Property taxes and rental housing: Evidence from China

We investigate the effect of property taxes on households’ rental income by exploiting regional variations in the introduction of property taxes in China in 2011. Using the propensity score matching combined with a difference-in-differences approach, we find that the rental income of households in pilot areas significantly increased after 2011. Hence, homeowners tend to shift the potential property tax burden to tenants. Additionally, this positive effect is driven by the extensive margin, rather than the intensive margin. Our finding is robust to various alternative specifications and subsample analysis. We then adopt a triple-difference model to show that the effect varies considerably across households that own residential premises in different regions and with different property characteristics.     

Who benefits the most? Risk pooling in mortgage loan insurance: Evidence from the Canadian mortgage market

This article evaluates the effect of mortgage loan insurance (MLI), an essential macroprudential tool available to policy makers, on housing affordability, household leverage, and the overall welfare of the economy. A dynamic model of the housing market with heterogeneous households and competitive housing and mortgage markets is constructed and is calibrated to Canadian data. We find that relaxing the mandatory nature of MLI required for mortgages with a loan-to-value ratio of 80% or more, in favor of a counterfactual system where MLI reflects credit risks, dampens demand for housing to purchase and puts downward pressure on house prices. Some of the households with low income and low asset holdings can no longer afford a house; therefore, the aggregate homeownership rate drops. In contrast, demand for rental units increases and rents go up.     

A reconsideration of the sugar sweetened beverage tax in a household production model

We study the impact of a hypothetical tax on sugar - sweetened beverages (SSBs) on the U.S. households’ nutrients purchase, welfare change, and health benefit. Differently from the traditional approach, Food at Home (FAH) is here defined as a “home” good instead of a market good and consumers’ demands derived under the assumption that households maximize utility subject to both a money and a time constraint. The model is estimated by using an incomplete approximate Exact Affine Stone Index (EASI) demand system on a data set built by merging the U.S. consumer expenditure and time use surveys. Results show that a SSB tax would be much more effective in decreasing household nutrients purchase than it would appear by estimating a model neglecting time costs in home food production, due to a lesser compensation of calories from increasing FAH consumption. A tax-induced 38% increase in SSB price is predicted to decrease the per capita energy purchase by 41 kcal/day.     

Macroeconomic Impacts of Canadian Immigration: Results from a Macro Model

We use a macro‐econometric forecasting model to simulate the impact on the Canadian economy of a hypothetical increase in immigration. Our simulations generally yield positive impacts on such factors as real gross domestic product (GDP) and GDP per capita, aggregate demand, investment, productivity, and government expenditures, taxes and especially net government balances, with essentially no impact on unemployment. This is generally buttressed by conclusions reached in the existing literature. Our analysis suggests that concern should be with respect to immigrants themselves, as they are having an increasingly difficult time assimilating into the Canadian labour market, and new immigrants are increasingly falling into poverty.     

Another Look at Tenure Choice, Inflation, and Taxes

The purpose of this paper is to explore the impact of inflation on the demand for housing. The first part of the paper presents a theoretical model that identifies the effects of inflation on the after-tax cost of housing and the choice between rental and owner-occupied housing. The second part discusses the results of a simulation model that measures the effect of inflation on the aggregate demand for housing, the aggregate homeownership rate, and the price of housing. The paper concludes that while inflation can be expected to increase the aggregate demand for housing and the price of housing relative to the general price level, inflation should ultimately lead to lower rates of homeownership. A corollary that is probably more relevant today is that lower inflation rates should reduce the real value of the housing stock and increase the homeownership rate. The paper also contains forecasts of the impact of the Tax Reform Act (TRA) of 1986 upon housing demand and the probability of homeownership for a variety of households.     

Viewpoint: Soda taxes – Four questions economists need to address

The popularity of soda taxes as a public health policy has grown rapidly in the last few years. While the evidence that the tax works in reducing the purchases of soda is emerging, there are a number of questions that are yet to be answered before the broader effectiveness of this measure can be determined. Beyond health effects, there is more specifically a need to better understand the economic mechanisms of change, redistributive effects, as well as causal and spillover effects in food systems and economy more broadly.     

Explaining beer demand: A residual modeling regression approach using statistical process control

We develop a medium-term model as well as a short-term model for understanding the factors affecting beer demand and for forecasting beer demand in Turkey. As part of this specific model development (as well as regression modeling in general) we propose a procedure based on statistical process control principles (SPC) and techniques to (1) detect nonrandom data points, (2) identify common missing, lurking variables that explain these anomalies, and (3) using indicator variables, integrate these lurking variables into the model. We validate our proposed procedure on several test examples as well as on the medium-term beer demand model. Both the medium and short-term models yield very satisfactory results and are currently being used by the company for which the study was conducted. In addition to the residual modeling regression approach developed using SPC, a major contribution to the success of the project (and the modeling in general) is the mutual collaboration between analyst and client in the modeling process.     

