The social costs of gun ownership

This paper provides new estimates of the effect of household gun prevalence on homicide rates, and infers the marginal external cost of handgun ownership. The estimates utilize a superior proxy for gun prevalence, the percentage of suicides committed with a gun, which we validate. Using county- and state-level panels for 20 years, we estimate the elasticity of homicide with respect to gun prevalence as between + 0.1 and + 0.3. All of the effect of gun prevalence is on gun homicide rates. Under certain reasonable assumptions, the average annual marginal social cost of household gun ownership is in the range $100 to $1800     

Would it have paid to be in the eurozone?

Giving up an independent monetary policy and a flexible exchange rate are the key aspects of joining a monetary union. In this paper we analyse how joining the euro area would have affected the Polish business cycle during the recent financial crisis. To this end we construct a small open economy DSGE model and estimate it for Poland and the euro area. Then we run a counterfactual simulation, assuming Poland's euro area accession in 1q2007. The results are striking — volatilities of GDP and inflation increase substantially. In particular, had Poland adopted the euro, GDP growth would have oscillated between − 6% and + 9% (− 9% to + 11% under more extreme assumptions) instead of between 1% and 7%. We conclude that during the analysed period independent monetary policy and, in particular, the flexible exchange rate played an important stabilizing role for the Polish economy.     

Heterogeneous treatment and self-selection in a wage subsidy experiment

The Self-Sufficiency Project (SSP) is a research and demonstration project that offered a generous time-limited income supplement to randomly selected welfare applicants under two conditions. The first, the eligibility condition, required that they remain on welfare for at least 12 months. The second, the qualification condition, required that they find a full-time job within 12 months after establishing eligibility. In this paper we focus on a neglected and important feature of the program, namely that the financial reward for becoming qualified is inversely related to the expected wage rate. Under very simple assumptions we show that those who have a low expected wage rate have a clear incentive to establish eligibility.Empirical non-parametric evidence strongly suggests that individuals self-select into eligibility. We jointly estimate a participation equation and a wage equation that are correlated through individual random effects. Our results show that the omission of self-selectivity into qualification translates into slightly underestimated treatment effects.     

Wind tunnel simulation and evaluation of soil conservation function of alpine grassland in Qinghai–Tibet Plateau

Aiming at studying soil conservation function of alpine grassland in the Qinghai–Tibet Plateau, this paper simulated soil erosion changes under different degrees of human disturbance in a wind tunnel laboratory. Three types of grasslands were selected, which include alpine meadow (QH-1), alpine steppe meadow (QH-2) and alpine steppe (QH-3), and the soil erosion rate was taken as the index to measure soil conservation function. The experimental results show that the soil erosion rates of three grassland samples increase with wind velocity under different treatments but the increment of erosion rate varied greatly. Under original status, soil erosion rates are in turn QH-1 < QH-2 < QH-3, which indicates that the soil conservation services are QH-1 > QH-2 > QH-3. When the aboveground vegetation was cut, the soil erosion rate change of QH-1 is the same as that of QH-3 and compared with the original status both of them changed a little. And when the root system was destroyed the erosion rates range in turn as QH-1 < QH-2 < QH-3. So the data suggest that soil conservation service for the three types of grasslands should be QH-1 > QH-2 > QH-3. The economic values of soil conservation were estimated, which include the values of organic carbon fixation, nutrient retention and reducing soil disuse.     

Investigating the US consumer credit determinants using linear and non-linear cointegration techniques

This paper has investigated the determinants of total consumer credit for the USA over the period 1968:Q1 to 2011:Q3. Using Breitung's (2001) non-parametric rank tests, we find the existence of linear cointegrating relationships in the consumer credit models. Enders and Siklos' (2001) threshold adjustment tests revealed that non-linearity is present slightly (with a statistical significance of 10% level) in the consumer credit model with a short-term interest rate (federal funds rate), while there exists a linear and symmetric cointegrating relationship in the models with medium (3 years) and long (10 years) term interest rates. Application of the linear cointegrating techniques (fully modified OLS, canonical cointegrating regression and general to specific) show that consumer credit responds more significantly to the medium and long-term interest rates than the short-term interest rate. We use these results to assess the popular belief that abnormality in the consumer credit set the stage for the 2007–08 crisis and severe recession.     

