Improving Work Incentives and Incomes for Parents: The National and Geographic Impact of Liberalising the Family Tax Benefit Income Test*

The effective tax rates and possible work disincentives created by Australia’s tax and welfare systems have been receiving extensive policy attention in recent years. Family Tax Benefit‐Part A (FTB‐A) is one of the key causes of high effective marginal tax rates for many families. This study uses national and spatial microsimulation models to evaluate the national and local impacts of a possible FTB‐A reform option, which involves reducing the income test withdrawal rate associated with the FTB‐A income test. The modelling suggests that the option would be an effective way to reduce high effective marginal tax rates for around 415,000 parents of FTB‐A children, would benefit around 850,000 families, and would deliver additional assistance to middle income families living on the outskirts of our cities.     

Lazy Prices

Using the complete history of regular quarterly and annual filings by U.S. corporations, we show that changes to the language and construction of financial reports have strong implications for firms’ future returns and operations. A portfolio that shorts “changers” and buys “nonchangers” earns up to 188 basis points per month in alpha (over 22% per year) in the future. Moreover, changes to 10-Ks predict future earnings, profitability, future news announcements, and even future firm-level bankruptcies. Unlike typical underreaction patterns, we find no announcement effect, suggesting that investors are inattentive to these simple changes across the universe of public firms.     

Projecting World Economic Growth: The Contribution of Information Technology

This paper introduces a new framework for projecting potential world economic growth, taking into account the critical contribution of information and technology. We apply this framework to project the potential growth of labor productivity, GDP, and per capita GDP over the ten-year period 2006-2016 for 122 economies. Relative to historical growth for the period 1996-2006, our base-case projections are slightly higher for productivity growth, but lower for growth of GDP and GDP per capita. By comparison with the World Bank forecasts, our projections are less optimistic for all groups of economies except for Eastern Europe and Sub-Saharan Africa. Our projections are also below the Goldman Sachs forecasts for all economies except for the U.S.