Consolidating distribution centers can reduce lost sales

In many industries, products are sold out of inventory. When inventory shortages are possible, expected product sales will fall short of expected product demand. We find that this shortfall is proportional to the standard deviation of demand. As we show, this implies that consolidating retailer units – which leads to a lower standard deviation for the aggregate demand – can increase sales.     

Incorporating Prior Information into A GMM Objective For Mixed Logit Demand Systems

Random parameters demand system estimates can generate upward sloping demands and imply margins outside of the theoretical bounds for profit maximization. If such violations are numerous enough, they can confound merger simulation exercises. Using Lerner indices for multiproduct firms playing static Bertrand games, we find that up to 35 per cent of implied margins for beer are outside the bounds. We characterize downward sloping demand and the theoretical bounds for profit maximization as prior information and extend the GMM objective function, incorporating inequality moments for product‐level own‐elasticities and brand level or product level Lerner indices. Very few violations remain when an inequality constrained estimator is used.     

An experiment on cash and in-kind transfers with application to food assistance programs

The impact of providing food assistance in kind (via food, stamps, or restricted debit cards) vs. cash has long been a subject of debate. Prior efforts to causally identify the effects of the two types of transfers have been hindered by concerns over non-random selection into assistance programs, misreporting of program benefits, and identification of inframarginal households who, theoretically, should treat cash and in-kind transfers identically. This paper reports the results of an economic experiment designed to cleanly test some conceptual issues associated with in-kind vs. cash giving in a lunchroom meal setting. Given current debates about the healthiness of food assistance recipients’ diets, we also consider the impacts of placing restrictions on in-kind transfers that either prohibit soda purchases with the transfer or require the transfer be spent on fruits and vegetables. Overall, we find that, as theory predicts, in-kind transfers have the same effect on food expenditures as an unrestricted cash transfer for inframarginal consumers, and for extramarginal consumers, food expenditures are higher for in-kind than cash transfers. Participants also respond to the fruit and vegetable restriction as theory would predict. However, in contrast to the theoretical prediction, the soda restriction reduces soda expenditures for more than half the inframarginal consumers.     

Socio-economic characteristics and the effect of taxation as a health policy instrument

This paper analyses the quantitative effects of using economic instruments in health policy on the basis of price elasticities calculated from estimated demand systems. The nutritional effects of various taxation schemes are compared for households in different age groups and social classes. Focusing on the consumption of saturated fats, fibre and sugar; it is generally found that the impact of price instruments is stronger for lower social classes than in other groups of the population. With regard to age groups, it is mostly the youngest that decrease their demand for saturated fat in response to price changes, while it is mostly the middle-aged who exhibit price responsiveness in their demand for sugar. These groups are however not considered as key target groups for dietary regulation; thus tax instruments may be effective in improving diets on average, but the design of the instruments and the targeting of vulnerable groups with special needs should be done with care. It should be noted that a tax on a single nutrient or food may have undesired effects on the demand for other food components, though this may be avoided by introducing taxes/subsidies on several food products simultaneously.     

Food scandals,media attention and habit persistence among desensitised meat consumers

Consumer reactions to food scandals and their resulting economic implication are well documented. However, studies have typically neglected the roles that consumption habits and media usage behaviours may play in explaining household’s response to food safety incidences. In this study we develop a model of heterogeneous media usage intensity, information impacts and decay over time to estimate household’s behavioural responses to the 2011 German Dioxin scandal. We are specifically interested in determining the degree of heterogeneity in household’s short-term adjustments demand patterns versus persisting long-term consumption habits of meat products (chicken and pork) directly affected by the incident. The empirical analysis employs detailed household-level retail scanner and media usage data collected by the GfK Consumer Scan panel for a total of 16,023 households over a period of 104 calendar weeks. Results of dynamic correlated random effect Tobit models indicate an important role of unobserved heterogeneity in explaining household responses during the food scandal. We find strong empirical evidence supporting our hypothesis that short-term marginal adjustments in demand and propensity to buy affected products triggered by the negative impact of household media exposure were over-compensated by habit persistence. The question of how consumption patterns evolve over time in the presence of food scandals is expected to be of interest for both policy makers and the food industry. The potential biases in the projection of economic impacts resulting from simplifying assumptions of household’s response patterns to a proliferating numbers of food safety incidences has implications for risk management and public policy.     

Intermedia Substitutability and Market Demand by National Advertisers

We assess substitute and complementary relationships among eight national advertising media classes, as well as the magnitude of their own-price elasticities. We employ a translog demand model, whose parameters we estimate by three-stage least squares, based on 1960–94 annual U.S. data.We find aggregate demand by national advertisers for each of the eight media isown-price inelastic, and that cross-price elasticities suggest slightly more substitutethan complementary relationships, although both are rather weak. These patterns areconsistent with long prevailing institutional arrangements and media selection practices.     