CREDIT CONSTRAINTS IN THE MARKET FOR CONSUMER DURABLES: EVIDENCE FROM MICRO DATA ON CAR LOANS*

We investigate the significance of borrowing constraints in the market for consumer loans. Using data from the Consumer Expenditure Survey on auto loan contracts we estimate the elasticities of loan demand with respect to interest rate and maturity. We find that, with the exception of high income households, consumers are very responsive to maturity and less responsive to interest rate changes. Both elasticities vary with household income, with the maturity elasticity decreasing and the interest rate elasticity increasing with income. We argue that these results are consistent with the presence of binding credit constraints in the auto loan market.     

Improving estimation of the fractionally differencing parameter in the SARFIMA model using tapered periodogram

This paper presents a new method to estimate the fractional differencing parameters in the SARFIMA model. A technique of split cosine bell tapering is suggested to improve the EGPH method. The simulation study shows that the optimal split proportion and bandwidth for the EGPH with split cosine bell tapering method respectively are p = 0.1 and b = 0.9. The new method with the optimal parameters outperforms the EGPH and EGPH with cosine bell tapering. We further applied the EGPH method to estimate intraday volume series and high-frequency absolute return data. The results show that the seasonal fractionally differencing parameters are all estimated to be large, while the nonseasonal fractionally differencing parameters are all very small. This indicates that their long memory property may be mainly caused by the structure of long-range dependence at the seasonal lags instead of dependence at the nonseasonal lags.     

The long-term effects of job search requirements: Evidence from the UK JSA reform

This paper investigates long-term returns from unemployment compensation, exploiting variation from the UK JSA reform of 1996, which implied a major increase in job search requirements for eligibility and in the related administrative hurdle. Search theory predicts that such changes should raise the proportion of nonclaimant nonemployed, with consequences on search effort and labor market attachment, and lower the reservation wage of the unemployed, with negative effects on post-unemployment wages. I test these ideas on longitudinal data from social security records (LLMDB). Using a difference in differences approach, I find that individuals who start an unemployment spell soon after JSA introduction, as opposed to 6 months earlier, are 2.5–3% more likely to move from unemployment into Incapacity Benefits spells, and 4–5% less likely to have positive earnings in the following year. This latter employment effect only vanishes 4 years after the initial unemployment shock. Also, annual earnings for the treated individuals are lower than for the non-treated. These results suggest that while tighter search requirements were successful in moving individuals off unemployment benefits, they were not successful in moving them onto stable or better jobs, with fairly long-lasting unintended consequences on a number of labor market outcomes.     

How working time reduction affects jobs and wages

In 1996, by law the maximum standard workweek in Portugal was reduced from 44 h to 40 h. We find that for workers involved this change reduced the job separation rate and increased hourly wages, keeping monthly earnings approximately constant. The working hours reduction also affected workers working less than 40 h per week; they were more likely to lose their job.     

An application of Lotka–Volterra model to Taiwan's transition from 200 mm to 300 mm silicon wafers

In this paper, we explore the innovation growth of 200 mm and 300 mm silicon wafers from Taiwan. Using the historic data, we simulate the growth of the area of 200 mm and 300 mm silicon wafers manufactured in Taiwan by the competitive Lotka–Volterra model. The parameters in the Lotka–Volterra model estimated with the realistic data are obtained numerically. The dynamic growth of competitive relationship between 200 mm silicon wafers and 300 mm silicon wafers is then analyzed. To prove the performance of the model, we further compare the famous Bass model and the Lotka–Volterra model. We also perform the equilibrium analysis to determine the long-term stability state in the simulation trajectory. Our research exhibits that 200 mm silicon wafers and 300 mm silicon wafers show a prey–predator relationship under the assumption of natural competition in the global semiconductor market. From a managerial perspective, the coefficients in the Lotka–Volterra model of exponential growth, self-interaction and cross-interaction represent the strength of product attractiveness, niche capacity and interaction for two competition products. We also find that there exists a stable equilibrium state for 200 mm silicon wafers and 300 mm silicon wafers. The prey 200 mm generation does not disappear completely; it finally settles to a constant market alongside the predator 300 mm generation.     

