A reassessment of the Feldstein-Horioka hypothesis of perfect capital mobility: evidence from historical data

This short paper explores the relationship between investment and saving rates in a sample of 13 OECD countries over the period 1885–1992. To this end, I employ panel cointegration tests based on the maximum likelihood approach developed by Johansen (J Economic Dynamics Control 12:231–254, 1988) instead of conventional panel cointegration residual based tests, in order to draw sharper conclusions. Using estimation techniques appropriate for heterogeneous panels I find a low degree of capital mobility for the sub-periods 1921–1992 and 1950–1992. The findings overwhelmingly support the hypothesis of perfect capital mobility in the short run.

Transaction tax and stock market behavior: evidence from an emerging market

This study examines the impact of a stamp tax rate increase on market behavior, using data from two stock exchanges in China. We find that when the tax rate increases from 0.3 to 0.5% (which implies that the transaction cost increases by about 1/3) trading volume decreases by 1/3. This implies an elasticity of turnover with respect to a stamp tax of −50% and an elasticity of turnover with respect to transaction cost of −100%. The markets’ volatility significantly increases after the increase in the tax rate. Furthermore, the change in the volatility structure indicates that the markets become less efficient in the sense that shocks are less quickly assimilated in the markets.

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Dividend-Driven Trading Strategies: Evidence from the Warsaw Stock Exchange

This study presents an analysis of dividend-driven trading strategies based on dividend yield growth effects in the Polish stock market in the years 1994–2004. Results indicate that the dividend yield growth portfolios were capable of beating the market in the entire sample period. Their performance, however, was not consistent over time and the highest returns were obtained during final years. Empirical findings based on the analysis of different types of portfolios demonstrate the importance of dividends as a source of significant fundamental information items from stock market companies. At the same time, they show that a dividend investment strategy for the Polish stock market is most successful when the selection of stocks for the dividend yield growth portfolios is subject to further restrictions, most notably concerning company size.

Inputs and institutions as conservative elements

Ludwig von Mises argued that capital goods were “conservative elements” that constrain future production decisions. Similarly, social capital and institutions also constrain future production decisions. These insights are applied to the institutional transformation of the post-Reconstruction American South. It is argued that the structure of social capital that developed in the South was inappropriate to the formal institutions that emerged as a result of the Civil War and Reconstruction. The tensions between institutions and social capital are examined in the context of racist lynching.

Productivity and profitability analysis of large Italian companies: 1998–2002

The determinants of profitability and productivity for large Italian companies operating in industrial sectors are investigated in this paper. Data were taken from one of the most important Italian business surveys, and furthermore two cross-section surveys for the years 1998 and 2002 are compared. The results highlight the importance of financial management and organisational complexity in order to explain the development of profitability and productivity ranking during 1998–2002. This paper identifies the important enterprise behaviour in terms of the variables considered. Large Italian companies remain competitive in the more traditional sectors (e.g. mechanics, textiles, etc.). In general, the Italian enterprises are not dynamic enough to compete in the most technological and innovative sectors. Moreover, there is the necessity for greater investments in order to foster the national economy.

Should mobile capital pay for public infrastructure investment?

The paper contributes to the discussion of fiscal competition with infrastructure goods. We explicitly focus on the costs of providing public infrastructure capital that appear in the public budget as investment. Thus we analyse the problem in a dynamic framework. Public infrastructure is considered as a marginal product complement to private capital. A central result of the model is that the fact that public capital is a complement to private capital, so that an increase in the supply of public capital ceteris paribus improves the marginal productivity of private capital, cannot be used as an argument to support a source tax. The so-called indirect productivity effect on private capital induced by public inputs does not justify the taxation of mobile capital. Rather, the efficiency of a source tax on mobile capital income depends on the question of whether or not the public input generates a factor rent to private capital.

What drives idiosyncratic volatility over time?

We document the patterns of market-wide and firm-specific volatility in the Portuguese stock market over the 1991–2005 period and test several explanations for the behavior of firm-level idiosyncratic volatility. Unlike previous studies we find no evidence of a statistically significant rise in firm-specific volatility. On the contrary, the ratio of firm-specific risk to total risk slightly decreases. We show that this result stems from new listings of large privatized companies that display lower firm-specific risk. Our findings are consistent with the idea that changes in idiosyncratic volatility are related to changes in the composition of the market.

Are some taxes different than others? An empirical investigation of the effects of tax policy in Canada

This paper investigates the response of major macroeconomic variables to four different types of tax policy innovations in Canada within a VAR framework. The positive tax multipliers documented in the previous literature are found only for corporate tax innovations. Our results indicate that different taxes affect output differently, and imply that the composition of total taxes may be a major factor behind cross-country variation in the sign and magnitude of total tax multipliers.

Methodological Procedure for Estimating Brazilian Quarterly GDP Series

This paper presents a methodology for estimating the Brazilian GDP quarterly series in the period between 1960–1996. Firstly, an Engle–Granger’s static equation is estimated using GDP yearly data and GDP-related variables. The estimated coefficients from this regression are then used to obtain a first estimation of the quarterly GDP, with unavoidable measurement errors. The subsequent step is entirely based on benchmarking models estimated within a state space framework and consists in improving the preliminary GDP estimation in order to both eliminate as much as possible the measurement error and that the sum of the quarterly values matches the annual GDP.

Underpricing of Initial Public Offerings: The Case of Portugal

This paper analyzes the initial public offering (IPO) underpricing phenomenon in Portugal. We show that the ‘hot issue’ market of 1987, coinciding with a speculative bubble in the stock market, is well explained by investor sentiment theories and that the issuing firms seized a ‘window of opportunity’ provided by excessive demand to offer and list their shares. In IPOs prior to the 1987 crash, underpricing is very high while there is a strong reversion to fundamentals in the long run. In the period 1988–2004, we find lower IPO underpricing and overall no evidence of long-run underperformance of IPO firms. Bookbuilding IPOs are more underpriced than other price setting systems IPOs, and firms with seasoned public offerings show abnormal returns in the long run.