煤炭企业税制改革探析

以煤炭企业及其税费的现状和存在的主要问题为线索,探析相关问题的解决方案,以期对我国税费改革的进一步深化提供参考,促进我国煤炭工业的健康可持续发展。     

Understanding heterogeneity in price changes and firm responses to a national unhealthy food tax in Mexico

To address the high prevalence of overweight and obesity in Mexico, an eight percent ad valorem excise tax on non-essential energy-dense foods came into effect on 1 January 2014. This paper estimates price changes after the tax implementation among the top four food categories and by leading vs. non-leading firms using purchase information from over 6000 urban households in the 2012–2015 Nielsen Mexico Consumer Panel. We create product-city-month specific prices that correct for potential biases associated with household and retailer characteristics. Using these corrected prices, we conduct before and after quasi-experimental analyses and find that price increases were larger than eight percent for cookies but were less than eight percent for ready-to-eat cereals, salty snacks, and pre-packaged sweet bread. For the latter food group, event-study analyses on the gradual price change over time suggest that price changes might be the result of an increasing price trend rather than the tax implementation. Firm-level analyses mostly show that price increases by the leading firms were larger than the overall increase at the food market level, helping explain variability in post-tax declines in food purchases as reported in other research. We also find that price changes are generally underestimated when we do not correct prices for biases associated with households and retailers. These results improve our understanding of the mechanisms behind heterogeneous changes in purchases after the tax implementation. Additionally, these results can assist policymakers when designing or improving taxes on non-essential energy-dense foods at a time when these policy options are high on the agenda in many places.     

Land rights,agricultural productivity,and deforestation

This paper studies the relationship between land tenure for smallholder agriculture and deforestation. We combine high resolution satellite data on deforestation with rich household and commune-level, biannual panel data from Vietnam. We study two margins of tenure security, whether a household has any land title (extensive) and the share of a household’s land held in title (intensive). Using a household-fixed effects model, we find the increases in crop production and land investment associated with holding land title are driven by the intensive margin. We then aggregate the survey data to the commune-level and find evidence that marginal increases in extensive tenure (share of households with any land title) increase deforestation holding constant the average intensive tenure (average share of land held in tenure among those with land title). We find some evidence that increasing the intensive margin of tenure (holding constant the extensive tenure) decreases deforestation. These results present a more nuanced view of the tenure-deforestation relationship than is prevalent in the existing literature.     

Proliferation of Brewers’ Brands and Price Uniformity in Canadian Beer Markets

In this paper, we study retail pricing in Canadian beer markets, where access to the liquor distribution system and the retail price list is restricted by government ownership and control of the system. We consider alternative explanations for price uniformity in the differentiated beer products market. While an analysis of retail beer price data from six Canadian provinces for a 10-year period shows that no single explanation of price uniformity strongly dominates the others, some of the results are consistent with menu cost and demand uncertainty theories of price uniformity.     

Die Kosten des Klimaschutzes am Beispiel der Strompreise für private Haushalte

Power prices in Germany have been surging since the outset of the new millennium. Among the major reasons for this tendency are newly raised taxes and levies on electricity prices, whose introduction is primarily motivated by climate concerns. Without these taxes and levies, net electricity prices would have remained constant for private households. This article discusses these taxes and levies that have been responsible for the cost increases in private households’ electricity consumption. Most influential have been the feed-in tariffs for renewable energies, above all photovoltaics. According to our calculations, the levy for renewables will further increase in the up-coming years, thereby pushing consumers’ electricity cost once again. Our calculations also show that within the next couple of years, there will be a fierce competition among renewable energy technologies, most notably between photovoltaics and wind power. Politics would be well-advised, therefore, to limit the annual capacity of newly installed solar modules in order to avoid both the explosion of consumers’ electricity bills and strong competition among renewables.     

The Effect of Government Advertising Policies on the Market Power of Cigarette Firms

We estimate market power among cigarette manufacturers over 1952–1984, a period of uniform pricing. We apply the Bresnahan approach; adjust it to the firm level; employ a dynamic model with habit persistence; and add an advertising equation, which helps identify the parameters, increase degrees of freedom, and constrain parameters so we can interpret our results at the firm level, despite the fact that the equations conform to what we might see in a market model. We consider effects of government interventions upon demand and market power and find, for instance, that the 1971 broadcast advertising ban decreased market power.     

Dynamic Pricing,Advance Sales and Aggregate Demand Learning in Airlines

This paper uses a unique U.S. airlines panel data set to study empirically the dynamic pricing of inventories with uncertain demand over a finite horizon. I estimate a dynamic pricing equation and a dynamic demand equation that jointly characterize the adjustment process between prices and sales as the flight date nears. I find that the price increases as the inventory decreases, and decreases as there is less time to sell. Consistent with aggregate demand learning and price adjustment, demand shocks have a positive and much larger effect on prices than the positive effect of anticipated sales.