Changes in the wage structure,family income,and children's education

We exploit the changes in the distribution of family income to estimate the effect of parental resources on college education. Our strategy exploits the fact that families at the bottom of the income distribution were much poorer in the 1990s than they were in the 1970s, while the opposite is true for families in the top quartile of the distribution.  Our estimates suggest large effects of family income on enrollments.  For example, we find that a 10 percent increase in family income is associated with a 1.4 percent increase in the probability of attending a four-year college.     

The corporation as a tax shelter: Evidence from recent Israeli tax changes

Shifting of income between the corporate and the personal income tax bases in response to tax incentives is the premise of the literature on taxation and organizational form. Empirical evidence of income shifting is, however, merely circumstantial. Using a unique panel of high-frequency VAT data from Israel, we trace the footprints of income shifting through incorporation by high-income individuals who convert their labor income into less-taxed dividends. A rise in the personal income tax rates resulted in more than 4500 companies–a 5% addition to the corporate sector–being registered in the 12 months following the tax change, mainly by self-employed professionals in the industries of business activities and health services; behavioral response to taxation was found only in the top percentile of the income distribution.     

Travel patterns and the potential use of electric cars – Results from a direct survey in six European countries

A significant penetration of electrical drive vehicles (EDVs) in the fleet is possible only if their use is compatible with mobility patterns of individuals. Building on the analysis of car mobility patterns by means of web-based car trips diaries filled in by a sample of individuals in six European countries, this paper provides insights on how EDVs could fit mobility habits. Critical aspects related to driving behaviour, which should be considered to allow the penetration of electric cars in the market, are identified. Among others results, we show that average daily driven distance in 6 countries ranges from an average of 40 km (UK) to an average of 80 km (Poland) and the parking time after the last trip of a day amounts to more than 16 h per day. These findings show that the current drive and parking behaviours are in line with the range limitation of current EDVs and the potential need for a full slow recharge of an average EDV battery. Our results are a starting point for the estimation on energy demand profiles to assess how electrical energy supply can meet demand under the assumptions of a wide market share of EDVs.     

Application of artificial neural networks in tendency forecasting of economic growth

Economic growth results from the synthesis influence of various known or unknown and certain or uncertain factors. Mapping of the stimuli effects and the input and output estimates of artificial neural networks (ANN) are obtained via combinations of nonlinear functions. This approach offers the advantages of self-learning, self-organization, self-adaptation, and fault tolerance, as well as the potential for use in forecasting applications of economic growth. Furthermore, the ANN technology allows the use of multiple variables in both the input and output layers. This capability is very important for economic growth calculations because economic development is often a function of many influential variables. Herein, a forecasting system of economic growth with related application has been proposed, based on ANN. The results show that the Zhejiang proportions of tertiary industry in China for 1995, 1996, and 1997 were 32.305%, 32.174%, and 32.114%, respectively, and the comparative errors e_ann were 0.64%, − 0.08%, and − 0.27%, respectively, indicating that the forecast result of ANN was better than that of the GM(1.1) model. This method offered better performance and efficiency.     

Functional sensitivity of testing the environmental Kuznets curve hypothesis

Conventional tests for the environmental Kuznets curve (EKC) hypothesis mostly apply a quadratic equation in modeling the non-linear relationship between environmental indices (such as air pollutants) and welfare measures (such as income per capita). If their inverted-U shaped pattern is empirically accepted with two significant regressors, the income per capita and its square transformation, the EKC hypothesis is supported. Using an OECD sample, this paper shows that the validity of testing the EKC hypothesis is sensitive to how we transform income non-linearly in sulfur and carbon EKC regressions. This paper carries out experiments on different powers of γ for transforming income non-linearly and concludes that only when 0 < γ < 1 and 1 < γ < 2 will the EKC regression demonstrate a testable non-linear cointegration relationship between the two air pollutants and income per capita. In the generalized EKC regressions estimated in this paper, although we find sulfur and carbon EKC patterns in the OECD sample, none of the EKC regressions using different γ is a cointegrating equation. This finding implies an inside critique to the EKC literature that failure of cointegration of the conventional EKC regression is not because of using the quadratic functional form, but because of the fundamentally spurious relationship between the trends of pollutants and income levels.     