The Austrian income tax tariff, 1955–2006

Using official statistics and tax laws, we outline and discuss the evolution of the personal income tax in Austria since the beginning of the Second Republic in 1955. Focusing on the tax tariff and its progressivity properties, we identify a period of high (and increasing) progressivity before 1989, followed by a period of diminished progressivity since 1989. While still being a powerful revenue instrument, the Austrian income tax seems to have lost both redistributive impact and political allure.

Constitutional tariffs, incidental protection, and the Laffer relationship in the early United States

This article explores an early attempt to establish a constitutional constraint on tariffs utilizing the Laffer Curve relationship. In 1842 John Calhoun suggested that the curve’s revenue maximization apex could be used to differentiate between “Revenue” and “Protective” tariffs independently from the non-judiciable question of legislative motive. When admitted that a tax must actually be collected to remain constitutionally valid, the apex functions as a de facto upper tariff rate constraint. Despite subsequently falling in disfavor, Calhoun’s argument illustrates the importance of political economy on the constitutional level by recognizing conditions that induce policymakers to rationally raise tax rates at the expense.

Why the structure of capital and the useful lives of its components matter: A test based on a model of Austrian descent

This paper centers on the structure of capital and the useful lives of its components by considering an economy with two representative firms, one producing a necessity and another producing a luxury. This difference determines their reinvestment opportunities. Therefore, while the one applies replacement, the other adopts scrapping. However, as these capital policies lead to different service lives, the analysis confronts the issues raised by Miller (Review of Income and Wealth 29:284–296, 1982, Review of Income and Wealth 36:67–82, 1990) and deals with them by drawing on Haavelmo’s (A study in the theory of investment, Chicago: The University of Chicago Press, 1960) suggestions regarding the aggregation of capital. Among other findings, it turns out that the simulation results are highly robust, thus demonstrating that real-world implications may be even stronger than strictly suggested by the model.

Efficiency of the Warsaw Stock Exchange: Analysis of Selected Properties

The Warsaw Stock Exchange (WSE) has been operating in present form for 15 years. WSE is regarded as an “emerging market”. We can observe that it is still developing (in order to become “developed market”). The level of development is often analyzed with reference to the efficiency of the market. We can say that the capital market is efficient if the prices at the market fully reflect all available information. The aim of the presented research is to analyze the current situation at the Warsaw Stock Exchange. Particularly we investigate the weak form of efficiency using selected statistical tests. The research is based on actual data concerning daily observations of shares at the Warsaw Stock Exchange transformed to the logarithmic rates of return, considering the period 2000–2006 and subperiods: the bear market, stagnation and the bull market.

The Social Economics of Neoliberal Globalization

The recent period of intensive and extensive development of global economic integration, or globalization, has reached a crossroads. The regime of the neoliberal Great Capitalist Restoration is not sustainable and fundamental governance changes must be made. This paper adds perspective to the choices that must be made at this critical juncture of the global social economy by applying the master concepts of Schumpeter’s Creative Destruction and Polanyi’s Protective Response.

Comparing Interpersonal Comparisons in Utility Theory and Happiness Research

Social scientists are reluctant to make explicit interpersonal comparisons of well-being. However, implicit comparisons are made on a surprisingly regular basis. These comparisons are based on the wealth and the Kaldor–Hicks concept in utility theory and on self-reported well-being in happiness research. Taking a utilitarian stance, this paper tests the ethical foundations of both principles. While self-reported well-being serves as an acceptable proxy for utilitarian decision-making, the Kaldor–Hicks concept does not appear so. Implications for evaluating policies are outlined.

Complexity of economic structures and emergent properties

This concept revolves around differences of embeddedness of organizations in the macro patterns of routines (economic policy regimes), which in turn may differentially provide them–and the system as a whole–with ‘procedural rationality’ in dealing with identified problems in their relevant complex environment. Regularities of interdependence are specified between different regime patterns and the variety of coordination routines between and inside micro organizations. Corresponding regularities are also observed for internal governance routines of organizations, which in turn determine the behavioral adaptation by self-organization that may be rationally in a local perspective, but–contingent on the organization’s embeddedness in the coordination structure–not necessarily so in a comprehensive one.

Financial intermediation and growth: causality and causes without outliers

In a seminal paper, Levine et al. (J Monet Econ 46:31–77, 2000) provide cross-sectional evidence showing that financial development has positive average impact on long-run growth, using a sample of 71 countries. We argue that the evidence is sensitive to the presence of outliers.

Ramifications of a Flat Tax—Shifting the Burden to the Middle Class

An alternative to the current US tax system would be a flat tax. According to its supporters, the flat tax would decrease the complexity of the tax system. Opponents contend that the flat tax will shift the tax burden to the middle class. The current research tested the claim that the flat tax will shift the tax burden to the middle class by developing simulations of two flat tax proposals, the Steve Forbes Plan and the Hall and Rabushka Plan, and then examining the change in the tax burden for different income levels as compared to the current tax system. The results show that both plans shift more of the tax burden to middle income class taxpayers than under the current US tax system.

Quantifying corruption by a human capital earnings equation

This paper uses a human capital earnings equation to quantify administrative corruption in the public sector. Regression analyses are conducted based on information from surveys administered to public officials in Albania. After accounting for officials’ characteristics, e.g., schooling, experience, gender, type of agency, and public and private sectors’ features, we deduce that the administrative corruption was on average 2.6× the officials’ current salary in Albania, which is equivalent to 16.7% of the country’s GDP.