐driving, physical and verbal abuse, public disturbance, and stealing and damaging property.
New Evidence on Taxes and the Timing of Birth LaLumia, Sara; Sallee, James M.; Turner, Nicholas
American economic journal. Economic policy,
05/2015, Letnik:
7, Številka:
2
Journal Article
Recenzirano
Odprti dostop
This paper uses data from the universe of tax returns filed between 2001 and 2010 to test whether parents shift the timing of childbirth around the New Year to gain tax benefits. Filers have an ...incentive to shift births from early January into late December, through induction or cesarean delivery, because child-related tax benefits are not prorated. We find evidence of a positive, but very small, effect of tax incentives on birth timing. An additional $1,000 of tax benefits increases the probability of a late-December birth by only about 1 percentage point. We argue that the response to tax incentives is small in part because of confusion about eligibility and delays in the issuance of Social Security numbers for newborns, as well as a lack of control over medical procedures on the part of filers with the highest tax values. In contrast to this small behavioral response, we do document a substantial reporting response among self-employed parents facing changes in the Earned Income Tax Credit as a result of a child's birth. We estimate that this reporting response reduces federal revenue by hundreds of millions of dollars per year.
The alienability of legal claims holds the promise of increasing access to justice and fostering development of law. I develop a principal-agent framework where litigation funders provide expertise ...in reducing uncertainty in agents' disutility of production. The model leads to the counterintuitive prediction that litigation funders prefer cases with novel issues, and social surplus is positively correlated with legal uncertainty. Consistent with the model, court backlog, court expenditures, and a slowing in average time to completion are associated with third-party funding; cases with third-party funding receive more citations and are reversed less often than comparable cases without such arrangements.
The People's Bank of China (PBC) has employed a range of different instruments in the implementation of its monetary policy over the past decades, so perhaps no single instrument would constitute an ...adequate representation of the monetary policy stance. We thus develop a new policy stance index, and examine it in an ordered probit model, which follows the studies by Gerlach (2004) and He and Pauwels (2008). The empirical results show that in a backward-looking model, monetary policy reacts to actual output growth; one the other hand, when deviations from trend levels are considered, the PBC concerns inflation most seriously. In a forward-looking model, when we examine the PBC's statements in its quarterly Monetary Policy Executive Report from 2001Q1 to 2010Q3, it seems that the PBC's assessment of the prospects for inflation plays a key role determining the PBC's monetary policy stance. Our conclusions suggest that the PBC is informally targeting inflation, although no explicit target has ever been announced to the public by the PBC.
► A new monetary policy stance index is developed for China. ► The index is then examined in an ordered probit model. ► Monetary policy reacts significantly to past output growth. ► Besides, monetary policy responds to deviations of inflation from long-term trend. ► PBC’s words in executive reports also suggest an informal inflation targeting regime.
ESTIMATING FISCAL LIMITS: THE CASE OF GREECE Bi, Huixin; Traum, Nora
Journal of applied econometrics (Chichester, England),
November/December 2014, Letnik:
29, Številka:
7
Journal Article
Recenzirano
This paper uses Bayesian methods to estimate a real business cycle model that allows for interactions among fiscal policy instruments, the stochastic ‘fiscal limit’ and sovereign default. Using the ...particle filter to perform likelihood-based inference, we estimate the full nonlinear model with post-EMU data until 2010:Q4.We find that (i) the probability of default on Greek debt was in the range of 5–10% in 2010:Q4 and (ii) the 2011 surge in the Greek real interest rate is within model forecast bands. The results suggest that a nonlinear rational expectations environment can account for the Greek interest rate path.
This paper compares the evolution of long-run inflation expectations in the euro area and the United States, using evidence from financial markets and surveys of professional forecasters. Survey data ...indicate that long-run inflation expectations are reasonably well anchored in both economies but reveal substantially greater dispersion across forecasters' long-horizon projections of US inflation. Analysis of daily data on inflation swaps and nominal-indexed bond spreads, which gauge compensation for expected inflation and inflation risk, also suggests that long-run inflation expectations are more firmly anchored in the euro area than in the United States.
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