Loan price modelling for local governments using risk premium analysis

Previous studies have highlighted the question of government loan interest as one of great current importance. Government borrowing levels are high, and reducing interest payments would generate savings to meet other spending needs and/or to lower taxation, thus supporting the sustainability of public finances. However, no previous study has presented a method for a local government to calculate its own credit risk and thus be in a position to negotiate lower interest rates on its borrowing. This article defines a financial model that enables local governments to estimate the interest rate payable on a bank loan, based on their credit risk premium, in accordance with the Basel II rules and the findings of our empirical study of large local governments.     

Property rights,mobile capital,and comparative advantage

Recent papers show that imperfect property rights to a natural resource – a sector-specific factor–can be a source of comparative advantage. In these models, weaker property rights attract labor–the only mobile factor – to the resource sector, increasing the country's comparative advantage for that sector. If capital in addition to labor is mobile, and if the benefits of capital are non-excludable or if the degree of property rights is endogenous, a deterioration of property rights has ambiguous effects on comparative advantage and on the equilibrium wage/rental ratio.     

Tiebout equilibria in local public good economies with spillovers

This paper analyzes the effects of spillovers on the equilibrium population distribution across jurisdictions in a local public good economy with free mobility. Spillovers are parametrized by a matrix [α_ij] where α_ij ∈ [0, 1]. When spillovers are symmetric and close to 0 or 1 (pure local public goods and pure public goods), all equilibrium jurisdiction structures are symmetric. However, any population distribution can be sustained in equilibrium for some value of the spillover parameter α. In the class of utility functions with additive externalities, we identify the unique family of utility functions for which equilibria are symmetric except for an isolated value of α. This is a class of utility functions which are linear in the public good and a power function of the private good, u(c, γ) = − A(1 − c)^β + γ. With this specification of utility, we show that an increase in α results in a more fragmented equilibrium population distribution, and that when spillovers are asymmetric and large, a jurisdiction which is more centrally located (i.e. benefits more from the public goods provided in other jurisdictions) has a larger population in equilibrium.     

Do fiscal transfers alleviate business tax competition? Evidence from Germany

According to theory, capacity equalization grants cause local governments to internalize the effects of their tax policies on revenues of neighboring jurisdictions and so raise equilibrium tax rates. This paper empirically analyzes the incentive effects of equalizing transfers on business tax policy by exploiting a natural experiment in the state of Lower Saxony which changed its equalization formula as of 1999. We resort to within-state and across-state difference-in-difference estimates to identify the reform effect on municipalities' business tax rates. Confirming the theoretical prediction, the reform had a significant impact on the municipalities' tax policy in the 4 years after the reform with the effect stabilizing in the fourth to fifth years. The finding is robust to various alternative specifications.     

Do production managers predict turning points? A directional analysis

This study evaluates the directional accuracy of production managers' forecasts by using a new market-timing test. By extending the directional analysis to the 4 × 4 case, this study investigates whether Japanese production managers' forecasts correctly predict turning points in production across different industries. This fills a gap in the literature that focused on predicting increase/decrease or acceleration/deceleration using directional analysis of the 2 × 2 case. It also illustrates its merit over the 2 × 2 case. This study shows that majority of the forecasts are not useful in predicting turning points in production; however, they are useful in predicting increase/decrease in production. Our findings suggest that the production managers' forecasts serve as early qualitative information of expansion and contraction on the Japanese economy and their accuracy does not differ by phases of business cycles.